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 March 31, 2012

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
(State or other jurisdiction of
incorporation or organization) 33-0830300
(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 April 30, 2012 was 47,054,266 shares.

OPTIMER PHARMACEUTICALS, INC.
FORM 10-Q
For the Quarterly Period Ended March 31, 2012

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets — March 31, 2012 and December 31, 2011	3
Consolidated Statements of Operations — Three months ended March 31, 2012 and 2011	4
Consolidated Statements of Cash Flows — Three months ended March 31, 2012 and 2011	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures about Market Risk	29
Item 4. Controls and Procedures	29
PART II — OTHER INFORMATION
Item 1A. Risk Factors	30
Item 6. Exhibits	52
SIGNATURE	53

2

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements

Optimer Pharmaceuticals, Inc.

Consolidated Balance Sheets

	March 31,			December 31,
	2012			2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	22,232,400		$	31,787,512
Short-term investments	48,772,817			78,791,066
Trade accounts receivable, net	5,348,118			6,563,645
Accounts receivable, other	53,490,730			52,289,290
Inventory, net	5,869,326			3,947,380
Prepaid expenses and other current assets	2,683,572			3,781,830
Total current assets	138,396,963			177,160,723
Equity investment in OBI	29,213,896			—
Property and equipment, net	3,418,935			2,590,715
Long-term investments	882,000			882,000
Other assets	1,424,724			1,389,734
Total assets	$	173,336,518		$	182,023,172
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		7,810,199			9,860,462
Accrued expenses	27,988,106			21,447,544
Total current liabilities	35,798,305			31,308,006
Deferred rent	148,246			151,141
Stockholders’ equity:
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized, no shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	—			—
Common stock par value, $0.001 per share, 75,000,000 shares authorized, 46,760,532 shares and 46,689,951 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	46,761			46,690
Additional paid-in capital	362,289,774			358,895,471
Accumulated other comprehensive income (loss)	966,669			(46,725		)
Accumulated deficit	(225,913,237		)	(214,992,783		)
Total Optimer Pharmaceuticals, Inc. stockholders’ equity	137,389,967			143,902,653
Noncontrolling interest	—			6,661,372
Total stockholders’ equity	137,389,967			150,564,025
Total liabilities and stockholders’ equity	$	173,336,518		$	182,023,172

See accompanying notes.

3

Optimer Pharmaceuticals, Inc.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended
	March 31,
	2012			2011
Revenues:
Product, net	$	14,380,541		$	—
Licensing	—			69,165,000
Research grant and collaboration agreement	2,106			111,639
Total revenues	14,382,647			69,276,639
Cost and expenses:
Cost of product sales	2,284,260			—
Cost of licensing	—			4,273,532
Research and development	11,067,967			8,378,009
Selling, general and administrative	25,522,282			11,806,275
Co-promotion expenses with Cubist	10,081,583			—
Total operating expenses	48,956,092			24,457,816
Income (loss) from operations	(34,573,445		)	44,818,823
Gain on deconsolidation of OBI	23,782,229			—
Loss related to equity method investment	(485,969		)	—
Interest income (loss) and other, net	76,387			23,242
Consolidated net income (loss)	$	(11,200,798	)	$	44,842,065
Net loss attributable to noncontrolling interest	280,344			290,805
Net income (loss) attributable to Optimer Pharmaceuticals, Inc.	$	(10,920,454	)	$	45,132,870
Net income (loss) per share - basic	$	(0.23	)	$	1.06
Net income (loss) per share - diluted	$	(0.23	)	$	1.04
Weighted average number of shares used to compute net income (loss) per share - basic	46,722,617			42,661,533
Weighted average number of shares used to compute net income (loss) per share - diluted	46,722,617			43,399,798
Comprehensive income	$	(10,187,404	)	$	45,081,207

See accompanying notes.

4

Optimer Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended March 31,
	2012			2011
Operating activities
Net income (loss)	$	(11,200,798	)	$	44,842,065
Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities:
Depreciation and amortization	173,477			86,044
Stock based compensation	3,105,344			2,178,424
Issuance of common stock for consulting services and other	—			2,378,039
Deferred rent	(2,895		)	(6,899		)
Gain on deconsolidation of OBI	(23,782,229		)	—
Loss related to equity method investment	485,969			—
Changes in operating assets and liabilities:
Trade accounts receivable, net	1,215,527			—
Accounts receivable, other	(1,419,904		)	(1,601,177		)
Inventory	(1,921,946		)	—
Prepaid expenses and other current assets	(1,489,211		)	(512,002		)
Other assets	(102,122		)	(283,667		)
Accounts payable and accrued expenses	7,193,323			3,602,314
Net cash provided by (used in) operating activities	(27,745,465		)	50,683,141
Investing activities
Purchases of short-term investments	—			(22,886,865		)
Sales or maturity of short-term investments	20,707,127			12,000,000
Purchases of property and equipment	(1,228,979		)	(252,341		)
Reduction of cash due to deconsolidation of OBI	(4,010,680		)	—
Proceeds from sale of OBI common stock	2,027,109			—
Net cash provided by (used in) investing activities	17,494,577			(11,139,206		)
Financing activities
Proceeds from sale of common stock	289,030			80,010,481
Net cash provided by financing activities	289,030			80,010,481
Effect of exchange rate changes on cash and cash equivalents	406,746			271,462
Net increase (decrease) in cash and cash equivalents	(9,555,112		)	119,825,878
Cash and cash equivalents at beginning of period	31,787,512			19,861,924
Cash and cash equivalents at end of period	$	22,232,400		$	139,687,802

See accompanying notes.

5

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

(unaudited)

1.Interim Financial Information

Organization and Business Activities

Optimer Pharmaceuticals, Inc. (“Optimer” or the “Company”) was incorporated in Delaware on November 18, 1998. Optimer has two active wholly-owned subsidiaries, Optimer Pharmaceuticals Canada, Inc., which is incorporated and located in Canada, and Optimer Luxembourg 2 S.à r.l. (“Optimer Europe”), which is incorporated in Luxembourg. During the first quarter of 2012, the Company established, as part of its international structure strategy, additional wholly-owned subsidiaries, including Optimer Pharmaceuticals U.S. Holdings LLC, Optimer Bermuda, and Optimer Luxembourg 1 S.à r.l.  As of March 31, 2012, there were no activities in these additional wholly-owned subsidiaries.

The Company had a majority-owned subsidiary, Optimer Biotechnology, Inc. (“OBI”), which is incorporated and located in Taiwan. In February 2012, OBI issued 36 million newly-issued shares of its common stock resulting in gross proceeds to OBI of approximately 540 million New Taiwan dollars (approximately $18.3 million based on then-current exchange rates).  The Company did not participate in the February 2012 financing.  Also, in March, 2012, the Company sold 1.5 million shares it owned of OBI. As a result, the Company owned approximately 43% of OBI and thus OBI ceased being a majority-owned subsidiary of the Company.   These transactions during the first quarter of 2012 triggered consideration regarding whether or not to consolidate OBI as well as an evaluation to consider whether OBI is a variable interest entity (“VIE”).  As a result of its evaluation, the Company determined OBI was not a VIE and that Optimer no longer had control over the operations and decision making of the voting interest entity. As a result of this evaluation, the Company deconsolidated OBI and derecognized the OBI assets, liabilities, and noncontrolling interest from its financial statements. For the quarter ended March 31, 2012, the gain attributed to the deconsolidation was $23.8 million. As of the date of deconsolidation, February 7, 2012, the Company began accounting for its investment in OBI under the equity method and accordingly recognized its share of OBI’s losses in the amount of $485,969 for the period from February 7, 2012 through March 31, 2012.

Optimer is a biopharmaceutical company focused on discovering, developing and commercializing innovative hospital specialty products.  The Company currently has one anti-infective product, DIFICID™ (fidaxomicin), which is approved in the United States, and approved in Europe as DIFICLIR™, for the treatment of Clostridium difficile-associated diarrhea (“CDAD”) and is developing additional product candidates using its proprietary technology, including its OPopS™ drug discovery platform.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the three months ended March 31, 2012 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, 2011, which was filed with the Securities and Exchange Commission (“SEC”) on March 8, 2012.

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

Principles of Consolidation

The consolidated financial statements include all the accounts of the Company and its majority owned subsidiaries.  All intercompany balances and transactions have been eliminated in consolidation.

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.  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. As of March 31, 2012, cash, cash equivalents and short-term investments totaled approximately $71.0 million.

6

Accounts Receivable

Trade accounts receivable are recorded net of reserves for estimated chargeback obligations, prompt payment discounts, service fee arrangements and any allowance for doubtful accounts. Reserves for other sales related allowances such as rebates, distribution and other fees, and product returns are included in accrued expenses in the Company’s consolidated balance sheet. The allowance for prompt pay discounts and service fee arrangements was $994,880 and zero at March 31, 2012 and 2011, respectively.

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.  Net inventory consisted of the following as of the dates indicated:

	March 31,			December 31,
	2012			2011
Raw materials	$	4,298,510		$	1,815,696
Work in process	886,005			1,321,763
Finished goods	1,228,633			809,921
	$	6,413,148		$	3,947,380
Reserved	(543,822		)	—
	$	5,869,326		3,947,380

Investment in OBI

Beginning as of February 7, 2012, the Company accounted for its investment in OBI under the equity method of accounting as the Company ceased to have voting control or other elements of control that would require consolidation. The investment is subsequently adjusted for the Company’s share in equity in net loss and cash contributions and distributions. In addition, the Company records adjustments to reflect the amortization of basis differences attributable to the fair values in excess of net book values of identified tangible and intangible assets which were generated at the date of deconsolidation.  Any difference between the carrying amount of the investment on the Company’s balance sheet and the underlying equity in net assets is evaluated for impairment at each reporting period. As of March 31, 2012, the Company’s investment in OBI was $29.2 million.

Foreign Currency Translation

The functional currency for the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rates on the balance sheet dates. Net revenues and expenses are translated using the average exchange rates prevailing during the year. Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive income (loss) within stockholders’ equity in the consolidated balance sheets. Foreign currency transaction gains and losses are reported in operating expenses, net in the consolidated statements of operations.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, short-term investments and accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.  The fair value of available-for-sale securities is based upon quoted market prices for those securities.

Derivatives

The Company may use derivatives to manage foreign currency risk and interest rate risk and not for speculative or trading purposes. The Company’s objective is to reduce the risk to earnings and cash flows associated with changes in foreign currency exchange rates. Gains and losses resulting from changes in the fair values of those derivative instruments are recorded to earnings or other comprehensive income (loss) depending on the use of the derivative instrument and whether it qualifies for hedge accounting.

7

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current period presentation.  Specifically, it has consolidated its sales and marketing expense and its general and administrative expense into a single selling, general and administrative expense category.  This reclassification has no impact on the net loss from operations or stockholders’ equity as previously reported.

Revenue Recognition

DIFICID is available through three major wholesalers and regional wholesalers that provide DIFICID to hospital and retail pharmacies, and long-term care facilities. The Company recognizes revenue from product sales when there is persuasive evidence of an arrangement, delivery has occurred, title has passed to the customer, the price is fixed and determinable, the buyer is obligated to pay the Company, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from the Company, the Company has no obligation to bring about the sale of the product, the amount of returns can be reasonably estimated and collectability is reasonably assured. The Company recognizes product sales of DIFICID upon delivery of product to the wholesalers.

The Company’s net product revenues represent total product revenues less allowances for customer credits, including estimated rebates, discounts and returns. These allowances are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Allowances for rebates, discounts and returns are established based on the contractual terms with customers, communications with customers as well as expectations about the market for the product and anticipated introduction of competitive products.  Product shipping and handling costs are included in cost of sales.

Product Sales Allowances.  The Company establishes reserves for prompt payment discounts, government rebates, product returns and other applicable allowances.

Allowances against receivable balances primarily relate to prompt payment discounts and fee for service arrangements with its contracted wholesalers and are recorded at the time of sale, resulting in a reduction in product sales revenue.  Accruals related to government rebates, product returns and other applicable allowances are recognized at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.

Prompt Payment Discounts.  The Company offers a prompt payment discount to its contracted wholesalers.  Since the Company expects its customers will take advantage of this discount, the Company accrues 100% of the prompt payment discount that is based on the gross amount of each invoice, at the time of sale.  The accrual is adjusted quarterly to reflect actual earned discounts.

Government Rebates and Chargebacks.  The Company estimates government mandated rebates and discounts relating to federal and state programs such as Medicaid, Veterans’ Administration (“VA”) and Department of Defense programs, the Medicare Part D Coverage Discount Program, as well as certain other qualifying federal and state government programs.  The Company estimates the amount of these reductions based on DIFICID patient data, actual sales data and market research data related to payor mix.  These allowances are adjusted each period based on actual experience.

Medicaid rebate reserves relate to the Company’s estimated obligations to states under statutory “best price” obligations which may also include supplemental rebate agreements with certain states.  Rebate accruals are recorded during the same period in which the related product sales are recognized.  Actual rebate amounts are determined at the time of claim by the state, and the Company will generally make cash payments for such amounts after receiving billings from the state.

VA rebates or chargeback reserves represent the Company’s estimated obligations resulting from contractual commitments to sell DIFICID to qualified healthcare providers at a price lower than the list price charged to the Company’s distributor.  The distributor will charge the Company for the difference between what the distributor pays for the product and the ultimate selling price to the qualified healthcare provider.  Rebate accruals are established during the same period in which the related product sales are recognized. Actual chargeback amounts for Public Health Service are determined at the time of resale to the qualified healthcare provider from the distributor, and the Company will generally issue credits for such amounts after receiving notification from the distributor.

8

Although allowances and accruals are recorded at the time of product sale, certain rebates will generally be paid out, on average, up to six months or longer after the sale.  Reserve estimates are evaluated quarterly and, if necessary, adjusted to reflect actual results.  Any such adjustments will be reflected in the Company’s operating results in the period of the adjustment.

Product Returns.  The Company’s policy is to accept returns of DIFICID for six months prior to and twelve months after the product expiration date.  The Company also permits returns if the product is damaged or defective when received by its customers. The Company will provide a credit for such returns to customers with whom the Company has a direct relationship. Once product is dispensed, it cannot be returned, but the Company allows partial returns in states where such returns are mandated. The Company does not exchange product from inventory for the returned product.

Allowances for product returns are recorded during the period in which the related product sales are recognized, resulting in a reduction to product revenue.  The Company estimates product returns based upon historical trends in the pharmaceutical industry and trends for similar products sold by others.

Collaborations, Milestones and Royalties

In order to determine the revenue recognition for contingent milestones, the Company evaluates the contingent milestones at the inception of a collaboration agreement.

Accounting Standard Codification (“ASC”) Topic 605-28, Revenue Recognition — Milestone Method (“ASC 605-28”), established the milestone method as an acceptable method of revenue recognition for certain contingent event-based payments under research and development arrangements.  Under the milestone method, a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved.  A milestone is an event (i) that can be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and (iii) that would result in additional payments being due to the Company.  The determination that a milestone is substantive is judgmental and is made at the inception of the arrangement.  Milestones are considered substantive when the consideration earned from the achievement of the milestone is (i) commensurate with either the Company’s performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from the Company’s performance to achieve the milestone, (ii) relates solely to past performance and (iii) is reasonable relative to all deliverables and payment terms in the arrangement.

Other contingent event-based payments received for which payment is either contingent solely upon the passage of time or the results of a collaborative partner’s performance are not considered milestones under ASC 605-28.  In accordance with ASC Topic 605-25, Revenue Recognition — Multiple-Element Arrangements, such payments will be recognized as revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured.

Revenues recognized for royalty payments, if any, are recognized as earned in accordance with the terms of various research and collaboration agreements.

For collaboration agreements with multiple deliverables, the Company recognizes collaboration revenues and expenses by analyzing each element of the agreement to determine if it is to be accounted for as a separate element or single unit of accounting. If an element is to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for that element are applied to determine when revenue is to be recognized. If an element is not to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for the bundled group of elements are applied to determine when revenue is to be recognized.

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.

In connection with certain research and 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.

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.

9

Research and Development Expenses

The Company expenses costs related to research and development until technological feasibility has been established for the product.  Once technological feasibility is established, all product costs are generally capitalized until the product is available for general release to customers.  The Company has determined that technological feasibility for its product candidates will be reached when the requisite regulatory approvals are obtained to make the product available for sale, which, in the United States, generally occurs upon the approval of the New Drug Application (“NDA”) for such product.

The Company’s research and development expenses consist primarily of license fees, salaries and related employee benefits, costs associated with clinical trials managed by the Company’s contract research organizations and costs associated with non-clinical activities and regulatory approvals.  The Company uses external service providers and vendors to conduct clinical trials, to manufacture supplies of product candidates to be used in clinical trials and to provide various other research and development-related products and services.

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

Net Income (Loss) Per Share Attributable to Common Stockholders

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Common stock equivalents consist of common shares issuable upon the exercise of stock options, and warrants and upon the vesting of restricted stock units.

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 Adopted Accounting Pronouncements

Effective January 1, 2012, the Company adopted the following accounting standards issued by the Financial Accounting Standards Board (“FASB”).

The Company adopted the amendments to 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 adoption of these amendments did not have a material impact on the Company’s financial position, cash flow or results of operations.

The Company adopted an amendment on 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 adoption of these amendments did not have a material impact on the Company’s financial position, cash flow or results of operations.

10

3.   Fair Value of Financial Instruments

The following table summarizes the Company’s financial assets measured at fair value as of March 31, 2012:

	Quoted Prices in Active Markets(Level 1)		Other Observable Inputs(Level 2)		Unobservable Inputs(Level 3)		Total
Cash equivalents	$	22,232,400	$	—	$	—	$	22,232,400
Marketable securities	—		47,824,190		—		47,824,190
Auction rate securities	—		—		882,000		882,000
Investment in Cempra	948,627		—		—		948,627
Other assets — forward contracts not designated as hedges	—		199,779		—		199,779
	$	23,181,027	$	48,023,969	$	882,000	$	72,086,996

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.

Marketable Securities.  With the exception of auction rate securities, the Company obtains pricing information from quoted market prices, pricing vendors or quotes from brokers/dealers. The Company conducts reviews of its primary pricing vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable.

The fair value of U.S. Treasury securities and government-related securities, and corporate bonds are generally determined using standard observable inputs, including reported trades, quoted market prices, and broker/dealer quotes and thus these securities are in Level 2.

The fair value of preferred auction rate securities (“ARPS”) is estimated by the Company using a discounted cash flow model that incorporates transaction details such as contractual terms, maturity and 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 the security in the near term. The ARPS does not have observable inputs and thus the ARPS is included in Level 3.

Available- for- sale security.  Equity securities that have readily determinable fair values not classified as trading securities or as held-to-maturity securities are classified as available-for-sale securities.  Any unrealized gains and losses are reported in other comprehensive income until realized. During the quarter ended March 31, 2012, Cempra became a publicly traded company and as such the Company assigned a value to the shares received in March 2006 (see Note 8) and recorded the entire amount as an unrealized gain. The Company considers the equity it owned in Cempra as available-for-sale.  For the quarter ended March 31, 2012, the Company recorded an unrealized gain of $948,627 and has included the fair value of $948,627 in short-term investment as of March 31, 2012. Cempra’s stock is actively traded in the market and thus is in Level 1.

Derivative Instruments. Derivative instruments consist of a forward contract to manage foreign exchange risk for certain transactions denominated in a foreign currency. The forward contract is valued using a standard calculation that is primarily based on observable inputs, such as foreign currency exchange rates and thus the forward contract is included in Level 2.  For the quarter ended March 31, 2012, included in its interest income and other, net, the Company recognized a gain of $63,773 on its forward contract.

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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, 2012	$	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 March 31, 2012	$	882,000
Change in unrealized gains (losses) included in net income related to assets still held	$	—

As of March 31, 2012, the Company held one ARPS valued at $882,000 with a perpetual maturity date that resets every 28 days.  Although as of March 31, 2012, 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.

4.     Investment Securities

The following is a summary of the Company’s consolidated investment securities, all of which are classified as available-for-sale. Determination of estimated fair value is based upon quoted market prices, pricing vendors or quotes from brokers/dealers as of the dates presented.

	March 31, 2012
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Government agencies	$	38,395,951	$	38,391	$	—	$	38,434,342
Corporate bonds	9,384,180		5,668		—		9,389,848
Investment in Cempra	—		948,627		—		948,627
	$	47,780,131	$	992,686	$	—	$	48,772,817

	December 31, 2011
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Government agencies	$	69,241,792	$	106,347	$	—	$	69,348,139
Corporate bonds	9,429,485		13,442		—		9,442,927
	$	78,671,277	$	119,789	$	—	78,791,066

None of the investments had a net unrealized loss position as of March 31, 2012.

In February 2012, Cempra completed its initial public offering and the Company has determined that its equity in Cempra had readily determinable value at that time and recorded its fair value in the Company’s books. Prior to February 2012, the Company assigned no value to its equity in Cempra.

The amortized cost and estimated fair value of securities available-for-sale at March 31, 2012, by contractual maturity, are as follows:

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	47,780,131	$	47,824,190

The weighted-average maturity of the Company’s short-term investments as of March 31, 2012 and 2011 was approximately four months and twelve months, respectively.

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5.Investment in OBI

Gain on deconsolidation of OBI

In February 2012, OBI issued 36 million newly-issued shares of its common stock resulting in gross proceeds of approximately 540 million New Taiwan dollars (approximately $18.3 million based on then-current exchange rates).  The Company did not participate in the February 2012 financing.  In March 2012, the Company sold 1.5 million shares of its equity interest in OBI.  These transactions reduced the Company’s ownership interest in OBI from a majority interest to a 43% interest and triggered consideration regarding whether or not to continue consolidating OBI as well as an evaluation to consider whether OBI was a VIE.  As a result of its evaluation, the Company determined that OBI was not a VIE and that Optimer no longer had voting control or other forms of  control over the operations and decision making of OBI. As a result of this evaluation, the Company deconsolidated OBI as of February 7, 2012 and derecognized the OBI assets, liabilities, and noncontrolling interest from its financial statements. Management applied deconsolidation accounting guidance, which included analyzing Optimer’s investment in OBI at February 7, 2012 to determine the fair value on the date of deconsolidation and the related gain or loss upon deconsolidation. Based on a preliminary valuation, management determined that the fair value of Optimer’s investment in OBI at February 7, 2012 was $29,699,865.  This fair value is based primarily on OBI’s financing transaction in February 2012 in which shares of common stock were sold at approximately $0.51 per share (based on then-current exchange rates).   As a significant portion of the additional investment in OBI was made by outside investors in an arms-length transaction, management has determined that this price per share approximated fair market value as of February 7, 2012. In this transaction OBI sold common shares in which all shares have the same rights and preferences as existing shareholders.

For the quarter ended March 31, 2012, the gain attributed to the deconsolidation of OBI was $23.8 million. Currently and during the period ended March 31, 2012, Optimer provides consulting, legal,  purchasing and other services to OBI. At this time there is no written contract or agreement for services between OBI and Optimer, who at March 31, 2012 are deemed to be related parties.

As of the date of deconsolidation, February 7, 2012, the Company will account for its investment in OBI under the equity method. The investment is subsequently adjusted for Optimer’s share in the equity in net loss and cash contributions and distributions. In addition, we record adjustments to reflect the amortization of basis differences attributable to the fair values in excess of net book values of identified tangible and intangible assets.  Based on a preliminary valuation, the fair value in excess of book value can be attributed to in process research and development related to the License and Collaboration Agreement for DIFICID and the Intellectual Property Assignment and License Agreement related to OPT-822/821 (see Note 8). For the period post deconsolidation, our equity method investment in OBI has been reduced by $.5 million to reflect our share in their losses during that period.  Any difference between the carrying amount of the investment on our balance sheet and the underlying equity in net assets is evaluated for impairment at each reporting period. As of March 31, 2012, our investment in OBI was $29.2 million.

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

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

	Three Months Ended March 31,
	2012			2011
Numerator:
Net income (loss) — basic and diluted	$	(10,920,454	)	$	45,132,870
Denominator:
Weighted average number of shares of common stock outstanding - basic	46,722,617			42,661,533
Effect of dilutive securities:
ESPP shares	—			14,247
Stock award common share equivalents	—			724,018
Weighted average number of shares of common stock outstanding - diluted	46,722,617			43,399,798
Net income (loss) per share - basic	$	(0.23	)	$	1.06
Net income (loss) per share - diluted	$	(0.23	)	$	1.04

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

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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, 2012, 2011, 2010 and 2009.

In March and 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 employees or non-employee directors 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.

Restricted Stock Units

In February 2012, the Compensation Committee of the Board of Directors (“Compensation Committee”) approved the grant to certain employees of restricted stock units (“RSUs”) covering up to an aggregate of 187,500 shares of common stock, which vest over three years beginning on January 1, 2012 .  Restricted stock units are valued based on the fair market value of the Company’s stock on the date of grant.

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

In February 2012, the Compensation Committee also granted to certain executives performance-based RSUs covering up to an aggregate of 250,000 shares of common stock, which vest over time beginning on the date the Company determines that a specified product revenue goal has been achievable.

In May 2010, the Company’s Board of Directors appointed Pedro Lichtinger as its President and CEO and as a member of the Board.  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 the applicable 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. Through March 31, 2012, 246,874 shares had vested.  Dr. Chang’s consulting agreement was terminated in April 2012 and as a result, the unvested portion of the performance-based options were cancelled.  However, due to Dr. chang’s continuing role as a director, his other equity awards remain outstanding and continue to vest as per the vesting term of the awards.

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

Stock options are valued using the Black-Scholes option pricing model on the date of grant. This option pricing model involves a number of estimates, including the expected lives of stock options, the Company’s anticipated stock volatility and interest rates.  The Company recognizes compensation expense for performance-based stock awards granted to employees under the accelerated attribution method.  The following table shows the assumptions used to compute stock-based compensation expense for the stock options, restricted stock units  and ESPP purchase rights during the three months ended March 31, 2012 and 2011, using the Black-Scholes option pricing model:

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	Three months endedMarch 31,
Stock Options, including performance-based options	2012		2011
Risk-free interest rate	1.52-2.17	%	2.19-2.58	%
Dividend yield	0.00	%	0.00	%
Expected life of options (years)	6.08-8.33		5.27-9.49
Volatility	69.71-70.26	%	69.66-73.63	%

	Three months endedMarch 31,
ESPP purchase rights	2012		2011
Risk-free interest rate	0.09	%	0.18	%
Dividend yield	0.00	%	0.00	%
Expected life of options (years)	0.5		.05
Volatility	42.61	%	40.01	%

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, RSUs, and other stock awards issued to employees and consultants, and employee stock purchases, recognized for the three months ended March 31, 2012 and 2011, was comprised as follows:

	Three months ended March 31,
	2012		2011
Research and development	$	964,783	$	675,522
Selling, general and administrative	2,122,915		1,455,710
Total stock-based compensation expense	$	3,087,698	$	2,131,232

At March 31, 2012, the total unrecognized compensation expense related to unvested stock options and restricted stock units issued to employees was approximately $30.5 million and the related weighted-average period over which such expense is expected to be recognized is approximately 3.2 years.

Optimer Biotechnology, Inc.

Stock Options

Until February 7, 2012, we consolidated OBI into our results of operations and recoded stock based compensation related to options granted by OBI. 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 ended March 31, 2012 and 2011:

	Three months ended March 31,
	2012		2011
Research and development	$	8,465	$	12,424
Selling, general and administrative	9,181		34,768
Stock-based compensation expense	$	17,646	$	47,192

8.     Other Collaborative Agreements

Astelllas Pharma Inc. (“Astellas Japan”)

In March 2012, the Company entered into a collaboration and license agreement with Astellas Japan pursuant to which the Company granted to Astellas Japan an exclusive, royalty-bearing license under certain of its know-how and intellectual property to develop and commercialize fidaxomicin in Japan.  Under the terms of the license agreement, Astellas Japan agreed to use commercially reasonable efforts to develop and commercialize fidaxomicin in Japan at its expense, and is obligated to achieve certain additional regulatory and

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commercial diligence milestones with respect to fidaxomicin in Japan.  In addition, under the terms of the license agreement, Astellas Japan granted to the Company an exclusive, royalty-free license under know-how and intellectual property generated by Astellas Japan and its sublicensees in the course of developing fidaxomicin and controlled by Astellas Japan or its affiliates for use by the Company and any of its sublicensees in the development and commercialization of fidaxomicin outside Japan and, following termination of the license agreement and subject to payment by the Company of a single-digit royalties, in Japan.  In addition, under the terms of a supply agreement entered into by Astellas Japan and Optimer Luxembourg, on the same date, Optimer Luxembourg will be the exclusive supplier of fidaxomicin to Astellas Japan for Astellas Japan’s development and commercialization activities in Japan during the term of the supply agreement.

Under the terms of the license agreement, Astellas Japan is obligated to pay the Company an upfront fee equal to $20,000,000 in April 2012. The Company is also eligible to receive additional cash payments totaling up to $70,000,000 upon the achievement by Astellas Japan of specified regulatory and commercial milestones.  In addition, the Company will be entitled to receive royalties on net sales of fidaxomicin products in Japan above an agreed threshold, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas Japan on a product-by-product basis until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan. Under the supply agreement, in exchange for commercial supply of fidaxomicin, Astellas Japan is obligated to pay Optimer Luxembourg a price equal to net sales of fidaxomicin products in Japan minus a discount that is based on a high double-digit percentage of such net sales and a mark-up to cost of goods.  This price will be payable by Astellas Japan on a product-by-product basis for commercial supply until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan.

The license agreement will continue in effect on a product-by-product basis until expiration of Astellas Japan’s obligation to pay royalties with respect to each fidaxomicin product in Japan, unless terminated early by either party.  Following expiration of the license agreement, Astellas Japan’s license to develop and commercialize the applicable fidaxomicin product will become non-exclusive.  Each of the Company and Astellas Japan may terminate the license agreement 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 license agreement prior to expiration in the event Astellas Japan 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 under the license agreement, and Astellas Japan may terminate the license agreement prior to expiration for any reason upon 180 days’ prior written notice to the Company.  Upon any such termination, the license granted to Astellas Japan (in total or with respect to the terminated product, as applicable) will terminate and revert to the Company.  The supply agreement will continue in effect until terminated by either party.  Each of Optimer Luxembourg and Astellas Japan may terminate the supply agreement (i) upon the material breach of such agreement by the other party, (ii) upon the bankruptcy or insolvency of the other party or (iii) on a product-by-product basis following expiration of Astellas Japan’s obligation to pay the price described above with respect to the applicable fidaxomicin product, or in its entirety following expiration of Astellas Japan’s obligation to pay the price described above with respect to all fidaxomicin products.

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 for each element. As the Company has not delivered any of the identified deliverables, no revenue has been recognized as of March 31, 2012.  Based on the results of the Company’s analysis, it was determined that the upfront payment of $20 million will be earned upon the delivery of the license and related know-how, which did not occur during the first quarter of 2012, and thus was not recognized as of March 31, 2012. The upfront payment of $20 million was received from Astellas Japan during April 2012.

Cubist Pharmaceuticals, Inc.(“Cubist”)

In April 2011, the Company entered into a co-promotion agreement with 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 is 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.

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In exchange for Cubist’s co-promotion activities and personnel commitments, the Company is obligated to 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. Except for the first quarterly payment which the Company paid in advance, all subsequent payments are paid in arrears. 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.  Based on the level of sales to date, the Company expects to achieve the first year sales target and has accrued $6.5 million representing a pro-rated portion of the $5 million bonus as well as a portion of estimated gross profit on sales above the sales target which will become due to Cubist in August 2012, assuming such estimated levels of revenues are met.

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.

The following is a summary of accrued expenses related to the Company’s co-promotion agreement with Cubist during the three months ended March 31, 2012:

Expenses	Three Months Ended March 31, 2012
Target bonus and portion of gross profit payments	$	6,480,000
Service fees	$	3,601,583
Total	$	10,081,583

Astellas Pharma Europe Ltd. (“APEL”)

In February 2011, the Company entered into a collaboration and license agreement with APEL pursuant to which the Company granted to APEL 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 Commonwealth of Independent States (“CIS”). In March 2011, the parties amended the agreements to include certain additional countries in the CIS and all additional territories in Africa (all such countries and territories are referred to as the APEL territories). Under the terms of the agreement, APEL has agreed to use commercially reasonable efforts to develop and commercialize DIFICID in the APEL territory at its expense, and to achieve certain additional regulatory and commercial diligence milestones with respect to DIFICID in the APEL territory.  The Company and APEL may also agree to collaborate in, and share data resulting from, global development activities with respect to DIFICID, in which case the Company and APEL will be obligated to co-fund such activities.  In addition, under the terms of the agreement, APEL granted the Company an exclusive, royalty-free license under know-how and intellectual property generated by APEL and its sublicensees in the course of developing DIFICID and controlled by APEL or its affiliates for use by the Company and any of its sublicensees in the development and commercialization of DIFICID outside the APEL territory and, following termination of the agreement and subject to payment by the Company of single-digit royalties, in the APEL territory.  In addition, under the terms of a supply agreement entered into between the Company and APEL on the same date, the Company will be the exclusive supplier of DIFICID to APEL for APEL’s development and commercialization activities in the APEL territory during the term of the supply agreement, and APEL 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 APEL, in March 2011, APEL 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 APEL of specified regulatory and commercial milestones and contingent events. Of this amount, 40 million Euros will become due 30 days subsequent to the earlier to occur of launch in two major countries or six months after EMA approval and 10 million Euros will become payable to the Company upon the launch in any country in the APEL territory. In December 2011, the Company received an approval from the EMA for DIFICLIR™ (fidaxomicin) tablets and thus recorded the 40 million Euro milestone as revenue and a receivable in the fourth quarter of 2011. The Company expects to receive the 40 million Euro payment in mid-2012. The Company entered into a forward contract in order to limit the Company’s foreign currency exposure. The Company is eligible to receive additional milestone payments totaling up to 65 million Euros upon the achievement of certain commercial milestones.

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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 its performance or on the occurrence of a separate outcome resulting from its 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 as to whether or not the milestones will be met and the achievement of the milestones is based in part on the occurrence of a separate outcome resulting from its 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 APEL territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by APEL 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 for each element. Based on the results of the Company’s analysis, it 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 APEL will continue in effect on a product-by-product and country-by-country basis until expiration of APEL’s obligation to pay royalties with respect to each DIFICID product in each country in the APEL territory, unless terminated early by either party as more fully described below.  Following expiration, APEL’s license to develop and commercialize the applicable DIFICID product in the applicable country will become non-exclusive.  The Company and APEL 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 APEL 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 APEL 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 us.  Upon any such termination, the license granted to APEL (in total or with respect to the terminated product or terminated country, as applicable) will terminate and revert to the Company.

Par Pharmaceuticals, Inc. (“Par”)

In February 2007, the Company repurchased the rights to develop and commercialize DIFICID in North America and Israel from 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 net sales by the Company, its affiliates or its licensees of DIFICID in North America and Israel, and a 1.5% royalty on 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, 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, 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 APEL agreement.  In the fourth quarter of 2011, the Company also recorded $3.3 million in royalties related to the $53.6 million EMA approval milestone due from APEL.  For the quarter ended March 31, 2012, the Company recorded approximately $719,000 in royalties related to DIFICID net sales in the U.S.

Biocon Limited (“Biocon”)

In May 2010, the Company entered into a long-term supply agreement with Biocon, for the commercial manufacture of DIFICID API.  Pursuant to the agreement, Biocon agreed to manufacture and supply 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 it 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.  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 obtained marketing authorization for DIFICID in the United States.  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 that it indicates in binding forecasts.

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Patheon Inc. (“Patheon”)

In June 2011, the Company entered into a commercial 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.  The Company 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 us, (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.

Cempra Pharmaceuticals, Inc. (“Cempra”)

In March 2006, the Company entered into a collaborative research and development and license agreement with Cempra.  The Company granted to Cempra an exclusive worldwide license, except in ASEAN countries, with the right to sublicense, the Company’s patent and know-how related to the Company’s macrolide and ketolide antibacterial program.  As partial consideration for granting Cempra the licenses, the Company obtained equity of Cempra and the Company assigned no value to such equity.  The Company may receive milestone payments as product candidates are developed and/or co-developed by Cempra, in addition to milestone payments based on certain sublicense revenue.  The aggregate potential amount of such milestone payments is not capped and, based in part on the number of products developed under the agreement, may exceed $24.5 million. The Company has assessed milestones under the revised authoritative guidance for research and development milestones and determined that the preclinical milestone payments, as defined in the agreement, meet the definition of a milestone as they are 1) events that can only be achieved in part on the Company’s past performance or upon the occurrence of a specific outcome resulting from the Company’s performance, 2) there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and 3) they result in additional payments being due to the Company. Clinical development and commercial milestone payments, however, currently do not meet this criteria as their achievement is solely based on the performance of Cempra. To date the Company has recognized $500,000 in payments from this collaboration. 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.

In February 2012, Cempra completed an initial public offering at which time the Company’s equity interest in Cempra was converted to 125,646 shares of common stock.  The Company considers its equity interest in Cempra as available-for-sale.  See Note 3 for further discussion.

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Optimer Biotechnology, Inc.

In October 2009, the Company entered into certain transactions involving OBI, its then wholly-owned subsidiary, to provide funding for the development of two of its 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, its 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.

Memorial Sloan-Kettering Cancer Center (“MSKCC”)

In July 2002, the Company entered into a license agreement with 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 the Company, 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 (“TSRI”)

In July 1999, the Company acquired exclusive, worldwide rights to its OPopS technology from 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 the Company’s 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 OPT-88 which, after further evaluation, OBI decided not to pursue. In February 2011, OBI and TSRI agreed to terminate the agreement 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, the Company’s 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 remaining agreements, the Company also will owe TSRI payments

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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 three remaining TSRI agreements is approximately $11.1 million.

Revenues from Research Grants

The Company has one active grant from the National Institute of Allergy and Infectious Diseases. This $3.0 million grant was awarded in September 2007 for three years and was subsequently extended to August 2012. 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 March 31, 2012 and 2011, the Company recognized revenues related to research grants of $2,106, and $111,639, respectively.

9.     Subsequent Event

In April 2012, the Company issued 286,260 shares of common stock to AFOS, LLC as consideration for the engagement of an affiliate of AFOS to provide certain services to the Company and the affiliate’s obligation to provide such services.  The shares are subject to various lock-up periods during which AFOS may not transfer such shares, except under certain exceptions.

In April 2012 the Company announced the termination of each of Mr. Prunty and Dr. Shue, the removal of Dr. Chang as the Chairman of its Board of Directors and the Company’s request that Dr. Chang resign his directorship at the Company.  Dr. Chang’s removal as Chairman resulted from the Board of Directors’ views as to his actions in his capacity as Optimer’s representative on the Board of Directors of OBI as well as his failure to identify and effectively manage compliance, record keeping and conflict of interest issues in connection with OBI’s grant to Dr. Chang of 1.5 million shares of OBI.  The terminations of Mr. Prunty and Dr. Shue were related to the belief of the Company’s Board of Directors that both individuals failed to follow proper procedures when they became aware of potential issues related to the issuance of the OBI shares to Dr. Chang.  The Company has disclosed the matter to the relevant U.S. authorities and is cooperating with those authorities in reviewing the matter.  While the full facts are not yet known to the Company and are the subject of its own investigation, these events could potentially result in lawsuits being filed against the Company and certain of its employees and directors or the Company and its employees and directors could be the subject of governmental investigations or enforcement proceedings.

On May 9, 2012, at the Company’s Annual Stockholders’ meeting, its stockholders approved the Company’s 2012 Equity Incentive plan and the increase of its authorized shares from 75,000,000 shares to 150,000,000 shares.

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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, 2011, 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 global biopharmaceutical company currently focused on commercializing our antibiotic product DIFICID®(fidaxomicin) in the United States, and further developing other fixacomicin products in the United States and worldwide, both ourselves and with our partners and licensees.  DIFICID is indicated for the treatment of CDAD in adults 18 years of age or older, and is the first antibacterial drug to be approved in the United States for the treatment of CDAD in nearly 30 years. We are currently marketing DIFICID in the United States through our own sales force and through our co-promotion agreement with Cubist Pharmaceuticals, Inc, or Cubist. In addition, in December 2011, the European Medicines Agency, or EMA, approved the Marketing Authorization Application, or MAA, for DIFICLIR™ (fidaxomicin) tablets for the treatment of adults suffering with CDAD in Europe.

In March 2012, we entered into a collaboration and license agreement with Astellas Pharma Inc., or Astellas Japan, pursuant to which we granted to Astellas Japan an exclusive, royalty-bearing license under certain of our know-how and intellectual property to develop and commercialize fidaxomicin in Japan in return for an upfront fee, certain additional cash payments upon the achievement by Astellas Japan of specified milestones, and certain royalties on net sales of fidaxomicin products in Japan.    In March 2012 Astellas Japan also entered into a  supply agreement with our our wholly-owned subsidiary Optimer Luxembourg 2 S.à r.l, or Optimer Europe, under which, in exchange for commercial supply of fidaxomicin, Astellas Japan is obligated to pay Optimer Europe a price equal to net sales of fidaxomicin products in Japan minus certain discounts that are based on a high double-digit percentage of such net sales and a mark-up to cost of goods.  This price will be payable by Astellas Japan on a product-by-product basis for commercial supply until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan.

We were incorporated in November 1998.  Since inception, we have focused on developing and commercializing DIFICID and other fidaxomicin products. We have incurred significant net losses since our inception.  As of March 31, 2012, we had an accumulated deficit of $251.5 million.  These losses have resulted principally from costs incurred in connection with research and development activities, including the costs of clinical trial activities, license fees and general and administrative expenses, and more recently expenses incurred in connection with our commercial efforts with respect to DIFICID in the United States.  We expect to incur operating losses for the next several years as we pursue the commercialization of DIFICID, as well as further development of DIFICID, including conducting post-marketing studies for label expansion and to obtain approval in the U.S. for using DIFICID as a prophylaxis indication, and further development, regulatory approval and commercialization of fidaxomicin worldwide.  We may also acquire or in-license additional products or product candidates, technologies or businesses that are complementary to our own.

Critical Accounting Policies

Our Management’s Discussion and Analysis of 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. As of March 31, 2012, inventories consisted of $4.3 million in raw materials, $0.3 million in work in process and $1.2 million  in finished goods.  During the first quarter, we reserved $0.5 million of our inventory cost.

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Investment in OBI

We account for our investment in OBI under the equity method of accounting as we do not have the elements of control that would require consolidation. The investment is subsequently adjusted for equity in net income and cash contributions and distributions. In addition, we record adjustments to reflect the amortization of basis differences attributable to the fair values in excess of net book values of identified tangible and intangible assets.  Any difference between the carrying amount of the investment on our balance sheet and the underlying equity in net assets is evaluated for impairment at each reporting period.

Revenue Recognition

DIFICID is available only through three major wholesalers, AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson Corporation, and regional wholesalers that provide the DIFICID to hospital and retail pharmacies, and long-term care facilities. We recognize revenue from product sales when there is persuasive evidence of an arrangement, delivery has occurred, title has passed to the customer, the price is fixed and determinable, the buyer is obligated to pay us, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from us, we have no obligation to bring about the sale of the product, the amount of returns can be reasonably estimated and collectability is reasonably assured. We recognize product sales of DIFICID upon delivery of product to the wholesalers.

During the three months ended March 31, 2012, the $14.4 million in net product revenue to wholesalers reflected a total of 5,874 DIFICID treatments. 5,542 DIFICID treatments were shipped to hospitals, retail pharmacies and long-term care facilities.  As of March 31, 2012, approximately 1,700 hospitals had ordered DIFICID and the number of target hospitals including DIFICID on their formularies was approaching 700.

Our net revenues represent total revenues less allowances for customer credits, including estimated rebates, discounts and returns. These allowances are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Allowances for rebates, discounts and returns are established based on the contractual terms with customers, communications with customers as well as expectations about the market for the product and anticipated introduction of competitive products.  Product shipping and handling costs are included in cost of sales.

Product Sales Allowances.  We establish reserves for prompt payment discounts, government rebates, product returns and other applicable allowances.

Allowances against receivable balances primarily relate to prompt payment discounts and fee for service arrangements with our contracted wholesalers and are recorded at the time of sale, resulting in a reduction in product sales revenue.  Accruals related to government rebates, product returns and other applicable allowances are recognized at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.

Prompt Payment Discounts.  We offer a prompt payment discount to our contracted wholesalers.  Since we expect our customers will take advantage of this discount, we accrue 100% of the prompt payment discount that is based on the gross amount of each invoice, at the time of sale.  The accrual is adjusted quarterly to reflect actual earned discounts.

Government Rebates and Chargebacks.  We estimate government mandated rebates and discounts relating to federal and state programs such as Medicaid, Veterans’ Administration, or VA, and Department of Defense programs, the Medicare Part D Coverage Discount Program, as well as with respect to certain other qualifying federal and state government programs.  We estimate the amount of these reductions based on historical trends for similar competitive products, until such time as DIFICID patient data, actual sales data and market research data related to payor mix has reached an established steady state.  These allowances are adjusted each period based on actual experience.

Medicaid rebate reserves relate to our estimated obligations to states under statutory “best price” obligations which may also include supplemental rebate agreements with certain states.  Rebate accruals are recorded during the same period in which the related product sales are recognized.  Actual rebate amounts are determined at the time of claim by the state, and we will generally make cash payments for such amounts after receiving billings from the state.

VA rebates or chargeback reserves represent our estimated obligations resulting from contractual commitments to sell DIFICID to qualified healthcare providers at a price lower than the list price charged to our distributor.  The distributor will charge us for the difference between what the distributor pays for the product and the ultimate selling price to the qualified healthcare provider.  Rebate accruals are established during the same period in which the related product sales are recognized. Actual chargeback amounts for Public Health Service are determined at the time of resale to the qualified healthcare provider from the distributor, and we will generally issue credits for such amounts after receiving notification from the distributor.

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Although allowances and accruals are recorded at the time of product sale, certain rebates will be generally paid out, on average, up to six months or longer after the sale.  Reserve estimates are evaluated quarterly and, if necessary, adjusted to reflect actual results.  Any such adjustments will be reflected in our operating results in the period of the adjustment.

Product Returns.  Our policy is to accept returns of DIFICID for six months prior to and twelve months after the product expiration date.  We also permit returns if the product is damaged or defective when received by its customers. We will provide a credit for such returns to customers with whom we have a direct relationship. Once product is dispensed it cannot be returned, but we allow partial returns in states where such returns are mandated. We do not exchange product from inventory for the returned product.

Allowances for product returns are recorded during the period in which the related product sales are recognized, resulting in a reduction to product revenue.  We estimate product returns based upon sales of DIFICID, management experience with similar products, historical trends in the pharmaceutical industry and trends for similar products sold by others.

Collaborations, Milestones and Royalties

In order to determine the revenue recognition for contingent milestones, we evaluate the contingent milestones using the criteria as provided by the Financial Accounting Standards Board, or FASB, guidance on the milestone method of revenue recognition at the inception of a collaboration agreement.

Accounting Standard Codification (“ASC”) Topic 605-28, Revenue Recognition — Milestone Method (“ASC 605-28”), established the milestone method as an acceptable method of revenue recognition for certain contingent event-based payments under research and development arrangements.  Under the milestone method, a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved.  A milestone is an event (i) that can be achieved based in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and (iii) that would result in additional payments being due to us.  The determination that a milestone is substantive is judgmental and is made at the inception of the arrangement.  Milestones are considered substantive when the consideration earned from the achievement of the milestone is (i) commensurate with either our performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone, (ii) relates solely to past performance and (iii) is reasonable relative to all deliverables and payment terms in the arrangement.

Other contingent event-based payments received for which payment is either contingent solely upon the passage of time or the results of a collaborative partner’s performance are not considered milestones under ASC 605-28.  In accordance with ASC Topic 605-25, Revenue Recognition — Multiple-Element Arrangements (“ASC 605-25”), such payments will be recognized as revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; price is fixed or determinable; and collectability is reasonably assured.

Revenues recognized for royalty payments, if any, are recognized as earned in accordance with the terms of various research and collaboration agreements.

For collaboration agreements with multiple deliverables, we recognize collaboration revenues and expenses by analyzing each element of the agreement to determine if it is to be accounted for as a separate element or single unit of accounting. If an element is to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for that element are applied to determine when revenue is to be recognized. If an element is not to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for the bundled group of elements are applied to determine when revenue is to be recognized.

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.  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.  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.

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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.

Total consolidated stock-based compensation expense of $3.1 million and $2.2 million was recognized in the three months ended March 31, 2012 and 2011, respectively.  The stock-based compensation expense recognized 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.

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.

We estimate that our federal and state taxable income, if any, 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.

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Segment Reporting

Our management has determined that we operate in one business segment which is the development and commercialization of pharmaceutical products.

Results of Operations

Comparison ofThree Months Ended March 31, 2012 and 2011

Revenues

Total revenues for the three months ended March 31, 2012 and 2011 were $14.4 million and $69.3 million, respectively. The decrease of $54.9 million was primarily due to the $69.2 million upfront payment we received from APEL in the first quarter of the 2011 partially offset by $14.4 million of product sales in the first quarter of 2012.

Cost and expenses

Cost of product sales. Cost of product sales for the three months ended March 31, 2012 consisted primarily of the 5% royalty due to Par on net sales of DIFICID in the United States.  Cost of product sales also included the cost of inventory sold.

Cost of licensing. We did not incur and cost of licensing in the three months ended March 31, 2012.  The $4.3 million incurred for the same period in the prior year represented a 6.25% royalty payment we made to Par based on the net revenue from the APEL upfront payment.

Research and development expense.  Research and development expense for the three months ended March 31, 2012 and 2011 was $11.1 million and $8.4 million, respectively, an increase of $2.7 million. The increase was primarily due to higher health economics and outcomes research, medical affairs, medical education, pharmacovigilance, and publication expenses.

Selling, general and administrative expense. Selling, general and administrative expense for the three months ended March 31, 2012 and 2011 was $25.5 million and $11.8 million, respectively, an increase of $13.7 million. The increase was primarily due to our commercialization efforts. We had higher headcount during the 2012 period and thus incurred higher salary expense. We also incurred advertising and promotion expenses as well as higher legal, consulting and other outside services.

Co-promotion expenses with Cubist. The $10.1 million represented certain expenses that may be due Cubist under our April 2011 DIFICID co-promotion agreement. In addition to a quarterly service fee payment for co-promoting DIFICID, Cubist is eligible to receive $5.0 million in the first year after first commercial sale if a mutually agreed upon annual sales target is achieved, as well as a portion of our gross profits derived from net sales above the specified annual target. Based on the level of sales to date and the estimated continued growth in revenues, Optimer expects to achieve the first year sales target and has accrued $9.2 million representing the quarterly service fee and a pro-rated portion of the $5.0 million bonus payment as well as a portion of gross profits. We did not incur similar expenses in the quarter ended March 31, 2011.

Gain on deconsolidation of Optimer Biotechnology, Inc. The $23.8 million represented the gain on the deconsolidation of OBI.  We did not have a similar gain in the quarter ended March 31, 2011.

Equity in net loss of OBI. The $486,000 represented the loss recognized in our investment in OBI using the equity method. We did not have a similar loss in the quarter ended March 31, 2011.

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest for the three months ended March 31, 2012 and 2011 was approximately $280,000 and $291,000, respectively. The $280,000 represented approximately one month of noncontrolling interest prior to deconsolidation of OBI in February 2012.

Interest income and other, net. Interest income and other, net of $76,000 for the three months ended March 31, 2012 was relatively consistent with the $23,000 for the three months ended March 31, 2011.

Liquidity and Capital Resources

Sources of Liquidity

Prior to our launch of DIFICID in July 2011, our operations have been financed primarily through the sale of equity securities.  Through March 31, 2012, we received gross proceeds of approximately $333.8 million from the sale of shares of our preferred and common stock in various private and public financing transactions.

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In March 2011, pursuant to our collaboration and license agreement with Astellas Pharma Europe Ltd., or APEL, we received approximately $69.2 million as an upfront payment from APEL.

Until required for operations, we invest a substantial portion of our available funds in money market funds, 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 March 31, 2012, our consolidated cash, cash equivalents and short-term investments totaled approximately $71.0 million as compared to $110.6 million as of December 31, 2011, a decrease of approximately $39.6 million.  The decrease in our cash, cash equivalents and short-term investments was primarily due to day-to-day operating expenses as well as the exclusion of OBI’s cash, cash equivalents as of March 31, 2012 which occurred as a result of the deconsolidation of OBI in the quarter.

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.

In March 2012, we entered into a collaboration and license agreement with Astellas Japan to which we granted to Astellas to develop and commercialize fidaxomicin in Japan.  Under the terms of the license agreement, Astellas Japan is obligated to pay to us an upfront fee equal to $20.0 million which we received in April 2012. We are also eligible to receive additional cash payments totaling up to $70.0 million upon the achievement by Astellas Japan of specified regulatory and commercial milestones.  In addition, we will be entitled to receive royalties on net sales of fidaxomicin products in Japan above an agreed threshold, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas Japan on a product-by-product basis until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan. Under the supply agreement, in exchange for commercial supply of fidaxomicin, Astellas Japan is obligated to pay Optimer Luxembourg a price equal to net sales of fidaxomicin products in Japan minus a discount that is based on a high double-digit percentage of such net sales and a mark-up to cost of goods.  This price will be payable by Astellas Japan on a product-by-product basis for commercial supply until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan.

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 are obligated to pay a quarterly fee of approximately $3.75 million to Cubist ($15.0 million per year) which we began paying 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 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.  Based on the level of sales to date, we expect to achieve the first year sales target and have accrued $6.5 million of expenses during the first quarter of 2012, representing a pro-rated portion of the $5.0 million bonus as well as a portion of estimated gross profit on sales above the sales target which will become due to Cubist in August 2012 assuming such estimated levels of revenues are met.

In February 2011, we entered into a collaboration and license agreement with APEL pursuant to which we granted to APEL an exclusive, royalty-bearing license under certain of our know-how and intellectual property to develop and commercialize fidaxomicin in the APEL territory. Under the terms of the license agreement with APEL, APEL paid to us an upfront fee of $69.2 million in March 2011. We are eligible to receive additional cash payments totaling up to 115.0 million Euros upon the achievement by APEL of specified regulatory and commercial milestones with 40 million Euros of this amount due 30 days following the earlier to occur of launch of fidaxomicin in two major territories or six months after EMA approval for DIFICLIR, which occurred in December 2011, and 10 million Euros will become due 30 days after the upon launch of fidaxomicin in any country in the APEL territory. We currently expect to receive these two milestone payments no later than mid 2012.  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 APEL territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by APEL on a product-by-product and country-by-country basis until a generic product accounts for a specified market share of the applicable fidaxomicin product in the applicable country.

In June 2011, we entered into a commercial manufacturing services agreement with Patheon Inc., or 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 agreed to purchase a specified percentage of our fidaxomicin product requirements for North America and Europe from Patheon or its affiliates.

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In May 2010, we entered into a long-term supply agreement with Biocon Limited or Biocon, for the commercial manufacture of fidaxomicin’s active pharmaceutical ingredient, or API. Pursuant to the agreement, Biocon agreed to manufacture and supply to us, up to certain limits, fidaxomicin API and, subject to certain conditions, we agreed to purchase from Biocon at least a portion of our requirements for fidaxomicin 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 fidaxomicin 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 fidaxomicin API and if Biocon is unable to manufacture alternative products with the dedicated capacity.

In February 2007, we regained worldwide rights to fidaxomicin from Par Pharmaceuticals, Inc., or 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 fidaxomicin.  We are obligated to pay Par a 5% royalty on net sales by us or our affiliates of fidaxomicin in North America and Israel, and a 1.5% royalty on net sales by us or our affiliates of DIFICID (fidaxomicin) 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 fidaxomicin 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 APEL agreement.  In December 2011, we recorded $3.3 million in royalties related to the $53.6 million EMA approval milestone due from Astellas.  We also expect to pay Par $1.3 million associated with the $20.0 million upfront payment from Astellas Japan. For the quarter ended March 31, 2012, we recorded approximately $719,000 in royalties related to DIFICID net sales in the U.S.

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 in the United States and other fidaxomicin products in countries outside the United States;

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

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

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

·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 partner or license fidaxomicin or commercialize fidaxomicin ourselves in countries outside the United States, the APEL territory and Japan;

·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, in addition to the two milestone payments we expect to receive from APEL, will be sufficient to meet our capital requirements for at least the next 12 months.

Until we can generate significant cash from our operations, we expect to continue to fund our operations with existing cash resources, revenues from sales of DIFICID in the United States and revenues from existing and future collaboration agreements.  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.

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The credit markets continue to be volatile 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 negotiate less favorable terms for rights to our products or product candidates 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 debt, 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 March 31, 2012 consisted primarily of money market funds 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 March 31, 2012 would have resulted in an approximately $12,000 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.

Foreign Currency Risk

While we operate primarily in the United States, we are exposed to foreign currency risk.  Our agreement with APEL includes milestone and royalty payments which are denominated in Euros.  Our fidaxomicin API manufacturer, Biocon, is located in India and our manufacturer of fidaxomicin tablets, Patheon, is located in Canada.  Although we pay Biocon and Patheon in U.S. dollars, changes in the Rupee and the Canadian dollar may result in price adjustments and affect our operating results.

We also established a subsidiary in Canada, Optimer Pharmaceuticals Canada, Inc. and recently in Luxembourg, or Optimer Europe, and we expect Optimer Canada’s and Optimer Europe’s transactions to be denominated primarily in Canadian dollars and Euros, respectively.  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 conditions in the global financial markets in such countries and the impact on both the U.S. dollar the Canadian dollar and the Euro.

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. In anticipation of a 40 million Euro milestone payment from APEL after we received the EMA approval of fidaxomicin, we entered into a forward contract to limit our foreign currency exposure to the Euro.  Thus, we do not expect the impact of fluctuations in the relative fair value of the Euro to be material to our results of operations.

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 acting 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.

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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 acting 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 acting chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting during the quarter ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  Subsequent to March 31, 2012, we experienced some personnel changes including the departure of our then-Chief Financial Officer.  The roles and responsibilities of the former Chief Financial Officer related to internal control over financial reporting are currently performed by our Acting Chief Financial Officer and various consultants while we conduct a search for a permanent Chief Financial Officer. We do not believe at this time that such changes have materially affected, or are 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, 2011, 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;

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

·our ability to expand the label of DIFICID to cover additional indications; and

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

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.

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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 and sales activities with respect to DIFICID, which could adversely impact our ability to 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.

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 agreements with APEL and Astellas Japan to commercialize and further develop fidaxomicin in the APEL territory and in Japan, respectively.  The failure to maintain these agreements or the failure of APEL or Astellas Japan to perform its obligations under its respective agreements, could negatively impact our business.*

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

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

·APEL or Astellas Japan or both 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 and/or Japan;

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

·there may be disputes between us and APEL and/or Astellas Japan, including disagreements regarding the applicable 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 fidaxomicin, 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 with APEL 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;

·APEL and/or Astellas Japan 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 APEL and/or Astellas Japan and manage our own inventory of fidaxomicin, as well as our ability to generate accurate financial forecasts;

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

·APEL and/or Astellas Japan may not properly maintain or defend our intellectual property rights in the APEL territory or in Japan 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 APEL and/or Astellas Japan may be reduced or eliminated based upon APEL’s, Astellas Japan’s and our ability to maintain or defend our intellectual property rights and the presence of generic competitors in the APEL territory or in Japan;

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

·if APEL and/or Astellas Japan are unsuccessful in obtaining regulatory approvals for or commercializing fidaxomicin in the APEL territory or in Japan, 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 APEL and Astellas Japan’s 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 fidaxomicin in the APEL territory and in Japan on acceptable terms, or at all, and we may be unable to pursue continued commercialization or development of fidaxomcinc in the APEL territory and in Japan on our own.

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

Other than our collaboration agreements with APEL and Astellas Japan, we may not be able to enter into acceptable agreements to commercialize fidaxomicin 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 fidaxomicin outside of the United States through collaboration arrangements with third parties, such as our collaboration with APEL and Astellas Japan, or independently.  We may be unable to enter into additional collaboration arrangements in international markets outside of the APEL territory and in Japan.  In addition, there can be no guarantee that APEL or Astellas Japan 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 fidaxomicin 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 fidaxomicin in countries outside of the United States and

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outside of the APEL territory and Japan, or if we otherwise decide to market fidaxomicin ourselves in these countries, we will need to develop our own marketing and sales force to market fidaxomicin in these territories to hospital-based and long-term care physicians.  These efforts, including our on-going efforts in Canada through our subsidiary, Optimer Canada, may not be successful as we have limited relationships among such hospital-based and long-term care physicians and may not currently have sufficient funds to develop an adequate sales force in each of these regions.  There is no guarantee that we will be able to develop an effective international sales force to successfully commercialize our products in these international markets.  If we cannot commercialize fidaxomicin, either through a collaboration or independently, in any territory that represents a significant market opportunity, our ability to achieve and sustain profitability will be substantially limited.

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 March 31, 2012, we had an accumulated deficit of approximately $225.5 million.  We have generated minimal revenues from product sales to date and we expect our expenses to continue to be significant in the ner-term as we execute the commercial launch of DIFICID due to, amount other things, our employee headcount, on-going payments to Cubist pursuant to our co-promotion agreement, and as we pursue additional research and development activities, including potential additional indications for DIFICID. We have funded our operations through March 31, 2012 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 any future product candidates, we are unable to predict the extent of any future losses.  We or our collaborators may never successfully commercialize our product candidates, including DIFICID outside of the United States, and thus we may never have any significant future revenues or achieve and sustain profitability.

If we and Cubist are unable to effectively train and equip our respective sales forces, our ability to successfully commercialize DIFICID in the U.S. will be harmed.

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. We must also effectively collaborate and coordinate with Cubist sales force representatives in co-promoting DIFICID, including training efforts.  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 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.

The commercial success of DIFICID and any other products we develop or acquire will depend upon attaining significant market acceptance among physicians, hospitals, patients, healthcare payors and the medical community.

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

·timing of market introduction of our products as well as of competitive drugs;

·the clinical indications for which the product is approved;

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

·perceived advantages over alternative treatments;

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

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

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

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·whether the product 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.

With respect to DIFICID specifically, successful commercialization will depend on whether and to what extent physicians, pharmacists, long-term care facilities and hospital pharmacies, over whom we have no control, determine to utilize DIFICID. The sale of DIFICID to each hospital is to a large extent dependent upon the 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 DIFICID will adversely impact their overall pharmacy budgets, which could cause pharmacists to resist adding 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 additional approvals from P&T committees in a timely manner or at all, and the failure to do so will limit our ability 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 a very limited track record of sales in the U.S., any inability to timely supply DIFICID to our customers, or any unexpected side effects that arise from the use of the drug, particularly early in the product launch, may lead physicians to not accept DIFICID as a viable treatment alternative.

Even after receipt of regulatory approval from the FDA, DIFICID is, and any other products we may develop or acquire in the future will be, subject to substantial, ongoing regulatory requirements.

DIFICID is, and any future approved products will be, 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 any products, including 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 or any future approved product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where active pharmaceutical ingredient, or API, or final drug product is manufactured, may result in the imposition of additional restrictions, including requiring us to reformulate the product, conduct additional clinical trials, make changes in the labeling of the product or withdraw the product from the market.

The FDA or foreign regulatory authorities may also impose ongoing requirements for potentially costly post-approval studies for any approved product. For example, as a condition of the FDA’s 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 or any future approved product 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;

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·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.

Any of these regulatory actions due to our failure to comply with post-approval requirements could damage our reputation, limit our ability to market our products and adversely affect our operating results.  In addition, the failure of our current or future collaborators to comply with these regulations and similar regulations in foreign jurisdictions would limit our ability to fully commercialize fidaxomicin and any other product we may develop or acquire in the future.

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, in addition to FDA restrictions, 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;

·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. 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. 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.

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Recent healthcare reform legislation has also strengthened these laws.  For example, the recently enacted PPACA, among other things, amended 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 these laws and we recently increased our compliance resources in connection with the commercial launch of DIFICID.  However, because of the far-reaching nature of these laws, there can be no assurance that we will 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.

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

Our and our collaborators’ sales of DIFICID are, and sales of any future approved products will be, 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, which are increasingly challenging prices charged and the cost-effectiveness of medical products.  These practices maybe further exacerbated by future healthcare reform measures.  In addition, 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 products, including DIFICID.

We have licensed rights to develop and commercialize fidaxomicin in Europe and certain other countries to APEL and Astellas Japan.  In the event we or our collaborators, including APEL or Astellas Japan, seek approvals to market fidaxomicin in other non-U.S. territories, we or our collaborators including APEL and Astellas Japan, will need to work with the government-sponsored healthcare entities in Europe and each other foreign country, 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 fidaxomicin or any future products to control costs or to affect levels of use of the product.

We cannot predict the availability or level of coverage and reimbursement for DIFICID or any future approved product.  If third-party coverage and reimbursement is not available or is available only to limited levels, we may not be able to commercialize DIFICID or any other products successfully or at all, which would materially harm our business and prospects.

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.

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 we are not able to obtain FDA approval for any desired future indications for DIFICID or any future approved products, our ability to market and sell such products will be limited and our business may be adversely affected.

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

Our and our collaborators’ ability to sell our product candidates outside of the United States is 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.  Regulatory requirements can vary widely from country to country and could delay the introduction of our products in those countries.  Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval will be obtained in any other country.  In addition, our 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. 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.

Other than DIFICLIR’s approval by the EMA in Europe, 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 products.

We face an inherent risk of product liability lawsuits related to the testing of our product candidates, and face an even greater risk related to the sale of commercial products, such as DIFICID.  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 a product liability claim, we may incur substantial liabilities.  Regardless of merit or eventual outcome, product liability claims may result in:

·significant litigation costs;

·substantial monetary awards to or costly settlement with patients;

·product recalls and/or an inability to continue marketing our products;

·decreased demand for our product;

·injury to our reputation;

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

·withdrawal of clinical trial participants;

·loss of revenues; and

·the inability to commercialize our product candidates.

Our ability to market products is dependent upon physician and patient perceptions of us and the safety and quality of our products.  We could be adversely affected if we or our products and product candidates are subject to negative publicity.  We could also be adversely affected if any of our products or product candidates or any similar products distributed by other companies prove to be, or are asserted to be, harmful to patients.  Also, because of our dependence upon physician and patient perceptions, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similar products distributed by other companies could have a material adverse impact on our results of operations.

We have product liability insurance that covers our commercial product up to a $10.0 million annual aggregate limit as well as 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.  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.

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

We may require additional capital to fully commercialize DIFICID and any future products for which we obtain regulatory approval or acquire or in-license.  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 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 scale back our commercialization activities for DIFICID in the United States or significantly delay, scale back or discontinue the development of one or more of our product candidates or research and development initiatives.  We also could be required to:

·seek collaborators for one or more of our current or future products or 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 DIFICID, and we are unable to raise additional capital or are unable to effectively collaborate with additional partners for the commercialization of DIFICID, we will not generate significant revenues from sales of this product and our business will be materially harmed.

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.

In April 2012 we announced the termination of each of John D. Prunty, our then Senior Vice President, Chief Financial Officer and Corporate Secretary, and Youe-Kong Shue, Ph.D., our Vice President, the removal of Dr. Michael Chang as the Chairman of our Board of Directors and our request that Dr. Chang to resign his directorship at Optimer.  We have appointed Kurt M. Hartman, our General Counsel, Chief Compliance Officer and Senior Vice President, Access, as our acting Chief Financial Officer while we engage in a search for a permanent Chief Financial Officer and we are continuing to evaluate our need for additional personnel.  We can give no assurance that we will be able to hire qualified replacements for the positions that we need to fill or that we will not experience disruptions in key functions while we seek to fill key positions, and there may be significant costs associated with the recruiting, hiring and retention of officers and employees for the open positions. The announcement of the terminations and the requested resignation of Dr. Chang may also have other adverse impacts on our business. If we lose additional key employees or if our management team is not able to effectively manage us through these events, our business, financial condition, and results of operations may be adversely affected.

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.

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As a result of events we are still investigating, it is possible that we and certain of our current and former employees and directors may be named as defendants in future litigation or as subjects of government investigations or future enforcement proceedings that could result in substantial costs and divert management’s attention.*

In April 2012 we announced the termination of each of Mr. Prunty and Dr. Shue, the removal of Dr. Chang as the Chairman of our Board of Directors and our request that Dr. Chang resign his directorship at Optimer.  Dr. Chang’s removal as Chairman resulted from our Board of Directors’ views as to his actions in his capacity as Optimer’s representative on the Board of Directors of OBI as well as his failure to identify and effectively manage compliance, record keeping and conflict of interest issues in connection with OBI’s grant to Dr. Chang of 1.5 million shares of OBI.  The terminations of Mr. Prunty and Dr. Shue were related to the belief of our Board of Directors that both individuals failed to follow proper procedures when they became aware of potential issues related to the issuance of the OBI shares to Dr. Chang.

While the full facts are not yet known to us and are the subject of our own investigation, these events could potentially result in lawsuits being filed against us and certain of our employees and directors or we and our employees and directors could be the subject of governmental investigations or enforcement proceedings. In the event any such lawsuit is filed or investigation or proceeding is instigated there is no guarantee that we will be successful in defending it. Also, our insurance coverage may be insufficient, our assets may be insufficient to cover any amounts that exceed our insurance coverage, and we may have to pay damage awards or otherwise may enter into settlement arrangements in connection with such claims. A settlement of any such lawsuit could involve the issuance of common stock or other equity, which may result in dilution to existing stockholders. Any payments or settlement arrangements could have material adverse effects on our business, operating results, and financial condition. Even if any claims against us are not successful, any related litigation, investigation or proceeding could result in substantial costs and significantly and adversely impact our reputation and divert management’s attention and resources, which could have a material adverse effect on our business, operating results and financial condition. In addition, any such lawsuit, investigation or proceeding may make it more difficult to finance our operations, obtain certain types of insurance (including directors and officers liability insurance), and attract and retain qualified executive officers, other employees and directors.

We recently established a sales and marketing organization and have little 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 have very limited experience commercializing pharmaceutical products on our own. In order to commercialize 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, pharmacovigilance, managerial and other non-technical capabilities. We established the commercial organization primarily in New Jersey, and our bicoastal organizational structure could create management challenges. The establishment and development of our own sales force to market DIFICID has been and will continue to be expensive and time consuming and could delay any product launch, and we cannot be certain that we will be able to successfully maintain this capability or successfully adapt it to commercialize and future products we may develop or acquire. 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 also 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 APEL in the APEL territory and Cubist in the United States. In the event we are unable to further develop and maintain our own marketing and sales capabilities or collaborate with a third-party marketing and sales organization, we would not be able to fully commercialize any product, including DIFICID, which would negatively impact our ability to generate product revenues.

We substantially increased the size of our organization, and we may experience difficulties in managing growth.*

We had 283 employees as of April 30, 2012.  The commercial launch of DIFICID required us to expand our managerial, operational, marketing, sales, financial and other resources.  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.  To effectively manage our operations growth and various projects, we must:

·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;

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·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.  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 API, for fidaxomicin and in June 2011, we entered into a manufacturing services agreement with Patheon to manufacture and supply certain fidaxomicin products, including fidaxomicin.  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.

Our ability and that of our collaborators to develop and commercialize fidaxomicin 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 fidaxomicin API or drug product from our current suppliers, and an inability to develop alternative sources for such supply, could adversely affect our ability to obtain fidaxomicin in a timely or cost effective manner to maximize product sales, and could result in a breach of our supply agreement with APEL or Astellas Japan 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 fidaxomicin API and rely on Patheon 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. The manufacturing facilities of Biocon and Patheon have been inspected and approved by the FDA for other companies’ drug products; however, none of Biocon’s or Patheon’s facilities have been inspected by the FDA for the manufacture of our drug supplies.  We or other third-party manufacturers of our products may be unable to comply with cGMP requirements and with other FDA, state, local and foreign regulatory requirements.  We and our collaborators have little control over third-party manufacturers’ compliance with these regulations and standards.  A failure to comply with these requirements by our third-party manufacturers, including Biocon 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, which would significantly harm our business and prospects.

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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 and generic antibiotic therapies. With respect to DIFICID, we face competition or will face competition from branded Vancocin Pulvules, generic vancomycin capsules, reconstituted intravenious vancomycin “slurry” for oral administration and  metronidazole.  In addition, we anticipate that DIFICID will compete with other antibiotic and anti-infective product candidates currently in development for the treatment of CDAD. For example, Cubist recently announced its intention to proceed with a Phase 3 clinical trial for its compounds, CB-183,315, as a potential treatment for 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 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.

DIFICID currently faces, and we anticipate it will continue to face, increasing competition in the form of generic versions of branded products of competitors that will lose their patent exclusivity.  For example, DIFICID currently faces steep competition from an inexpensive generic form of metronidazole in the United States.  In Europe, DIFICLIR will immediately face generic oral vancomycin competition.  DIFICID will also face competition in the United States from inexpensive generic oral vancomycin capsules, which were approved in April 2012 by the FDA. 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 and because vancomycin capsules may become available at 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 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.

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 fidaxomicin.  As a significant part of our growth strategy, we intend to commenrcialize, independently or through collaboaration with a partner additional hospital products. .  The success of this strategy depends upon our ability to identify, select and acquire pharmaceutical product candidates and products that fit into our development plans on terms that are acceptable to us. To supplement this strategy, we may also obtain rights to additional product candidates from third parties through acquisition or in-licensing transactions.

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

A significant portion of the research and development that we decide to conduct may involve 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.  We currently have exited basic research and are not seeking to identify potential product candidates through internal research programs.  We may seek to obtain rights to novel therapeutics from third parties.

We cannot be certain that we will identify any product candidates to co-develop, in-license or acquire.  If we do identify and enter into any such agreements regarding product candidates we cannot be certain such product candidates will produce commercially viable drugs that safely and effectively treat infectious diseases or other diseases.  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, 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, we will not be successful in developing a pipeline of potential product candidates to follow DIFICID, and our business prospects would be significantly harmed.

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

An important part of our business strategy is to continue to develop a pipeline of product candidates by acquiring or in-licensing products, businesses or technologies that we believe are a strategic fit for our business.  Future in-licenses or acquisitions, however, may entail numerous operational and financial risks, including:

·exposure to unknown liabilities;

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

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

·higher than expected acquisition and integration costs;

·increased amortization expenses;

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

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

·inability to retain key employees of any acquired businesses.

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

We rely on 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, we no longer maintain a controlling interest in OBI.  As a result, we 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 operations which could adversely affect the development and/or commercialization of our products and product candidates. Our recent termination of Dr. Shue, OBI’s president and chief executive officer and removal of Dr. Michael Chang as Chairman of our Board of Directors may also have a negative effect on our relationship with OBI and our ability to maximize the value of our ownership position in OBI or any rights we may have in OPT-822/821.

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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. There are also risks that post-approval clinical trials we agreed to conduct or otherwise plan to conduct with respect to DIFICID will not yield positive results, which would impair our ability to continue marketing DIFICID in the United States.

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.

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.  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.  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 currently 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 or maintain regulatory approval for or commercialize our product candidates.*

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

We and any CROs conducting clinical trials for us 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 or could prevent us from complying with post-approval study requirements.

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 or our ability to comply with post-approval study requirements could be jeopardized. 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 DIFICID and any future approved product 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.

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;

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·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

·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 or any future approved products will successfully be placed on the list of drugs covered by particular health plan formularies, nor can we predict the negotiated price for any future products, 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 or any future products 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.  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 products and product candidates and other hazardous compounds. We and our manufacturers are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials.  Although we believe that the safety procedures for handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials.  We currently have insurance coverage in the amount of approximately $250,000 for damage claims arising from contamination on our property.  These amounts may not be sufficient to adequately protect us from liability for damage claims relating to contamination.  If we are subject to liability exceeding our insurance coverage amounts, our business and prospects would be harmed.  In the event of an accident, state or federal authorities may also curtail our use of these materials and interrupt our business operations.

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

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.  Any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our commercialization activities or drug development programs.  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, the commercialization of our products may be harmed and the further development of our product candidates may be delayed.

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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 products and 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 and 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 situation outside the United States is even more uncertain.  Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property.  Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our licensed patents, our patents or in third-party patents.

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

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

·others may be able to make competing pharmaceutical formulations containing our product and product candidates or components of our product formulations that are either not covered by the claims of our owned 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 patents and patent applications or the pending patent applications and issued patents of our licensors;

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

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

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

·our pending patent applications or the pending patent applications and issued patents we own or license 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 products and 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 for any product.

We have 12 pending patent applications and five issued patents related to fidaxomicin from the United States Patent and Trademark Office or U.S.P.T.O.

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

·composition of matter for fidaxomicin;

·pharmaceutical composition of fidaxomicin and use for CDI;

·polymorphic forms (issued in U.S.);

·composition comprising a polymorphic form (issued in the U.S.);

·manufacturing processes (issued in the U.S.);

·treatment of diseases with fidaxomicin (issued in the U.S.);

·formulation; and

·fidaxomicin related compounds, including metabolites, e.g. OP-1118 (issued in the U.S.).

If we are unable to obtain a composition of matter patent, our competitors, including generic drug companies, may be able to design other similar formulations of the active ingredient of fidaxomicin.  Furthermore, our competitors, including generic drug companies, may be able to design around our existing patents and pending applications which may issue as patents for fidaxomicin. As a result, our competitors may be able to develop competing products.

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.  We may be dependent on Par to provide technical support for patent applications relating to fidaxomicin.  If Par fails to adequately protect fidaxomicin with issued patents, our business and prospects would be significantly harmed.

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 Par 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 our 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 APEL and Astellas Japan pursuant to their first right to enforce the patents licensed to them in the APEL territory and Japan, respectively, 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 APEL and Astellas Japan, 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, these searches may not have identified all third-party patents relevant to this product and we have not conducted an extensive search of patents issued to third parties with respect to our 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”, and “Optimer Pharmaceuticals”, 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 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 continue to 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;

·actual or anticipated variations in our quarterly operating results, including fidaxomicin sales and royalties, and our quarterly expenses;

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·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 or product candidates, clinical trials, manufacturing process or marketing and sales activities;

·failure of fidaxomicin to achieve commercial success;

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

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

·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 APEL and Astellas Japan, 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;

·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;

·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;

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·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.

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. 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.

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;

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·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	(1)	Certificate of Incorporation of Optimer Pharmaceuticals, Inc., as amended and restated.
3.2		Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Optimer Pharmaceuticals, Inc. (7)
3.3	(3)	Bylaws of Optimer Pharmaceuticals, Inc., as amended.
4.1	(2)	Common Stock Certificate of Optimer Pharmaceuticals, Inc.
4.2	(4)	Registration Rights Agreement, dated October 23, 2007, by and between Optimer Pharmaceuticals, Inc. and the purchasers listed on the signature pages thereto.
10.1	(5)	Optimer Pharmaceuticals, Inc. Incentive Compensation Plan.
10.2+	(5)	Optimer Pharmaceuticals, Inc. Amended and Restated Severance Benefit Plan.
10.3	(6)	Separation Agreement between Optimer Pharmaceuticals, Inc. and Tessie M. Che, dated January 10, 2012.
10.4	*	Collaboration and License Agreement between Optimer Pharmaceuticals, Inc. and Astellas Pharma Inc.
10.5	*	Supply Agreement between Optimer Pharmaceuticals, Inc. and Optimer Luxembourg 2 S.à r.l.
10.6	*	Letter Agreement between Optimer Pharmaceuticals, Inc. and Optimer Biotechnology, Inc., dated January 31, 2012.
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 portion of this exhibit.  Omitted portions have been filed separately with the Securities and Exchange Commission.

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

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

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

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

(5)Filed with Registrant’s Annual Report on Form 18-K on February 13, 2012.

(6)Filed with Registrant’s Annual Report on Form 10-K on March 8, 2012.

(7)Filed with Registrant’s Current Report on Form 8-K on May 16, 2012.

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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: May 10, 2012	By:	/s/ Kurt M. Hartman
	Name:	Kurt M. Hartman
	Title:	General Counsel, Chief Compliance Officer, Senior Vice-President and Chief Financial Offier
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

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EX-10.4

Exhibit 10.4

***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

COLLABORATION AND LICENSE AGREEMENT

This COLLABORATION AND LICENSE AGREEMENT (“Agreement”) is entered into on March 29, 2012 (the “Effective Date”) between OPTIMER PHARMACEUTICALS, INC., a company organized under the laws of the State of Delaware (“Optimer”), having a principal place of business at 10110 Sorrento Valley Rd., Suite C, San Diego, California 92121, and Astellas Pharma Inc., a company organized under the laws of Japan (“Partner”), having a principal place of business at 2-3-11 Nihonbashi-Honcho, Chuo-ku, Tokyo, 103-8411, Japan.

WHEREAS

WHEREAS, Optimer has developed fidaxomicin for the treatment of Clostridium difficile infection and owns or controls certain patents, know-how and other intellectual property relating to fidaxomicin;

WHEREAS, Partner is engaged in the research, development and commercialization of pharmaceutical products; and

WHEREAS, Partner desires to obtain from Optimer, and Optimer desires to grant to Partner, certain exclusive rights and licenses to develop and commercialize Products in the Territory (each as hereinafter defined), subject to the terms and conditions of this Agreement.

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

ARTICLE 1

DEFINITIONS

1.1“Acquisition Transaction” shall have the meaning set forth in Section 14.1.

1.2“Affiliate” of a Party shall mean any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, as the case may be, but for only so long as such control exists.  As used in this Section 1.2 and in Section 1.62, “control” shall mean (a) to possess, directly or indirectly, the power to direct the management or policies of an entity, whether through ownership of voting securities, by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of more than fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting share capital or other equity interest in such entity.

1.3“Alliance Manager” shall have the meaning set forth in Section 3.3.

1.4“APEL” shall mean Astellas Pharma Europe Limited, an Affiliate of Partner.

1.5“APEL Agreement” shall mean that certain Collaboration and License Agreement between APEL and Optimer dated 2 February, 2011, as amended in accordance with its terms.

1.6“APEL Territory” shall mean the Territory as defined in the APEL Agreement.

1.7“API” shall mean the active pharmaceutical ingredient of the Existing Product.

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

1.9“Audit Disagreement” shall have the meaning set forth in Section 7.7.

1.10“Bankruptcy Laws” shall have the meaning set forth in Section 12.4.

1.11“Bundled Product” shall mean any pharmaceutical product containing or comprising a Compound as the sole active pharmaceutical ingredient sold together with another pharmaceutical product or device that does not contain or comprise a Compound for a single price including fixed combinations.

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

1.13“Calendar Quarter” shall mean a period of three (3) consecutive months during a Calendar Year beginning on and including January 1st, April 1st, July 1st or October 1st.

1.14“Calendar Year” shall mean a period of twelve (12) consecutive months beginning on and including January 1st.

1.15“CDI” shall mean Clostridium difficile infection or Clostridium difficile-associated diarrhea (CDAD) in humans.

1.16“Change of Control Event” shall mean that Optimer (a) completes a transaction in which Optimer merges or consolidates with any other entity (other than a wholly-owned subsidiary of Optimer); or (b) effects any other transaction or series of transactions (other than a listing on a public recognized stock exchange or fund raising from existing or new

2

investors in the ordinary course of business), such that in either case of clause (a) or (b) the stockholders of Optimer immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving entity following the closing of such merger, consolidation, other transaction or series of transactions and where in the case of (a) or (b) the acquiring entity is (i) a […***…] or (ii) […***…].

1.17“CMC” shall mean chemistry, manufacturing and controls.

1.18“Commercialization Plan” shall have the meaning provided in Section 5.1(b).

1.19“Commercially Reasonable Efforts” shall mean, with respect to a Product, those efforts and resources normally devoted by a Party or its Affiliates for the development or commercialization of a similarly situated anti-infective pharmaceutical product at a similar stage of development or commercialization, taking into account relative safety and efficacy, product profile, the competitiveness of the marketplace and the market potential of such product the nature and extent of market exclusivity, including patent coverage and regulatory data protection, and the achievement of an optimum price and reimbursement status of such product as determined on the basis of the Territory.  The level of effort and resources may be different for different markets within the Territory and may change over time, reflecting changes in the status of the Product and the market(s) in the Territory. In the case of Partner, the fact that a Product is in-licensed, rather than developed internally by Partner or its Affiliates, shall not affect the application of the foregoing standard.

1.20“Competing Entity” shall have the meaning provided in Section 2.5(c).

1.21“Competitive Product” shall mean, apart from the Existing Product, (a) any product containing a compound, […***…] which compound is being developed for, or has received Regulatory Approval for, CDI and (b) any product containing a Compound.

1.22“Compound” shall mean […***…] or any salt, hydrate, solvate, polymorph, stereo-isomer, ester, chelate, clathrate, acid, base, epimer, enantiomer, crystalline form, metabolite or prodrug or any other non-covalent derivative or crystalline form thereof.

***Confidential Treatment Requested

3

1.23““Confidential Information” shall have the meaning set forth in Section 8.1

1.24Confidentiality Agreement” shall mean that certain agreement dated October 26, 2011 between Optimer and Partner.

1.25“Control” (including any variations such as “Controlled” and “Controlling”) shall mean with respect to any Information, Data, Patent or other intellectual property rights, possession by a Party of the ability (whether by ownership or license, other than pursuant to this Agreement) to grant the applicable license under this Agreement, without violating the terms of an agreement with a Third Party.

1.26“Data” shall mean any and all scientific, technical or test data pertaining to Product(s) (provided, that if any such scientific, technical and/or test data pertains to Product(s) and something other than Product(s), then only such scientific, technical and test data that pertains to Product(s) and not to something else) that is generated by or under the authority of Partner or its Sublicensees or by or under the authority of Optimer or Optimer Current Affiliates at any time before or after the Effective Date or by or under the authority of any Third Party licensee of Optimer outside the Territory after the Effective Date, including research data, clinical pharmacology data, CMC data (including analytical and quality control data and stability data), preclinical data, clinical data and/or all submissions made in association with an IND or MAA filed in or outside the Territory with respect to such Product(s), in each case to the extent such data either (a) is Controlled by Optimer on the Effective Date or (b) comes within a Party’s Control during the Term.

1.27“Develop” shall mean to develop (including clinical, non-clinical and CMC development), analyze, test and conduct preclinical, clinical and all other regulatory trials for a Compound or Product (but excluding any Post-Marketing Studies of a Product), as well as any and all activities pertaining to new indications, pharmacokinetic studies and all related activities including work on new formulations, new methods of treatment and CMC activities including new manufacturing methods.  “Developing” and “Development” shall have correlative meanings.

1.28“Development Plan” shall have the meaning provided in Section 4.1(a).

1.29“Disclosing Party” shall have the meaning set forth in Section 8.1.

1.30“Dominating Patent Rights” shall have the meaning set forth in Section 6.3(d).

1.31“Excluded Claim” shall have the meaning set forth in Section 13.3(f).

1.32“Executives” shall have the meaning provided in Section 3.1(d).

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1.33“Existing Product” shall mean that certain pharmaceutical product Controlled by Optimer as of the Effective Date that is formulated as a tablet for oral administration and contains 200 milligrams of Compound as the sole active pharmaceutical ingredient.

1.34“Field” shall mean the diagnosis, prevention and treatment of any disease or condition in humans, including CDI.

1.35“First Commercial Sale” shall mean, on a Product-by-Product basis, the first bona fide, arm’s length sale of a Product in the Territory following receipt of Regulatory Approval of such Product in the Territory.  Sales of a Product for registration samples, compassionate use sales, named patient use and inter-company transfers to Affiliates of a Party will not constitute a First Commercial Sale.

1.36“Fiscal Half Year” shall mean a period of six (6) consecutive months beginning on and including April 1st or October 1st, provided, that the first Fiscal Half Year shall be the period beginning on the Effective Date and ending on March 31st.

1.37“Floor” shall have the meaning set forth in Section 6.3(d).

1.38“GAAP” shall mean generally accepted accounting principles in the United States, or internationally, as appropriate, consistently applied and shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that a Party use IFRS.

1.39“Generic Entry” shall have the meaning set forth in Section 6.3(e).

1.40“Generic Product” shall mean any product that is introduced in the Territory by an entity other than Partner or its Affiliate or Sublicensee which contains […***…] as contained in a Product sold by Partner or its Sublicensee […***…].

1.41“IND” shall mean any Investigational New Drug application, as defined in Title 21 of the Code of Federal Regulations, on file with the FDA before the commencement of clinical trials of the applicable Product in humans, or any comparable filing with any relevant Regulatory Authorities in the Territory.

1.42“Indemnitee” shall have the meaning set forth in Section 11.3.

1.43“Indemnitor” shall have the meaning set forth in Section 11.3.

***Confidential Treatment Requested

5

1.44“Information” shall mean information, ideas, inventions, discoveries, concepts, formulas, practices, procedures, processes, methods, knowledge, know-how, trade secrets, technology, inventories, machines, techniques, development, designs, drawings, computer programs, skill, experience, documents, apparatus, results, clinical and regulatory strategies, documentation, information and submissions pertaining to, or made in association with, filings with any Regulatory Authority, data, including pharmacological, toxicological and clinical data, analytical and quality control data, manufacturing data and descriptions, patent and legal data, market data, financial data or descriptions, devices, assays, chemical formulations, specifications, material, compositions of matter, product samples and other samples, physical, chemical and biological materials and compounds, and the like, in written, electronic or other form, now known or hereafter developed, whether or not patentable.

1.45“Inventions” shall mean any discovery or invention, whether or not patentable, made by a Party or its Affiliates or its or their respective employees, agents or independent contractors during the course of Development, Manufacturing, regulatory or commercial activities with respect to Compounds or Products in the Field in the Territory (and, if Partner or its Affiliates or their respective employees, agents or independent contractors performs any such activities pursuant to this Agreement outside the Territory, either alone or jointly with Optimer or its Affiliates or their respective employees, agents or independent contractors, any discovery or invention made during such activities), in each case pursuant to this Agreement during the Term and solely to the extent such discovery or invention relates to Compounds or Products in the Field, together with all intellectual property rights relating thereto.

1.46“Joint Inventions” shall have the meaning set forth in Section 9.2.

1.47“Joint Patents” shall have the meaning set forth in Section 9.3(b).

1.48“Joint Steering Committee” or “JSC” shall have the meaning set forth in Section 3.1.

1.49“Letter Agreement” shall mean that certain letter agreement of even date herewith by and between Optimer and Partner and all Exhibits thereto.

1.50“Licensed Know-How” shall mean (a) Information (including Data) that Optimer or any Optimer Current Affiliate Controls as of the Effective Date or during the Term, which Information is necessary or useful to Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products (including any Compound contained therein), and(b) if API is supplied by Optimer as Supplied Product, Information (including Data) that Optimer or any Optimer Current Affiliate Controls as of the Effective Date or during the Term, which Information is necessary or useful to tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products, in each case (a) and (b) in the Field in the Territory, including any replication or any part of such Information and the non-exhaustive list of Information included in the Licensed Know-How as of the Effective Date that is set out in the

6

Letter Agreement.  For purposes of clarification, “Licensed Know-How” shall include all OPT-80 Data (as defined in the PAR Agreement) Controlled by Optimer.

1.51“Licensed Patents” shall mean (a) all Patents that Optimer or any Optimer Current Affiliate Controls as of the Effective Date or during the Term, which Patents are necessary or useful to Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products (including any Compound contained therein), and (b) if API is supplied by Optimer as Supplied Product, all Patents that Optimer or any Optimer Current Affiliate Controls as of the Effective Date or during the Term, which Patents are necessary or useful to tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products, in each case (a) and (b) in the Field in the Territory including, but not limited to, those Patents listed on EXHIBIT A of this Agreement.

1.52“Licensed Technology” shall mean the Licensed Know-How and Licensed Patents.

1.53“Losses” shall have the meaning set forth in Section 11.1.

1.54“MAA” shall mean a marketing authorization application or equivalent application, and all amendments and supplements thereto, filed with the applicable Regulatory Authority in the Territory.

1.55“MAA Approval” shall mean, with respect to each country in or outside the Territory for a particular Product, approval by the applicable Regulatory Authority in such country (which, in the Territory, shall be the MHLW) of the MAA for such Product filed in such country.  It is understood that, as used herein, MAA Approval does not include pricing or reimbursement approval.

1.56“Manufacture” shall mean all activities related to the manufacturing of a pharmaceutical product, or any ingredient thereof, including manufacturing Supplied Product or supplies for Development, manufacturing of Supplied Product for commercial sale, in-process and semi-finished product testing, release of Supplied Product or any component or ingredient thereof, quality assurance activities related to manufacturing and release of Supplied Product, ongoing stability tests and regulatory activities related to any of the foregoing.  “Manufactured” or “Manufacturing” shall have correlative meaning.

1.57“Manufacturing Transition Plan” shall have the meaning set forth in Section 2.6(b).

1.58“Materials” shall have the meaning set forth in Section 4.6.

1.59“MHLW” shall mean the Ministry of Health, Labour and Welfare, or any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products in the Territory.

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1.60“Net Sales” shall mean, with respect to any Product, the gross amounts invoiced for sales or other dispositions of such Product by or on behalf of Partner or its Sublicensees, as applicable, to Third Parties (other than Sublicensees) less the following deductions to the extent included in the gross invoiced sales price for such Product or otherwise directly paid or incurred by Partner or its Sublicensees, as applicable, with respect to the sale or other disposition of such Product:

(a)normal and customary trade and quantity discounts actually allowed and properly taken directly with respect to sales of such Product (provided that such discounts are not applied disproportionately to such Product when compared to the other products of Partner or its Sublicensee, as applicable);

(b)credits or allowances given or made for rejection of or return of previously sold Products or for retroactive price reductions and billing errors;

(c)rebates and chargeback payments granted to managed health care organizations, pharmacy benefit managers (or equivalents thereof), national, state/provincial, local, and other governments, their agencies and purchasers and reimbursers, or to trade customers;

(d)costs of freight, insurance, and other transportation charges directly related to the distribution of such Product;

(e)taxes, duties or other governmental charges (including any tax such as a value added or similar tax, other than any taxes based on income) levied on or measured by the billing amount for such Product, as adjusted for rebates and refunds; and

(f)an allowance of up to […***…] for bad debts consistently applied in accordance with GAAP.

Upon any sale or other disposition of any Product that should be included within Net Sales for any consideration other than exclusively monetary consideration on bona fide arm’s-length terms, then for purposes of calculating Net Sales under this Agreement, such Product shall be deemed to be sold exclusively for money at the average sales price during the applicable reporting period generally achieved for such Product in the country in which such sale or other disposition occurred when such Product is sold alone and not with other products.

In no event will any particular amount, identified above, be deducted more than once in calculating Net Sales.  Sales of a Product between Partner and its Sublicensees for resale shall be excluded from the computation of Net Sales, but the subsequent resale of such Product to a Third Party shall be included within the computation of Net Sales.  Any free-of-charge disposal or use of a Product for development, regulatory or marketing purposes, such as clinical trials, compassionate use or indigent patient programs, shall not be deemed a sale or disposition for purposes of calculating Net Sales. If any Product is sold as a Bundled Product for a single invoiced amount (a

***Confidential Treatment Requested

8

“Combination Sale”), the Net Sales amount for the Product sold in such a Combination Sale shall be that portion of the gross amount invoiced for such Combination Sale (less all permitted deductions) determined as follows:

Except as provided below, the Net Sales amount for a Combination Sale shall equal the gross amount invoiced for the Combination Sale, reduced by the permitted deductions (the “Net Combination Sale Amount”), multiplied by the fraction A/(A+B), where:

[…***…].

In the event that the Compound Component included in a Bundled Productis sold as a separate product in the Territory, but the Other Component included in such Bundled Productis not sold separately in the Territory, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Net Combination Sale Amount by the fraction A/C where:

[…***…].

In the event that the Compound Component included in a Bundled Productis not sold as a separate product in the Territory, but the Other Component included in such Bundled Productis sold separately in the Territory, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Net Combination Sale Amount by the fraction (C-D)/C, where:

[…***…].

Where the calculation of Net Sales resulting from a Combination Sale in the Territory cannot be determined by any of the foregoing methods, the calculation of Net Sales for such Combination Sale shall be that portion of the Net Combination Sale Amount reasonably determined in good faith by mutual agreement of the Parties as properly reflecting the relative value of the Compound Component included in the Bundled Product and the value of the Other Component(s) included in the Bundled Product.

***Confidential Treatment Requested

9

1.61“Notice Date” shall have the meaning set forth in Section 13.3(b).

1.62“Optimer Current Affiliate” shall mean any entity that is (a) an Affiliate of Optimer as of the Effective Date or (b) any subsidiary that is controlled (as the term is defined in Section 1.2) by Optimer at any time before or after the Effective Date.

1.63“Optimer Europe” shall mean Optimer Luxembourg 2 S.à r.l. and any entity succeeding to the rights and/or obligations of such company under the Supply Agreement.

1.64“Optimer Indemnitees” shall have the meaning set forth in Section 11.1.

1.65“Optimer Manufacturing Technology” shall have the meaning set forth in Section 2.6(b).

1.66“PAR” shall mean Par Pharmaceutical, Inc.

1.67“PAR Agreement” shall mean that certain Prospective Buy-Back Agreement, dated January 19, 2007, by and between Optimer and PAR, as amended in accordance with its terms.

1.68“PAR Collaboration Agreement” shall mean that certain Collaboration Agreement, dated April 29, 2005, by and between Optimer and PAR, as amended in accordance with its terms.

1.69“PAR Tripartite Agreement” shall have the meaning provided in Section 6.3(b).

1.70“Partner Know-How” shall mean Data that Partner or any of its Affiliates Controls during the Term, which Data is necessary or useful to make, have made, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products (including any Compound contained therein) in the Field, including any replication or any part of such Data and/or Information and, for the purposes of the licenses under Section 12.3(b), Information (including Data) generated by or on behalf of Partner or any of its Sublicensees in the course of Development, registration, keeping, use, sale, offer for sale, disposal of, offer for disposal of or import of Products in the Field in the Territory.

1.71“Partner Manufacturing Notice” shall have the meaning set forth in Section 2.6(b).

1.72“Partner Patents” shall mean all Patents that Partner or any of its Affiliates Controls during the Term, which Patents (a) are filed in relation to Inventions made by employees, agents or independent contractors of Partner or its Affiliates, and (b) are necessary or useful to make, have made, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products (including any Compound contained therein) in the Field.

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1.73“Partner Technology” shall mean the Partner Know-How and Partner Patents.

1.74“Party” shall mean Optimer or Partner individually, and “Parties” shall mean Optimer and Partner collectively.

1.75“Patent(s)” shall mean (a) all patents, certificates of invention, applications for certificates of invention, priority patent filings and patent applications, and (b) any renewal, division, continuation (in whole or in part), or request for continued examination of any of such patents, certificates of invention and patent applications, and any all patents or certificates of invention issuing thereon, and any and all reissues, reexaminations, extensions, restorations by existing or future extension or restoration mechanisms, divisions, renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing.

1.76“Pharmacovigilance Agreement” shall have the meaning provided in Section 4.2(d).

1.77“Phase I Clinical Trial” shall mean a clinical trial of a Product in humans that would provide for first testing of a Product in humans and would satisfy the requirements of 21 C.F.R. §312.21(a) or analogous regulatory requirements in the Territory.

1.78“Phase III Clinical Trial” shall mean a pivotal clinical trial of a Product conducted in human patients designed to ascertain efficacy and safety of such Product for the purpose of submitting an application for Regulatory Approval to the competent Regulatory Authority in the Field in the Territory.

1.79“Post-Marketing Studies” shall have the meaning set forth in Section 5.1(c).

1.80“Product” shall mean any pharmaceutical product containing or comprising a Compound as the sole active pharmaceutical ingredient, in oral […***…] formulation only. For clarification, Products containing or comprising different dosages of the same formulation of a Compound (for example, the Existing Product and […***…]) and/or Products containing or comprising different formulations of the same dosage of a Compound (for example, the Existing Product and […***…]) shall be different Products.

1.81“Receiving Party” shall have the meaning set forth in Section 8.1.

1.82“Regulatory Approval” shall mean any and all approvals (including price and reimbursement approvals, if required), licenses, registrations, or authorizations of Regulatory

***Confidential Treatment Requested

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Authorities in any country that are necessary for the manufacture, use, storage, import, transport and/or sale of a Product in the Field in such country.

1.83“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 the Field in the Territory.  If governmental approval is required for pricing or reimbursement for a Product to be reimbursed by national health insurance (or its local equivalent), “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.

1.84“Representatives” shall have the meaning provided in Section 14.1.

1.85“Royalty Term” shall have the meaning set forth in Section 6.3(e).

1.86“Sales Report” shall have the meaning set forth in Section 7.1.

1.87“SEC” shall have the meaning set forth in Section 8.5(a).

1.88“Standstill Period” shall have the meaning set forth in Section 14.1.

1.89“Sublicensee” shall mean an Affiliate of Partner or a Third Party to whom Partner grants a right (a) to Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of or import a Product in the Field in the Territory, or (b) to the extent a license under the Licensed Technology is necessary in order for Partner to tablet or otherwise formulate API into Products or to blister, bottle (if applicable) or package API into Products, to tablet, have tableted or otherwise formulate or have formulated API into Products, or to blister, bottle (if applicable) or package API into Products in the Field in the Territory, in each case beyond the mere right to purchase a Product from Partner or its Affiliates, and “Sublicense” shall mean an agreement or arrangement between Partner and a Sublicensee granting such rights.

1.90“Supplied Product” shall have the meaning provided in the Supply Agreement.

1.91“Supply Agreement” shall have the meaning set forth in Section 5.2.

1.92“Term” shall have the meaning set forth in Section 12.1.

1.93“Terminated Supplied Product” shall have the meaning set forth in Section 2.6(a).

1.94“Territory” shall mean Japan.

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1.95“Third Party” shall mean any person or entity other than Optimer, Partner and their respective Affiliates.

1.96“Third Party Claims” shall have the meaning set forth in Section 11.1.

1.97“United States” or “U.S.” shall mean the United States of America, including its territories and possessions and the District of Columbia.

1.98“Valid Claim” shall mean (a) an unexpired claim of an issued patent within the Licensed Patents or Joint Patents which has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (b) a claim of a pending patent application; provided, however, that if a claim of a pending patent application shall not have issued within […***…] after the earliest filing date from which such claim takes priority, such claim shall not constitute a Valid Claim for the purposes of this Agreement after such […***…] deadline unless and until a patent issues with such claim, and […***…]; provided further, that, for clarity, […***…].

1.99“Withdrawal Notice” shall have the meaning set forth in Section 3.1(e).

ARTICLE 2

GRANT OF LICENSE

2.1License Grant to Partner.  Subject to the terms and conditions of this Agreement, Optimer hereby grants to Partner an exclusive (even as to Optimer and its Affiliates), royalty-bearing license and sublicense, with the right to sublicense in accordance with Section 2.2, under the Licensed Technology and Optimer’s interest in any Joint Patents, solely to (a) register (including conducting such clinical trials as may be required to support and maintain such registrations) Products with a Regulatory Authority, and (b) Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products, in each case (a) and (b) in the Field in the Territory during the Term. Additionally, subject to the terms and conditions of this Agreement and the Supply Agreement, if API is supplied by Optimer as Supplied Product, then, to the extent a license under the Licensed Technology is necessary in order for Partner to tablet or otherwise formulate API into Products and to blister, bottle (if applicable) and package API into Products, Optimer shall and hereby does grant to Partner a non-exclusive license and sublicense, with the right to sublicense in accordance with Section 2.2, under the Licensed Technology and Optimer’s interest in any Joint Patents to tablet, have tableted or otherwise formulate or have formulated API into Products and to blister, bottle (if applicable) and package API into Products, in each case in the Field in the Territory.  Additionally it is understood and

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agreed that Partner shall have the right to […***…], for the Development (by Partner or any Partner Affiliate) of Existing Product which is to be promoted, marketed and sold in the Field in the Territory, as may be agreed in writing by Optimer and in accordance with the terms of Article 4.

2.2Sublicenses by Partner.  Partner shall have the right to sublicense the rights granted to it under Section 2.1 in the Territory through multiple tiers of sublicenses, in each case only with the prior written consent of Optimer, which shall not be unreasonably withheld or delayed, and subject to compliance with this Section 2.2; provided, that Partner shall have the right, without the prior written consent of Optimer, to sublicense to contract sales organizations the right to promote Products in the Field in the Territory so long as such contract sales organizations perform, cumulatively, no more than […***…].  For clarity, Partner shall not have the right to subcontract the tableting or other formulation of API into Products or the blistering, bottling (if applicable) or packaging any Supplied Products into Products without the prior written consent of Optimer, which shall not be unreasonably withheld or delayed.  Any Sublicense shall be in writing and, with the exception of the financial terms, on substantially the same terms as this Agreement and, to the extent such Sublicense grants a sublicense of the rights licensed to Optimer under the PAR Agreement, shall be consistent with the terms of the PAR Agreement.  Partner shall be responsible for the acts or omissions of its Sublicensees in exercising rights under the Sublicenses which would constitute a breach hereunder.  Within ten (10) days after execution or receipt thereof, as applicable, Partner shall provide Optimer with a full and complete copy of each Sublicense granted (provided that Partner may redact any confidential information contained therein that is not necessary to disclose to ensure compliance with this Agreement).

2.3License Grant to Optimer.  Partner hereby grants to Optimer and its Affiliates an exclusive (even as to Partner and its Affiliates) license and sublicense, with the right to sublicense through multiple tiers of sublicenses, under the Partner Technology and Partner’s interest in any Joint Patents, solely to register (including conducting such clinical trials as may be required to support and maintain such registrations), Develop, keep, make, have made, use, sell, offer for sale, dispose of, offer to dispose of and import products that include a Compound, alone or in combination with any other active pharmaceutical ingredient, in any form or formulation, except as expressly licensed to Partner under Section 2.1, which license shall be fully-paid, perpetual and royalty-free, except that, to the extent that Partner would owe payments to a Third Party as a result of the practice by Optimer or any of its Affiliates or sublicensees of Partner Technology as provided in this Section 2.3, Partner will so advise Optimer, identifying the Partner Technology at issue and the payment obligations to such Third Party, and Optimer will be obligated to make such payments to such Third Party unless Optimer notifies Partner that it elects not to have such Partner Technology included in the license granted under this Section 2.3. Optimer shall be responsible for the acts or omissions of its sublicensees in exercising rights under the sublicenses which would constitute a breach hereunder. Within ten (10) days after execution or receipt thereof, as applicable, Optimer shall provide Partner with a full and

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complete copy of each sublicense granted by Optimer to a Third Party (provided that Optimer may redact any confidential information contained therein that is not necessary to disclose to ensure compliance with this Agreement).

2.4No Other Rights; Other Limitations. Except for the rights and licenses expressly granted in this Agreement, Optimer retains all rights under the Licensed Technology and its interest in any Joint Patents, and Partner retains all rights under the Partner Technology and its interest in any Joint Patents, and no rights shall be deemed granted by one Party to the other Party by implication, estoppel or otherwise.  Partner agrees not to practice any Licensed Technology or Optimer’s interest in the Joint Patents except to register (including conducting such clinical trials as may be required to support and maintain such registrations) Products with a Regulatory Authority, and Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products and, if API is supplied by Optimer as Supplied Product, tablet, have tableted or otherwise formulate or have formulated API into Products and blister, bottle (if applicable) and package API into Products, in each case in the Field in the Territory during the Term in accordance with the terms of this Agreement and the Supply Agreement, as applicable.  Partner further acknowledges that certain rights granted by Optimer to Partner under Section 2.1 with respect to the Licensed Technology were transferred from PAR to Optimer, or licensed by PAR to Optimer, pursuant to the PAR Agreement, and that such rights are granted subject to, and Partner (on behalf of itself and its Sublicensees) agrees to be bound by, all applicable terms and conditions of the PAR Agreement.  Optimer agrees not to practice any Partner Technology or Partner’s interest in any Joint Patents except (a) as expressly licensed to Optimer under Section 2.3, and (b) as provided in Section 12.3.

2.5Negative Covenant.

(a)Partner agrees that it will not, itself or with any of its Affiliates or any Third Party, in the Territory conduct any clinical trials, sales, marketing, promotion or distribution activities in respect of (i) any product containing a compound, […***…] which compound is being developed for, or has received Regulatory Approval for, CDI, or (ii) any product containing a Compound, in each case other than Products developed and commercialized pursuant to the terms and conditions of this Agreement.  The agreement set forth in this Section 2.5(a) will be in effect from the Effective Date until […***…].

(b)Except through rights granted to Partner, and subject to Section 2.5(c), Optimer agrees that it will not, itself or with any Optimer Affiliates or any Third Party, in the Territory conduct any clinical trials, sales, marketing, promotion or distribution activities in respect of a Competitive Product in the Field; provided, that this shall not apply to any product Developed or commercialized by Optimer or its Affiliate or any of their respective licensees in the exercise by Optimer of its right pursuant to Section 5.1(e) to convert to non-exclusive the license and sublicense granted under Section 2.1.

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(c)In the event that Optimer or any of its Affiliates is absorbed by or acquired by or merges with a Third Party, which Third Party or any of its affiliates is manufacturing, using, marketing, promoting, distributing, offering for sale, commercialising or selling a Competitive Product in the Field in the Territory (a “Competing Entity”), then Optimer shall […***…]; provided, that this shall not apply to any product Developed or commercialized by Optimer or its Affiliate or any of their respective licensees in the exercise by Optimer of its right pursuant to Section 5.1(e) to convert to non-exclusive the license and sublicense granted under Section 2.1.

The agreement set forth in Sections 2.5(b) and (c) will be in effect in the Territory from the Effective Date until royalties under Section 6.3(e) are no longer payable by Partner in the Territory.

2.6Manufacturing License Following Certain Terminations of the Supply Agreement.

(a)Coordination of Supply.  If either Party provides notice of termination of the Supply Agreement in its entirety or as to a particular Product in each case pursuant to Section 11.2(d) of the Supply Agreement, following provision of such notice, the Parties will discuss supply of Supplied Products and will use good faith efforts to coordinate obtaining the supply of Supplied Products for Partner and its Sublicensees in the Territory and for Optimer (including its Affiliates and other licensees) outside the Territory from one or more suppliers to enable the Parties to optimize supply costs of Supplied Products; provided, that in the case of termination of the Supply Agreement by either Party as to a particular Product pursuant to Section 11.2(d) thereof, the foregoing shall apply to Partner only with respect to supply of Supplied Products for incorporation into such terminated Product (any Supplied Product that is no longer to be supplied by Optimer Europe for any reason pursuant to this Section 2.6 if either Party terminates the Supply Agreement in its entirety or as to a particular Product in each case pursuant to Section 11.2(d) of the Supply Agreement being a “Terminated Supplied Product”).

(b)Manufacturing Right; Manufacturing Technology Transfer.  Partner shall notify Optimer in writing within […***…] following provision of notice of termination by either Party under Section 11.2(d) of the Supply Agreement if Partner plans to Manufacture itself or have Manufactured by its Affiliate or any Third Party such Terminated Supplied Product for the Territory pursuant to this Section 2.6(b) following termination of the Supply Agreement in its entirety or as to the applicable Product (such notice, a “Partner Manufacturing Notice”).  Promptly following the date of such Partner Manufacturing Notice, the Parties shall work together in good faith and expeditiously to agree to a plan for transitioning responsibility for Manufacturing of the applicable Terminated Supplied Products for the Territory to Partner or its Affiliate or designated Third Party contract manufacturer such that Partner or its Affiliate or designated Third Party contract manufacturer can Manufacture commercial quantities of such Terminated Supplied Products in compliance with Applicable

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Law and Regulatory Approvals upon termination under Section 11.2(d) of the Supply Agreement, or as soon as possible after such termination (the “Manufacturing Transition Plan”), and the Parties shall use commercially reasonable efforts and work diligently and expeditiously to implement such plan prior to the termination of the Supply Agreement or as soon as possible after such termination.  Such Manufacturing Transition Plan shall provide for the transfer by Optimer to Partner or its Affiliate or designated Third Party contract manufacturer all Optimer Manufacturing Technology and for Optimer to provide reasonable assistance to enable Partner or its Affiliate or designated Third Party contract manufacturer to Manufacture and supply the applicable Terminated Supplied Products in accordance with the license granted under Section 2.6(c), such transfer and assistance to be provided at Partner’s expense according to a budget included in such plan.  “Optimer Manufacturing Technology” shall mean all (x) Patents Controlled by Optimer or any Optimer Current Affiliates, including its rights under any Joint Patents and (y) Information Controlled by Optimer or any Optimer Current Affiliates in Optimer’s possession and/or that it can obtain by exercising its rights under its agreements with its Third Party manufacturers, in each case (x) and (y) that are necessary for the Manufacture of the applicable Terminated Supplied Products.

(c)Manufacturing License.  Upon the first to occur of:

(i)the commencement of the activities under the Manufacturing Transition Plan, to the extent provided in such Manufacturing Transition Plan; or

(ii)termination of the Supply Agreement by either Party in its entirety or as to a particular Product pursuant to Section 11.2(d) thereof, as applicable,

unless, in either such case, the Parties have agreed prior to the termination of the Supply Agreement under Section 2.6(a) to obtain the supply of Products for Partner and its Sublicensees in the Territory and for Optimer and its Affiliates and licensees outside the Territory from the same supplier(s), Optimer shall grant, and hereby grants effective upon such event described in Section 2.6(c)(i) or (ii) above to Partner, a non-exclusive, fully paid up license under the Optimer Manufacturing Technology to Manufacture itself or to have Manufactured by its Affiliate or any Third Party contract manufacturer the applicable Terminated Supplied Products solely for use and sale in the Field in the Territory in order to satisfy Partner’s and its Sublicensees’ requirements of Terminated Supplied Products.  Partner may not grant a sublicense under such license except to its Affiliate or to any designated Third Party contract manufacturer. The location of Manufacture of Terminated Supplied Products under this license is limited to the Territory, the United States of America, the location of Optimer’s Third Party manufacturers outside the Territory, locations in the APEL Territory in which APEL or its Affiliates or its Third Party manufacturers approved in accordance with the APEL Agreement have the right to Manufacture Supplied Products thereunder, or such other locations agreed by the Parties.  In the event that the Parties have agreed prior to the termination of the Supply Agreement under Section 11.2(d) thereof pursuant to Section 2.6(a) to obtain the supply of Products for Partner and its Sublicensees in the Territory and for Optimer and its Affiliates and licensees outside the

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Territory from the same supplier(s) but subsequently that arrangement terminates or expires, then (i) prior to such termination the Parties shall work together in good faith and expeditiously to agree a Manufacturing Transition Plan and the Parties shall use commercially reasonable efforts and work diligently and expeditiously to implement such plan prior to the expiration or termination of such supply arrangement, and (ii) the license in this Section 2.6(c) shall be effective on the first to occur of the commencement of the activities under such Manufacturing Transition Plan, to the extent provided in such Manufacturing Transition Plan, or the date of such termination.  For clarity, (1) in no event shall Partner have the right to obtain a license under the Optimer Manufacturing Technology upon any termination of the Supply Agreement other than as expressly set forth herein, and (2) in the event of any termination by either Party of the Supply Agreement as to a particular Product pursuant to Section 11.2(d) thereof, Optimer shall retain the exclusive right to Manufacture or have Manufactured and supply Supplied Products other than Terminated Supplied Products.

(d)Protection of Optimer Manufacturing Technology.  In addition to the provisions of Article 8, Partner recognizes that maintaining the confidentiality and trade secret nature of the Optimer Manufacturing Technology requires a higher level of vigilance than other Confidential Information, and agrees to (i) maintain in confidence Optimer Manufacturing Technology with the same degree of care that Partner uses to protect its own like information, (ii) strictly limit access to and use of Optimer Manufacturing Technology to employees, representatives, consultants and contractors of Partner and its designated Third Party contract manufacturers with a need to know such information, and (iii) use Optimer Manufacturing Technology and trade secrets only for producing Supplied Products in the Field for use and sale in the Territory.  Partner shall ensure that any person having access to the Optimer Manufacturing Technology will be made aware of its highly confidential nature and will agree to be bound by confidentiality terms no less stringent than those in this Agreement.  The obligations under this Section 2.6(d) shall survive and continue in effect following any expiration or termination of this Agreement.

ARTICLE 3

GOVERNANCE

3.1Joint Steering Committee.  The Parties will establish a joint steering committee (the “Joint Steering Committee” or “JSC”) to oversee the activities of the Parties pursuant to this Agreement.

(a)Composition.  The JSC will be comprised of two (2) members appointed by Partner and two (2) members appointed by Optimer, which members shall be senior level employees of each Party with decision-making authority.  Each Party will notify the other Party of its initial JSC members within thirty (30) days after the Effective Date.  The Parties, through the JSC, may change the number of JSC members as long as an equal number of members from each of Partner and Optimer is maintained.  Each Party may change its JSC members at any time

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by written notice to the other Party, which may be delivered at a scheduled meeting of the JSC.  Any member of the JSC may designate a substitute to attend and perform the functions of that member at any meeting of the JSC.  The JSC shall appoint one (1) of its members as chairman, whose role shall be to convene and preside at meetings of the JSC, but the chairman shall not be entitled to prevent items from being discussed or to cast any tie-breaking vote.  Each Party may, with the consent of the other Party, such consent not to be unreasonably withheld or delayed, invite non-member, non-voting representatives of such Party to attend meetings of the JSC.

(b)Responsibilities.  The JSC shall be responsible for oversight of the Parties’ activities under this Agreement with respect to Development, Regulatory Approval, manufacturing and commercialization (including marketing and sales) of Products in the Field in the Territory.  Without limiting the foregoing, the JSC shall:

(i)provide a forum for review and discussion of the Development Plan, and for Optimer to provide input with regard to the Development Plan and any Development activities with respect to Products in the Field in the Territory, including with respect to any investigator-initiated studies of Products in the Field in the Territory;

(ii)provide a forum for review and discussion of the Commercialization Plan, and for Optimer to provide input with regard to the Commercialization Plan, including with respect to any marketing studies of Products in the Field in the Territory (including Post-Marketing Studies);

(iii)provide a forum in which Partner updates Optimer on Partner’s strategy with regard to the preparation, filing, prosecution and maintenance of the Partner Patents;

(iv)periodically review the results of the Development Plan and Commercialization Plan to ensure, to the extent reasonably practical, compliance with obligations under this Agreement;

(v)review the publication strategy in the Territory with respect to Products in the Field;

(vi)provide a forum in which Optimer updates Partner with regard to the Development, regulatory strategy and commercialization of Products outside the Territory and outside the APEL Territory in the Field, including with respect to any Post-Marketing Studies of Products in the Field and the publication strategy outside the Territory with respect to Products in the Field;

(vii)facilitate the exchange of Data and/or Materials between the Parties; and

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(viii)perform such other duties as are specifically assigned by the Parties to the JSC in this Agreement.

(c)Meetings.  The JSC will hold meetings at such frequency as determined by the JSC members, but no less than once every Calendar Quarter.  Such meetings may be in person, via videoconference, or via teleconference; provided, that no less than two (2) JSC meetings each Calendar Year shall be in-person unless the Parties otherwise agree.  The location of in-person JSC meetings will alternate between Optimer’s offices in San Diego, California and Partner’s offices in Tokyo, unless the Parties otherwise agree.  At least seven (7) days prior to each JSC 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 will be kept of all JSC meetings and will reflect material decisions made at such meetings.  Meeting minutes will be prepared by each Party on an alternating basis and sent to each member of the JSC for review and approval within ten (10) days after a meeting.  Minutes will be deemed approved unless a member of the JSC objects to the accuracy of such minutes within fifteen (15) days of receipt.

(d)Decisions.  The JSC may make decisions with respect to any subject matter that is within the JSC’s decision-making authority.  Subject to this Section 3.1(d), all decisions of the JSC shall be made by unanimous vote, with Optimer and Partner each having, collectively, among its respective members, one (1) vote in all such decisions.  If the JSC cannot reach consensus with regard to any matter to be decided by the JSC within ten (10) Business Days after such matter has been brought to the JSC’s attention, then such matter shall be referred to the Chief Executive Officer of Optimer and the President and Chief Executive Officer or its designee of Partner (the “Executives”) for resolution.  If the Executives cannot resolve the issue within ten (10) Business Days after the matter has been brought to their attention then, subject to good faith consideration of the views of Optimer, Partner’s Executive shall have the tie-breaking vote on such issue, subject to (i) Optimer’s written approval of any material change to the Development Plan which it is entitled to approve, as set forth in Section 4.1(a), and (ii) Section 5.1(c) with regard to Post-Marketing Studies; provided, that if Optimer provides reasonable evidence that a decision of Partner regarding commercialization of Products in the Territory would have a material adverse effect on Optimer’s or its licensee’s commercialization of products containing or comprising the Compound outside the Territory, the Parties must promptly meet to discuss in good faith and reach a mutually agreed-upon solution to such issue. For the avoidance of doubt, Partner shall not have a tie-breaking vote in respect of Post-Marketing Studies inside the Territory, the approval procedure for which is set out in Section 5.1.

(e)Withdrawal.  At any time during the Term and for any reason, Optimer shall have the right to withdraw from participation in the JSC upon written notice to Partner, which notice shall be effective immediately upon receipt (“Withdrawal Notice”).  Following the issuance of a Withdrawal Notice and subject to this Section 3.1(e), Optimer’s representatives to the JSC shall not participate in any meetings of the JSC, nor shall Optimer have any right to vote on decisions within the authority of the JSC.  If, at any time, following the issuance of a

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Withdrawal Notice, Optimer wishes to resume participation in the JSC, Optimer shall notify Partner in writing and, thereafter, Optimer’s representatives to the JSC shall be entitled to attend any subsequent meeting of the JSC and to participate in the activities of, and decision-making by, the committees as provided in this Section 3 as if a Withdrawal Notice had not been issued by Optimer. Following Optimer’s issuance of a Withdrawal Notice, unless and until Optimer resumes participation in the JSC in accordance with this Section 3.1(e):  (i) all meetings of the JSC shall be held at Partner’s facilities; (ii) Partner shall have the right to make the final decision on all matters within the scope of authority of the JSC;  (iii) Optimer shall have the right to continue to receive the minutes of the JSC meetings, but shall not have the right to approve the minutes for any JSC meeting held after Optimer’s issuance of a Withdrawal Notice and (iv) Optimer shall provide Partner every six (6) months with a summary update regarding the matters set out in Sections 3.1(b)(vi), including the publications and publication strategy outside the Territory.  For clarity, if Optimer withdraws and then resumes participation in the JSC, it shall not have any right to retroactively review or modify any decision made by the JSC during Optimer’s withdrawal period.

3.2Expenses.  Each 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 JSC.

3.3Alliance Managers.  Promptly after the Effective Date, each Party shall appoint an individual to act as the alliance manager for such Party (the “Alliance Manager”).  Each Alliance Manager shall be permitted to attend meetings of the JSC as non-voting participants.  The Alliance Managers shall be the primary contact for the Parties regarding the activities contemplated by this Agreement and shall facilitate all such activities hereunder.  Each Party may replace its Alliance Manager with an alternative representative at any time with prior written notice to the other Party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager.

3.4Scope of Governance.  Notwithstanding the creation of the JSC or any other committee or subcommittee, each Party shall retain the rights, powers and discretion granted to it hereunder, and neither the JSC nor any other committee or subcommittee shall be delegated or vested with rights, powers or discretion unless such delegation or vesting is expressly provided herein, or the Parties expressly so agree in writing.  The JSC shall not have the power to amend or modify this Agreement, and no decision of the JSC or any committee or subcommittee shall be in contravention of any terms and conditions of this Agreement.  It is understood and agreed that issues to be formally decided by the JSC are only those specific issues that are expressly provided in this Agreement to be decided by the JSC or the committee or subcommittee, as applicable. For clarification, in no event shall the JSC have any decision-making authority with respect to matters relating to Products outside the Territory.  For further clarification, any decision of an Executive made in resolution of a dispute of the JSC pursuant to Section 3.1(d) shall be treated as decisions of the JSC for purposes of this Agreement.  It is understood between the Parties that under no circumstances are the activities to be performed by

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the JSC (or any subcommittee) intended or allowed to violate any Applicable Law (including but not limited to any competition and/or antitrust law).

3.5Change of Control.  If a Change of Control Event occurs, the Parties will implement procedures with the purpose of protecting Confidential Information of each of the Parties and ensuring that Confidential Information shared through the JSC will be specific to Products in the Field (and not any other products) and will be used by the Receiving Party and its representatives on the JSC only as expressly permitted by this Agreement and, without limiting the foregoing, not for the purpose of research, development, manufacture or commercialization of any other products.  It is anticipated that such procedures will include establishment of firewalls within their respective organizations so that access to and use of Confidential Information of the Disclosing Party shared with the Receiving Party through the JSC is strictly limited to the Receiving Party’s representatives on the JSC and only such other employees, representatives, consultants and contractors of the Receiving Party and its Affiliates with a need to know such information for purposes of this Agreement, and access to such Confidential Information (including its storage in any computer or electronic information retrieval system) is not available to any other employees, representatives, consultants and contractors of the Receiving Party and its Affiliates. Each Party shall ensure that its representatives on the JSC and any other employees, representatives, consultants and contractors of such Party and its Affiliates to whom access to such Confidential Information of the other Party is shared through the JSC will be made aware of its confidential nature and the firewall procedures in place to protect such Confidential Information and shall be contractually bound to comply with them and such Receiving Party shall take such steps as may be reasonably desirable to enforce such obligations.  The Parties will work together to agree to and document such procedures within thirty (30) days of such Change of Control Event, and after such Change of Control Event, the Parties will refrain from exchanging Confidential Information until such procedures are in place.

ARTICLE 4

DEVELOPMENT AND REGULATORY ACTIVITIES

4.1Development of Compounds and Products.

(a)Development Plan.  The Development of Compounds and Products in the Field in the Territory shall be governed by a comprehensive development plan (as amended in accordance with this Agreement, the “Development Plan”), the preliminary version of which has been prepared by Partner and agreed to by Partner and Optimer and is attached to the Letter Agreement.  The Development Plan may be changed and updated by Partner through consultation with the JSC and shall set forth all Development activities to be performed by Partner in support of Compounds and Products in the Field in the Territory; provided, that all material changes and updates to the Development Plan shall be subject to prior written approval of Optimer not to be unreasonably withheld or delayed and further provided that Optimer cannot refuse approval for any change (and Partner may proceed with any such change that Partner

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submits to Optimer for approval but Optimer does not approve) that (i) is required and/or advised by any scientific advice or guideline, law or regulation of the MHLW, (ii) results from Optimer’s failure to meet timeframes hereunder or provide to Partner any Data within the Licensed Know-How in accordance with the terms of this Agreement, or from Optimer Europe’s inability or failure to supply Supplied Products in accordance with the terms of the Supply Agreement, (iii) […***…], or (iv) is required […***…].

(b)Conduct of Development Activities.

(i)Compliance with Development Plan and Applicable Laws; Expenses.  Partner shall Develop Products in the Field in the Territory in compliance with all Applicable Laws, including good scientific and clinical practices under the Applicable Laws of the country in which such activities are conducted. Partner shall bear all costs and expenses incurred in connection with all Development activities with respect to Compound and Product in the Territory.

(ii)Information Regarding Development Activities.  Partner shall maintain records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved by or on behalf of Partner in the performance of Development activities pursuant to this Agreement.  Partner shall keep the JSC appropriately informed of the status of clinical, pre-clinical and post-approval studies and other activities with respect to Compounds and Products in the Field in the Territory conducted by it pursuant to this Agreement.  Upon request by the JSC, without limiting the foregoing, Partner shall promptly provide the JSC with summaries in reasonable detail of all data and results generated or obtained in the course of Partner’s and its Sublicensees’ performance of studies and other activities with respect to Compounds and Products in the Field in the Territory. Upon request by the JSC, without limiting the foregoing, Optimer shall provide the JSC with summaries in reasonable detail of all data and results that are generated or obtained in the course of Optimer’s and its licensees’ (other than APEL’s and its sublicensees’) performance of studies and other Development activities with respect to Compounds and Products in the Field outside the Territory including full details and specifications of all Product formulations […***…], provided that in no event shall Optimer be required to disclose to Partner or the JSC any data or results of any licensee unless Optimer is permitted to do so under the applicable agreement with such licensee.

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4.2Regulatory Activities.

(a)Conduct of Regulatory Activities.  Partner shall be solely responsible for formulating regulatory strategy and for preparing, filing, obtaining and maintaining Regulatory Approvals, including all regulatory authorizations, for Products in the Field in the Territory.  Partner shall be the holder of all Regulatory Approvals for Products in the Field in the Territory and shall have responsibility for interactions with Regulatory Authorities with respect to Products in the Field in the Territory.  Partner agrees to consult with Optimer regarding, and keep Optimer regularly and fully informed of, the preparation, Regulatory Authority review and approval of submissions and communications with Regulatory Authorities with respect to Products in the Field in the Territory.  In addition, Partner shall promptly provide Optimer with copies of all material documents, information and correspondence received from a Regulatory Authority with an English summary thereof and, upon reasonable request, with copies of any other documents, reports and communications from or to any Regulatory Authority relating to Compounds, Products and/or activities under this Agreement with an English summary thereof.  Partner shall bear all costs and expenses incurred in connection with regulatory activities with respect to Products in the Field in the Territory pursuant to this Agreement.

(b)Trade Name.  Partner shall be responsible for all communications with the Regulatory Authorities in the Territory regarding the proposed trade names for Products and for otherwise choosing the trade name(s) for use in connection with the Products in the Territory, and applying to register the trade name(s) with the Regulatory Authorities within the Territory.

(c)Conduct of Regulatory Activities outside the Territory and the APEL Territory.  Optimer agrees to keep Partner regularly and fully informed of, the preparation, Regulatory Authority review and approval of submissions and communications with Regulatory Authorities with respect to Products in the Field outside the Territory (including any variation of, and update to, any Regulatory Approvals outside the Territory) and the APEL Territory.  In addition, Optimer shall promptly provide Partner with copies of all material documents, information and correspondence received from a Regulatory Authority and, upon reasonable request, with copies of any other documents, reports and communications from or to any Regulatory Authority relating to Compounds or Products outside the Territory and the APEL Territory.

(d)Adverse Event Reporting.  Partner shall be responsible for the timely reporting of all relevant adverse drug reactions/experiences, Product quality, Product complaints and safety data relating to Compounds and Products to the appropriate Regulatory Authorities in the Territory; all in accordance with the Applicable Laws and Regulatory Authorities in the Territory. Optimer (or its licensee outside the Territory) shall be responsible for the timely reporting of all relevant adverse drug reactions/experiences, Product quality, Product complaints and safety data relating to Compounds and Products to the appropriate Regulatory Authorities outside the Territory. The details of such reporting shall be set forth in a pharmacovigilance agreement (as may be amended, the “Pharmacovigilance Agreement”), which will be agreed to

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by the Parties prior to the First Commercial Sale of a Product in the Territory.  Prior to executing the Pharmacovigilance Agreement, the Parties agree to work together in good faith to coordinate regarding pharmacovigilance activities with respect to Products in the Field, including by exchanging standard operating procedures and other Information relevant to such pharmacovigilance activities.

(e)Global Safety Database; Pharmacovigilance.  Optimer shall maintain the global safety database with respect to Compounds and Products under Development, which shall serve as the reference database for all responses to safety queries and aggregate safety reports and be the main source for Individual Case Safety Report (“ICSR”) processing and signal management. Each Party shall cooperate, and shall cause its Affiliates, licensees and Sublicensees to cooperate, in implementing and adhering to a pharmacovigilance mutual alert process with respect to Products to comply with Applicable Laws and that shall be set forth in a Pharmacovigilance Agreement, which will be agreed to by the Parties prior to the First Commercial Sale of a Product in the Territory. Partner shall pay a proportion to be agreed between the Parties of all costs incurred in implementing and maintaining such global safety database and pharmacovigilance mutual alert process along with the all of the costs incurred in relation to any customized reporting requirements for the Territory.

(f)[…***…]. Optimer or its licensee (other than APEL), as applicable, shall maintain, either at its own facilities or at a Third Party site, complete and accurate records of […***…]with respect to Compoundsand/or Products in the Field outside the Territory, and which was […***…]. Such records, including any electronic files, shall […***…].  Partner shall have the right, at Partner’s expense, to review the copy of such records at reasonable times […***…] to the extent required by MHLW, provided that in no event shall Optimer be required to disclose or otherwise make available to Partner any […***…] unless Optimer is permitted to do so under the applicable agreement with such licensee.

(g)Regulatory Audit.  Each Party shall notify the other within twenty four (24) hours of a Regulatory Authority audit of their or their Affiliate’s facilities with respect to Compounds and/or Products or within twenty four (24) hours of receipt of notice of a Regulatory Authority audit of their or their Affiliate’s Third Party contract research or manufacturing organizations’ facilities with respect to Compounds and/or Products, and shall also notify the other Party within twenty hour (24) hours of its receipt of any advance notice regarding such audits or other inspections with respect to Compounds and/or Products.  Each Party shall have the right to have its employee(s) or its Affiliates, their employees, its licensees or an independent consultant participate in such audits or other inspections of the other Party’s or their Affiliate’s

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or their Third Party contract research or manufacturing organization’s facilities; provided, that, in the case of an audit or inspection of a Third Party contract research or manufacturing organization’s facilities, such Party has the right under the applicable agreement with such Third Party organization to invite the other Party or its employees or Affiliates or licensees, as applicable, to participate; and provided further, that, if such agreement limits the number of individuals or entities that may be present during such audit or inspection, such Party shall use its reasonable discretion in determining which individuals or entities shall participate in such audit or inspection (which may or may not include Affiliates, employees, licensees or independent consultants of the other Party); provided further, that Optimer shall use its commercially reasonable efforts to ensure that a representative of APEL or Partner shall participate in such audit or inspection, and if Partner or APEL has the right to so participate, Partner and APEL shall decide which of Partner or APEL shall participate in such audit or inspection.  For clarity, in no event shall both Partner and APEL have the right to participate in any audit or inspection under this Section 4.2 unless otherwise agreed in writing by Optimer and, if applicable, the Third Party contract research or manufacturing organization.  The audited or inspected Party shall provide the other Party with the copies of any resulting document or action pertaining to Compounds and/or Products which results from these audits within seven (7) days of receipt.

4.3Diligence.  Partner shall use Commercially Reasonable Efforts to conduct and complete the studies and activities assigned to it in the Development Plan in accordance with the timelines specified therein and to prepare, file for, obtain and maintain Regulatory Approvals for Products in the Field in the Territory.

4.4Use of Subcontractors.  Partner may perform some of its Development activities under this Agreement through one or more subcontractors, provided that (a) none of Optimer’s rights hereunder are diminished or otherwise adversely affected as a result of such subcontracting, and (b) the subcontractor undertakes in writing obligations of confidentiality and non-use regarding Confidential Information which are substantially the same as those undertaken by the Parties pursuant to Article 8.  In the event Partner performs any of its Development activities hereunder through a subcontractor, then Partner will at all times be fully responsible for the performance and payment of such subcontractor.

4.5Transfer of Know-How; Transfer of Regulatory Documents.

(a)Licensed Know-How.  Promptly following the Effective Date, Optimer will make available to Partner, at no additional cost or expense to Partner, the Licensed Know-How that exists as of the Effective Date ([…***…], excluding any raw data included in the Licensed Know-How, which Optimer shall not be obligated to make available to Partner) together with reasonable assistance to enable Partner to understand and use such Licensed Know-How.  During the Term, Optimer shall provide to Partner, at no additional cost or expense to Partner, any Licensed Know-How that has not previously been provided hereunder promptly upon creation ([…***…], excluding any raw data included in the Licensed Know-How, which Optimer shall not be obligated to make available to Partner).

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Partner may cross reference drug master files or other regulatory filings outside the Territory that contain Licensed Know-How solely for commercialization of Products in the Field inside the Territory and Optimer gives Partner the right to so cross-reference, and Partner may use and disclose such Licensed Know-How to Affiliates and Third Parties in connection with Development activities, marketing activities, medical education activities, professional services activities and public relations activities; or for purposes of obtaining consultation services in the normal course of business (such as business consultants, advertising agencies, law firms, accounting firms, etc.) in each case solely to the extent necessary for Development, filing for, obtaining and maintaining Regulatory Approval and commercialization of Products in the Field in Territory; or as may otherwise be agreed in writing by Optimer and Partner.  Any disclosure of such Licensed Know-How shall be subject to Article 8.  During the Term, Partner may not use any such Licensed Know-How (or permit any Affiliate or Third Party to use Licensed Know-How) outside the Territory, or outside the Field or for any products other than the Products, except for the assessment and validation of the Licensed Know-How by Affiliates or Third Party consultants outside the Territory but solely for purposes of Developing, filing for, obtaining and maintaining Regulatory Approval or commercializing Products in the Field within the Territory.

(b)Partner Know-How.  Partner shall provide to Optimer, at no cost or expense to Optimer, Partner Know-How subject to the license granted in Section 2.3 that has not previously been provided hereunder promptly upon such Licensed Know-How being obtained or generated by Partner. Optimer and its licensees may cross reference drug master files or other regulatory filings in the Territory that contain Partner Know-How solely for commercialization of products that include a Compound, alone or in combination with any other active pharmaceutical ingredient, in any form or formulation outside the Territory and Partner gives Optimer and its licensees the right to so cross-reference. Optimer and its licensees may use and disclose such Partner Know-How to Affiliates and Third Parties in connection with Development activities, marketing activities, medical education activities, professional services activities and public relations activities; or for purposes of obtaining consultation services in the normal course of business (such as business consultants, advertising agencies, law firms, accounting firms, etc.) in each case solely to the extent necessary for Development, filing for, obtaining and maintaining Regulatory Approval and commercialization of such products outside Territory; or as may otherwise be agreed in writing by Optimer and Partner.  Any such disclosure of Partner Know-How shall be subject to Article 8.

(c)Optimer Agreements.  Optimer shall require that any Optimer Current Affiliate or Third Party contract research organization that is involved in generation of Data for Optimer or any Optimer Current Affiliate allow Optimer to provide Partner access to all such Data generated by such Optimer Current Affiliate or Third Party contract research organization, to the extent that such Data is required for preparation of MAAs and/or filing of MAAs with the applicable Regulatory Authorities and/or maintenance of any granted marketing authorizations for Product(s) in each case in the Territory in accordance with this Agreement.  […***…],

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Optimer shall use commercially reasonable efforts […***…] to […***…].  If Optimer is unable, after using commercially reasonable efforts, to […***…], Optimer shall […***…] in accordance with this Agreement.

(d)Ownership of Regulatory Filings.  All MAAs, MAA Approvals, Regulatory Approvals and any other regulatory filings relating to Development of the Products in the Field in the Territory shall be owned by Partner or its nominated Affiliate.

4.6Materials Transfer.  In order to facilitate the Development activities contemplated by this Agreement, either Party may provide to the other Party certain biological materials or chemical compoundsControlled by the supplying Party (collectively, “Materials”) for use by the other Party in furtherance of such Development activities. […***…].  Except as otherwise provided for under this Agreement, all such Materials delivered to the other Party will remain the sole property of the supplying Party, will be used only in furtherance of the Development activities conducted in accordance with this Agreement, will not be used or delivered to or for the benefit of any Third Party, except for subcontractors pursuant to Section 4.4, without the prior written consent of the supplying Party, and will be used in compliance with all Applicable Laws.  The Materials must be used with prudence and appropriate caution in any experimental work because not all of their characteristics may be known.  Except as expressly set forth in this Agreement, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

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ARTICLE 5

COMMERCIALIZATION; SUPPLY

5.1Commercialization of Products.

(a)Partner Responsibilities.  Partner shall have the exclusive right to commercialize Products in the Field in the Territory, at its sole cost and expense, subject to the terms and conditions of this Agreement.  Without limiting the foregoing, Partner will have the exclusive right and responsibility in the Field in the Territory for the following:

(i)designing the commercialization and marketing strategy and tactics for Products;

(ii)choosing and registering the trade names for the Products;

(iii)undertaking all promotional activities for Products;

(iv)establishing pricing and reimbursement for Products;

(v)receiving, accepting and filling orders for Products from customers;

(vi)warehousing and distributing Products to customers;

(vii)controlling invoicing, order processing and collection of accounts receivable for sales of Products; and

(viii)recording sales of Products in the Territory in its books of account for sales.

Partner shall provide updates regularly to the JSC relating to commercialization activities for the Products in the Field in the Territory.

(b)Commercialization Plan.  Partner shall be responsible for the creation and implementation of an annual plan and budget for the commercialization of Products in the Field in the Territory, which will include any Post Marketing Studies (as defined below) of Products in the Field in the Territory (the “Commercialization Plan”), which Commercialization Plan shall include, without limitation, identification of, and proposed plans to address, potential challenges with respect to commercialization of Products in the Field in the Territory.  Partner shall prepare and submit to Optimer the initial Commercialization Plan no later than […***…] after the first submission of a MAA for Product in the Territory for review and discussion through the JSC. Subsequent updated Commercialization Plans shall be submitted by Partner to Optimer on an annual basis on or before the end of February each Calendar Year for review and discussion through the JSC.  Through the JSC, Partner shall regularly consult with and provide

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updates to Optimer regarding the commercialization strategy and the commercialization of Products in the Field in the Territory.  Partner shall consider in good faith Optimer’s input regarding such commercialization strategy and the Commercialization Plan; provided, however, that Partner shall have final decision-making authority with respect to commercialization of Products in the Field in the Territory, including the right to set the terms of sales and book all sales of Products in the Field in the Territory, subject to Section 5.1(c) below. Partner shall provide Optimer with access to KOLs as may reasonably be requested by Optimer, where “KOLs” means all healthcare providers in the Territory that have administered a Product in clinical trials, have published academic articles relating to a Product, or are otherwise regarded by Partner, its Affiliates and Sublicensees, as the case may be, as a key opinion leader for a Product in the Territory. Optimer shall provide Partner with access to KOLs as may reasonably be requested by Partner, where “KOLs” means all healthcare providers outside the Territory and APEL Territory that have administered a Product in clinical trials, have published academic articles relating to a Product, or are otherwise regarded by Optimer, its Affiliates and Sublicensees, as the case may be, as a key opinion leader for a Product outside the Territory and APEL Territory.

(c)Post-Marketing Studies.  The Parties anticipate that it will be desirable to conduct post-marketing studies of the Products in the Field (including phase IV studies) in order to maximize the potential market for Products in or outside the Territory (“Post-Marketing Studies”).  The Parties shall discuss all proposed Post-Marketing Studies at the JSC. In relation to the Territory, in the event Partner wishes to conduct a Post-Marketing Study of the Product in the Field, Partner shall first prepare a protocol for any such Post-Marketing Study and present it to the JSC for comment. Partner shall be responsible for planning and overseeing the performance of any such Post-Marketing Studies in the Territory (at its sole expense), subject to the oversight of the JSC, and shall update the JSC on the progress of such studies.  In relation to the countries outside Territory other than in the APEL Territory, Optimer shall first prepare a protocol for any such Post-Marketing Study and present it to the JSC for comment. Optimer or its licensee, as applicable, shall be responsible for planning and overseeing the performance of any such Post-Marketing Studies outside the Territory other than in the APEL Territory (at its sole expense), and shall update the JSC on the progress of such studies. Notwithstanding the foregoing, if, following the presentation by a Party to the JSC of the protocol for such a Post-Marketing Study, the other Party promptly provides written notice to the Party proposing to perform the Post-Marketing Study that it reasonably believes, as supported by documentation, that such proposed Post-Marketing Study is reasonably likely to have a material adverse effect on such other Party’s or its licensees’ Regulatory Approval for or commercialization of any product containing the Compound,  then such Post-Marketing Study may not be performed, unless the Parties agree in writing that such Post-Marketing Study may proceed following good faith discussions by the Parties. For clarity, Post-Marketing Studies shall include (i) in the case of Partner, any clinical experimental investigations (“Shiyo-Seiseki-Chosa”) and special investigations (“Tokutei-Shiyo-Seiseki-Chosa”) of MHLW’s ordinance (No.145, 1960), respectively, under the Pharmaceutical Affairs Law of Japan and any other mandatory post-marketing studies required by MHLW as the phase IV commitment for the Regulatory Approval

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of the Product in the Field in the Territory, and (ii) in the case of Optimer, any Post-Marketing Studies required by the applicable Regulatory Authority as a phase IV commitment for Regulatory Approval of a Product outside the Territory; provided, however, that with respect to such investigations or studies described in (i) and (ii), the other Party shall not have the right to prohibit such Party from performing such investigations or studies pursuant to the immediately preceding sentence.

(d)Diligence.  During the Term, Partner shall use Commercially Reasonable Efforts to market, promote and commercialize at least one Product in the Field in the Territory in accordance with the Commercialization Plan and the terms of this Agreement.  Without limiting the foregoing, Partner shall:

(i)Initiate […***…] in the Territory no later than […***…]; and

(ii)Achieve […***…] in the Territory within […***…] of Regulatory Approval in the Territory.

(e)Partner’s Diligence Failure.

(i)In the event that Optimer determines that Partner has failed to achieve the diligence obligations set forth in Section 5.1(d), Optimer shall provide written notice thereof to Partner, and the Parties shall promptly discuss in good-faith for a period not to exceed thirty (30) days following the date of such notice (or such longer period as may be agreed by the Parties).  Such notice shall specify in reasonable detail the facts and circumstances constituting Optimer’s reasons for reaching such a determination. Following such thirty (30)-day period (or such longer period as may be agreed by the Parties), unless otherwise agreed by the Parties, if Partner (a) has not cured such failure, or (b) in the event that such failure is not capable of being cured in thirty (30) days, is not using best efforts to cure such failure, Optimer shall have the right, exercisable in its sole discretion and effective upon written notice thereof by Optimer to Partner, to (A) convert the license and sublicense granted to Partner in Section 2.1 to a non-exclusive license and sublicense in the Field in the Territory (and upon delivery of such notice such license and sublicense shall automatically be deemed non-exclusive without any further action or amendment by the Parties), and, without limiting the foregoing, Optimer shall have the right to Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products in the Field in the Territory (either itself or through a licensee or otherwise), or (B) terminate this Agreement pursuant to Section 12.2(b).  For the avoidance of doubt Partner shall always retain the right to resort to the dispute resolution procedure in Article 13 to challenge Optimer’s determination that Partner has failed to achieve the diligence obligations set forth in Section 5.1(d).

(ii)Any failure of Partner to achieve the diligence obligations set forth in Section 5.1(d) shall neither be considered Partner’s diligence failure as described in Section 5.1(e) nor a breach of this Agreement to the extent such failure was caused by (a) Optimer’s

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failure to meet timeframes hereunder or provide to Partner any Data within the Licensed Know-How in accordance with the terms of this Agreement, or Optimer Europe’s inability or failure to supply Supplied Products in accordance with the terms of the Supply Agreement or (b) any changes to the Development Plan approved by Optimer in accordance with Section 4.1(a) and changes to the Development Plan referenced in to Section 4.1(a)(i), (ii) or (iv) that Partner submitted to Optimer for approval but that Optimer did not approve, or (c) a Third Party owner of any Dominating Patent Rights refusing to grant a license to Partner on commercially reasonable terms.

(iii)This Section 5.1(e) shall not limit any other remedies or damages that Optimer may have under this Agreement or Applicable Law.

5.2Supply.  The Parties acknowledge and agree that, subject to the right granted to Partner in Section 2.1 to tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products, and Partner’s rights under Section 2.6, Optimer (and/or its Affiliate) shall retain all rights to make and have made Compounds and Products in the Territory.  Optimer Europe shall supply Compounds and/or Products to Partner and its Sublicensees for all Development and commercialization of Products in the Field in the Territory in accordance with the supply agreement of even date herewith between Optimer Europe and Partner (as may be amended, the “Supply Agreement”).  The Parties acknowledge and agree that Partner shall pay to Optimer Europe the Transfer Price (as defined in the Supply Agreement) for Supplied Products supplied under the Supply Agreement.

ARTICLE 6

PAYMENTS

6.1Upfront Fee.  Partner shall make a one-time, non-refundable, non-creditable payment to Optimer of US$20,000,000 (Twenty Million US Dollars) within thirty (30) days after presentation of an invoice by Optimer for this amount after the Effective Date.

6.2Milestone Payments.

(a)[…***…] Milestones.  Within thirty (30) days following the first occurrence of each of the milestone events set forth below, Partner shall notify Optimer of the relevant milestone event and Partner shall pay to Optimer the corresponding payment set forth below in cash (whether such milestone is achieved by Partner or any of its Sublicensees) within thirty (30) days after presentation of an invoice by Optimer for the relevant amount:

Milestone Event	Milestone Payment
[…***…]	US$[…***…] ([…***…]US Dollars)

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[…***…]	US$[…***…] ([…***…]US Dollars)
[…***…]	US$[…***…] ([…***…]US Dollars)

(b)[…***…] Milestones.  Within thirty (30) days following the […***…], Partner shall pay to Optimer the corresponding payment set forth below in cash:

Milestone Event	Milestone Payment
[…***…]	US$[…***…] ([…***…]US Dollars)
[…***…]	US$[…***…] ([…***…]US Dollars)

For clarity, if […***…] satisfies more than one milestone event set forth above, then payment shall be made for each such milestone event that is satisfied.  For example, if, […***…], then Partner shall pay to Optimer […***…].

(c)One-Time, Non-Refundable, Non-Creditable Payments.  The payments set forth above in this Section 6.2 shall be payable only once for each milestone event, upon the first occurrence of such milestone event, regardless of the number of times each event occurs, and shall not be refundable or creditable against any other payments by Partner to Optimer.

6.3Royalty Payments.

(a)Royalty Rate.

(i)Subject to the terms and conditions of this Agreement, Partner shall pay to Optimer royalties as set forth below on […***…] in the Territory:

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[…***…]	Royalty Rate
[…***…]	[…***…]	%

(ii)Notwithstanding the foregoing or anything else to the contrary set forth in this Agreement or the Supply Agreement in relation to any Products not purchased from Optimer Europe under the Supply Agreement, instead of royalties set forth in Section 6.3(a)(i), Partner shall pay to Optimer royalties as set forth below on […***…]:

[…***…]	Royalty Rate
[…***…]	[…***…]	%
[…***…]	[…***…]	%

By illustration but not in limitation, with respect to any Products not purchased from Optimer Europe under the Supply Agreement, […***…], the royalties shall be calculated as follows:  […***…]. Depending upon the actual facts and circumstances, this total may be subject to further adjustment under Section 6.3(d) or 9.5(b). The principles of the above calculation are also to be applied when the royalty rates are reduced pursuant to Section 6.3(f), save that the […***…] royalty rates are to be replaced with […***…] royalty rates, respectively.

(b)Existing Third Party Payment Obligations.  Optimer shall be responsible for any payments to any other Third Parties for Patents or Information licensed or acquired by Optimer prior to the Effective Date, which are included in the Licensed Technology including, without limitation, any payments to PAR under the PAR Agreement. In the event the rights to the Licensed OPT-80 Data (as defined in the PAR Agreement) cease to be licensed to Optimer by PAR under the PAR Agreement for any reason and Partner obtains a license with

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respect to such OPT-80 Data directly from PAR pursuant to that certain agreement by and among PAR, Partner and Optimer dated as of the Effective Date and attached hereto as EXHIBIT B (the “PAR Tripartite Agreement”), then Partner may deduct from the applicable payments owed to Optimer hereunder or to Optimer Europe under Section 4.1(a)(i)(1) of the Supply Agreement, but not both, the amount actually paid by Partner to PAR under the PAR Tripartite Agreement for such license with respect to such OPT-80 Data up to the amount that Optimer would have been obligated to pay to PAR under the PAR Agreement with respect to such payment.

(c)Third Party Intellectual Property Rights.  Subject to Section 6.3(d), Partner shall be responsible for payment of any and all fees, milestones, royalties or other payments owed to any Third Party for any Patents, Information or other intellectual property rights licensed or acquired after the Effective Date, which are necessary or useful to use, sell, offer for sale or import any Product in the Field in the Territory.

(d)Royalty Stacking.  On a Product-by-Product basis, in the event Partner or its Affiliate is required to pay to a Third Party royalties or amounts payable in lieu of royalties (including without limitation any lump sum payments) in order to obtain a license under Dominating Patent Rights with respect to a Product in the Territory then Partner may […***…] of the amounts actually paid tosuch Third Party in consideration for such license under Dominating Patent Rights from any royalty payments owing to Optimer under this Agreement or from the applicable payment owing to Optimer Europe under Section 4.1(a)(i)(1) of the Supply Agreement, but not both; provided that in no event shall such deduction reduce the royalties due to Optimer in any Calendar Quarter with respect to such Product to […***…] of the amount that would otherwise be due to Optimer under Section 6.3(a) (the “Floor”). If the […***…] then Partner […***…].As used herein, “Dominating Patent Rights” shall mean issued Patents of Third Parties, including without limitation issued Patents of Third Parties which form the basis of infringement actions under Section 9.5, without a license to which Patents the use, marketing, sale, offer for sale, packaging, promotion, import, export or other commercialization of the applicable Product in the Field in the Territory would infringe such Patents.  For clarity, the deduction described in this Section 6.3(d) and in Section 4.1(b)(ii) of the Supply Agreement may only be applied once.

(e)Royalty Term.  Subject to Sections 6.3(f) and 6.3(g), royalty payments pursuant to Section 6.3(a) shall be payable upon a Product-by-Product basis from the First Commercial Sale of a Product until the last day of the Calendar Quarter during which a Generic Product is sold in the Territory and sales of the Generic Product are greater than […***…] of total quarterly sales by volume of all sales of such Product (including such

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Generic Product) in the Territory in such Calendar Quarter (“Generic Entry”) (the “Royalty Term”).

(f)Royalty Reduction.  In respect of any Product, if on the date that is the later to occur of: (i) the expiration of the last-to-expire Valid Claim within the Licensed Patents or Joint Patents that claims such Product or Compound contained therein or a method of manufacture or use of such Product or Compound, and (ii) […***…]years after the First Commercial Sale, Generic Entry has not occurred, then the royalty rates payable under Section 6.3(a) shall be […***…], following which no further royalties will be payable in the Territory in respect of such Product.

(g)Revival of Royalty Term.  If, following Generic Entry and the consequent termination of Partner’s obligation to make royalty payments in the Territory, all sales of Generic Products in the Territory cease as a result of patent infringement proceedings in respect of the Licensed Patents or Joint Patents brought by either Party in accordance with Section 9.5, then royalty payments in accordance with Section 6.3(a) or Section 6.3(f) (as appropriate) shall become payable until any subsequent Generic Entry. Such revival of royalty payments shall only be effective once.

ARTICLE 7

PAYMENTS, BOOKS AND RECORDS

7.1Reports and Royalty Payment.

(a)Sales Report and Payment.  During the Term, within thirty (30) days after the end of each Calendar Quarter, Partner shall deliver to Optimer a report setting forth the gross sales of Products and Net Sales in the relevant Calendar Quarter (each on a Product-by-Product basis and in the aggregate, respectively), any exchange rate conversion in accordance with Section 7.3, and a calculation of the payments due under Section 6.3 and under the Supply Agreement in respect of such Products, including the applicable royalty rate applied in calculating such payments for each Product for such Calendar Quarter (a “Sales Report”).  Following receipt of any Sales Report Optimer shall raise an invoice for the amount stated by Partner to be payable to Optimer under this Agreement in such Sales Report. Payment shall be due from Partner within thirty (30) days of its receipt of such an invoice.

(b)Adjustment.  As Partner can only calculate Net Sales accurately at the end of every Fiscal Half Year, then the Sales Report for the first Calendar Quarter of a Fiscal Half Year shall be provisional. Therefore in the Sales Report for the second Calendar Quarter of a Fiscal Half Year, Partner shall include updated Net Sales for the whole of such Fiscal Half Year. In the event that the Sales Report following the end of a Fiscal Half Year shows that the actual Net Sales for the first Calendar Quarter in such Fiscal Half Year are greater in aggregate than the provisional Net Sales reported in the Sales Report for such first Calendar Quarter, then

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Partner shall pay the difference in the royalty payment due based upon such actual Net Sales to Optimer together with the royalties payable in respect of the second Calendar Quarter for that Fiscal Half Year. In the event that the Sales Report following the end of a Fiscal Half Year shows that the actual Net Sales for the first Calendar Quarter in such Fiscal Half Year are less in aggregate than the provisional Net Sales reported in the Sales Report for such first Calendar Quarter, then such difference in the royalty payment due based upon such actual Net Sales shall be credited to Partner and such credit shall be applied to reduce, as appropriate, the royalties payable in respect of the second Calendar Quarter for that Fiscal Half Year and any balance carried over to reduce royalties payable in any subsequent Calendar Quarters. If, in the event of termination or expiration of this Agreement, Partner is in credit for any amount under this adjustment mechanism then Optimer shall pay such amount to Partner within ninety (90) days of such termination or expiration.

7.2Payment Method.  All amounts specified to be payable under this Agreement are in United States Dollars and shall be paid in United States Dollars.  All payments under this Agreement shall be made by bank wire transfer in immediately available funds to a U.S. account designated in writing by Optimer or by other mutually acceptable means.  Payments hereunder will be considered to be made as of the day on which they are received by Optimer’s designated bank.

7.3Exchange Rate Conversion.  When conversion of payments from any currency other than United States Dollars is required, such conversion shall be at an exchange rate equal to the trailing three (3)-month average of the daily end of day rate in New York per the Bloomberg News Service.

7.4Taxes.  Optimer will pay any and all taxes levied on account of any payments made to it under this Agreement.  If any taxes are required to be withheld by Partner from any payment made to Optimer under this Agreement, Partner will (a) deduct such taxes from the payment made to Optimer, (b) timely pay the taxes to the proper taxing authority, and (c) send proof of payment to Optimer and certify its receipt by the taxing authority within thirty (30) days following such payment. For purposes of this Section, each Party agrees to provide the other with reasonable assistance to enable the due deduction by the paying Party and appropriate recovery by the other Party, which assistance includes, but is not limited to, provision of any tax forms and other information that may be reasonably necessary in order for the paying Party not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty.

7.5Records.  Partner shall keep, and require its Sublicensees to keep, complete, fair and true books of accounts and records for the purpose of determining the amounts payable to Optimer pursuant to this Agreement and to Optimer Europe pursuant to the Supply Agreement.  Such books and records shall be kept for such period of time required by law, but no less than at least three (3) years following the end of the Fiscal Half Year to which they pertain.  Such records shall be subject to inspection in accordance with Section 7.6.

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7.6Audits.  Upon not less than sixty (60) days’ prior written notice, Partner shall permit an independent, certified public accountant selected by Optimer and/or PAR (to the extent of its audit right with respect to payments of “Net Revenues” (as defined in the PAR Agreement)  due to it as provided under Section 2.4 of the PAR Agreement) and reasonably acceptable to Partner, which acceptance will not be unreasonably withheld or delayed, to audit or inspect those books or records of Partner and its Sublicensees that relate to Net Sales, the Transfer Price and Sales Reports for the sole purpose of verifying the:  (a) payments due hereunder in respect of Net Sales and payments due under the Supply Agreement; (b) withholding taxes, if any, required by Applicable Law to be withheld by Partner; and (c) exchange rates used in determining the amount of United States Dollars.  Such accountant will disclose to Optimer and/or PAR only the amount and accuracy of payments reported and actually paid or otherwise payable under this Agreement (in the case of PAR, limited to such payments paid or otherwise payable to PAR based on payments made to Optimer under this Agreement).  Such accountant will send a copy of the report to Partner at the same time it is sent to Optimer and/or PAR. As a condition to such inspection, the independent public accountant selected shall execute a written agreement, reasonably satisfactory in form and substance to Partner, to maintain in confidence all information obtained during the course of any such examination except for disclosure as necessary for the above purpose and all reasonable documents will be delivered to the accountant under these confidential terms. Additionally no accountant may be employed on a contingency basis. Such inspections may be made no more than once each Calendar Year and during normal business hours, with reasonable efforts to minimize disruption of Partner’s normal business activities.  Such records for any particular Calendar Quarter shall be subject to no more than one (1) inspection.  Inspections conducted under this Section 7.6 shall be at the expense of Optimer or PAR, as applicable, unless a variation or error producing an underpayment in amounts payable exceeding ten percent (10%) of the amount paid for a period covered by the inspection is established, in which case all reasonable costs relating to the inspection for such period and any unpaid amounts that are discovered shall be paid by Partner.

7.7Audit Disagreement. If there is a dispute between the Parties related to GAAP compliance following any audit performed pursuant to Section 7.6, either Party may refer the issue (an “Audit Disagreement”) to an independent certified public accountant for resolution. In the event an Audit Disagreement is submitted for resolution by either Party, the Parties shall comply with the following procedures.

(a)The Party submitting the Audit Disagreement for resolution shall provide written notice to the other Party that it is invoking the procedures of this Section.

(b)Within thirty (30) days of the giving such notice, the Parties shall jointly select a recognized international accounting firm to act as an independent expert to resolve such Audit Disagreement.

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(c)The Audit Disagreement submitted for resolution shall be described by the Parties to the independent expert, which description may be in written or oral form, within ten (10) days of the selection of such independent expert.

(d)The independent expert shall render a decision on the matter as soon as practicable.

(e)The decision of the independent expert shall be final and binding and shall not be subject to Article 13 hereof, unless such Audit Disagreement involves alleged fraud, breach of this Agreement or construction or interpretation of any of the terms and conditions hereof.

(f)All fees and expenses of the independent expert, including any Third Party support staff or other costs incurred with respect to carrying out the procedures specified at the direction of the independent expert in connection with such Audit Disagreement, shall be borne by the Party against whom such expert rules.

7.8Late Payments.  In the event that any payment due under this Agreement is not made when due, the payment shall accrue interest from the date due at a rate per annum equal to one percent (1%) above the U.S. Prime Rate (as set forth in the Wall Street Journal, Eastern U.S. Edition) for the date on which payment was due, calculated daily on the basis of a 365-day year, or similar reputable data source; provided that, in no event shall such rate exceed the maximum legal annual interest rate.  The payment of such interest shall not limit the Party entitled to receive such payment from exercising any other rights it may have as a consequence of the lateness of any payment.

ARTICLE 8

CONFIDENTIALITY

8.1Confidential Information.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, the Parties agree that the receiving Party (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement (or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement) any Information and materials furnished to it or its Affiliates by the other Party (the “Disclosing Party”) or its Affiliates pursuant to this Agreement, the Confidentiality Agreement or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement, in any form (written, oral, photographic, electronic, magnetic, or otherwise), including, but not limited to, all information concerning any Compound and/or Product and any other technical or business information of whatever nature (collectively, “Confidential Information”).  For purposes of clarification, all Licensed Technology shall be Confidential Information of Optimer and all Partner Technology shall be Confidential Information of Partner.  Each Party may use such Confidential Information only to the extent

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required to accomplish the purposes of this Agreement or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement.  Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own (but in no event less than reasonable care) to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information.  Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information.

8.2Exceptions.  Notwithstanding Section 8.1 above, the obligations of confidentiality and non-use shall not apply to information that the Receiving Party can prove by competent written evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party or any of its Affiliates, generally known or available; (b) is known by the Receiving Party or any of its Affiliates, other than under an obligation of confidentiality to the Disclosing Party, at the time of receiving such information; (c) is hereafter furnished to the Receiving Party or any of its Affiliates by a Third Party, which Third Party did not receive such information directly or indirectly from the Disclosing Party under an obligation of confidence; (d) is independently discovered or developed by the Receiving Party or any of its Affiliates without the use of Confidential Information belonging to the Disclosing Party; or (e) is the subject of a written permission to disclose provided by the Disclosing Party.

8.3Permitted Disclosures.  Notwithstanding the provisions of Section 8.1, the Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary in the following instances:

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

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

(c)complying with applicable court orders or governmental regulations;

(d)in the case of Optimer disclosure under terms of confidentiality no less stringent than under this Agreement to licensees of products containing or comprising a Compound outside the Territory and in the case of both Parties, under terms of confidentiality no less stringent than under this Agreement to PAR to the extent necessary to fulfill obligations under the PAR Agreement;

(e)disclosure to Affiliates, Sublicensees and potential Sublicensees (in the case of Partner), sublicensees and potential sublicensees of the licenses granted to Optimer hereunder (in the case of Optimer), contractors, employees and consultants, in each case who need to know such information for the Development, manufacture and commercialization of Products in accordance with this Agreement and the Supply Agreement (or, in the case of sublicensees and potential sublicensees of Optimer, who need to know such information for the development, manufacture and commercialization of products containing or comprising a

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Compound in accordance with the licenses granted to Optimer under this Agreement), on the condition that any such Third Parties agree to be bound by confidentiality and non-use obligations that are no less stringent than those confidentiality and non-use provisions contained in this Agreement; and

(f)            disclosure 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, that any such Third Party agrees to be bound by confidentiality and non-use obligations that are no less stringent than those confidentiality and non-use provisions contained in this Agreement.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Section 8.3(b) or (c), it will, except where impracticable, give reasonable advance notice to the other Party of such disclosure and use efforts to secure confidential treatment of such information at least as diligent as such Party would use to protect its own confidential information, but in no event less than reasonable efforts.  In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information hereunder.

8.4          Confidentiality of this Agreement and its Terms.  Except as otherwise provided in this Article 8, each Party agrees not to disclose to any Third Party the existence of this Agreement or the terms of this Agreement without the prior written consent of the other Party hereto, except that each Party may disclose the terms of this Agreement that are not otherwise made public as contemplated by Section 8.5 as permitted under Section 8.3.

8.5          Public Announcements.

(a)           As soon as practicable following the date hereof, the Parties shall each issue a mutually agreed to press release announcing the existence of this Agreement.  Except as required by Applicable Law (including disclosure requirements of the U.S. Securities and Exchange Commission (“SEC”) or any stock exchange on which securities issued by a Party or its Affiliates are traded), neither Party shall make any other public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld or delayed; provided that each Party may make any public statement in response to questions by the press, analysts, investors or those attending industry conferences or financial analyst calls, or issue press releases, so long as any such public statement or press release is not inconsistent with prior public disclosures or public statements approved by the other Party pursuant to this Section 8.5 and which do not reveal non-public information about the other Party.  In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment upon the proposed text.

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(b)           The Parties will coordinate in advance with each other in connection with the filing of this Agreement (including redaction of certain provisions of this Agreement) with the SEC or any stock exchange on which securities issued by a Party or its Affiliate are traded, and each Party will use reasonable efforts to seek confidential treatment for the terms proposed to be redacted; provided that each Party will ultimately retain control over what information to disclose to the SEC or any stock exchange as the case may be, and provided further that the Parties will use their reasonable efforts to file redacted versions with any governing bodies which are consistent with redacted versions previously filed with any other governing bodies.  Other than such obligation, neither Party (or its Affiliates) will be obligated to consult with or obtain approval from the other Party with respect to any filings to the SEC or any stock exchange.

(c)           Except as expressly permitted in this Agreement or as required by Applicable Law, neither Party may use the other Party’s trademarks, service marks or trade names, or otherwise refer to or identify that other Party in marketing or promotional materials, press releases, statements to news media or other public announcements, without the other Party’s prior written consent, which that other Party may grant or withhold in its sole discretion.

8.6          Publication.

(a)           Publication of the Partner Know-How. At least thirty (30) days prior to Optimer (which shall include its Affiliates and its licensees) publishing or distributing any marketing or promotional material that includes Partner Know-How or references or claims in respect of Partner Know-How and such Partner Know-How or references or claims in respect thereto have not been previously published by either Party or its Affiliates or licensees and are not otherwise already generally known or available, Optimer shall provide to Partner’s Alliance Manager a draft copy thereof for its review (unless Optimer is required by law to publish or distribute such Information sooner, in which case Optimer shall provide such draft copy to Partner’s Alliance Manager as much in advance of such publication or distribution as possible).  Optimer shall consider in good faith any comments provided by Partner during such thirty (30)-day (or shorter) period and in the event that Partner reasonably believes that the references or claims in respect of Partner Know-How in such material do not comply with Applicable Laws, the matter shall be raised at the JSC and subject to the JSC escalation procedure prior to publication or distribution (as applicable).  In addition, Optimer shall, at Partner’s reasonable request, remove therefrom any Confidential Information of Partner, except Optimer shall have the right to publicly disclose any Information, including Confidential Information, pertaining to safety or efficacy of the Compound or product containing or comprising Compound, that it believes in good faith it is obligated by Applicable Law or appropriate to conform to applicable regulatory requirements to disclose.  Notwithstanding the foregoing, Optimer shall not be required to provide a draft of any marketing or promotional material to Partner’s Alliance Manager or otherwise have any obligations under this Section 8.6(a) in respect of such marketing or promotional material which it is already obligated to disclose to Partner’s Alliance Manager under Section 8.6(b).

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(b)           Publication of the Product Information.  At least thirty (30) days prior to a Party (which shall include its Affiliates and, in the case of Partner, Sublicensees and in the case of Optimer its licensees other than APEL) publishing, publicly presenting, and/or submitting for written or oral publication a manuscript, presentation, abstract, marketing document or the like that includes Information relating to any Compound or Product that has not been previously published (including but not limited to proposed, current and completed trials), such Party shall provide to the other Party’s Alliance Manager a draft copy thereof for its review (unless such Party is required by law to publish such Information sooner, in which case such Party shall provide such draft copy to the other Party’s Alliance Manager as much in advance of such publication as possible).  The publishing Party shall consider in good faith any comments provided by the other Party during such thirty (30)-day (or shorter) period and in the event that the non-publishing party raises any concerns the matter shall be raised at the JSC and subject to the JSC escalation procedure prior to publication.  In addition, the publishing Party shall, at the other Party’s reasonable request, remove therefrom any Confidential Information of such other Party, except each Party shall have the right to publicly disclose any information, including Confidential Information, pertaining to safety or efficacy of the Product that such Party believes in good faith it is obligated by Applicable Law or appropriate to conform to applicable regulatory requirements to disclose; provided that it shall delay publication for a period not to exceed two (2) months in order to allow the other Party to file for patent protection as permitted by this Agreement in relation to its Data and Confidential Information.  The contribution of each Party shall be noted in all publications or presentations by acknowledgment or co-authorship, whichever is appropriate.

8.7          Prior Non-Disclosure Agreements.  As of the Effective Date, the terms of this Article 8 shall supersede any prior non-disclosure, secrecy or confidentiality agreement between the Parties (or their Affiliates) dealing with the subject of this Agreement, including without limitation the Confidentiality Agreement.  Any information disclosed under such prior agreements shall be deemed disclosed under this Agreement.

8.8          Equitable Relief.  Given the nature and value of the Confidential Information and the competitive damage and irreparable harm that would result to a Party upon unauthorized disclosure, use or transfer of its Confidential Information to any Third Party, the Parties agree that monetary damages may not be a sufficient remedy for any breach of this Article 8.  If the Receiving Party becomes aware of any breach or threatened breach of this Article 8 by a Third Party to whom the Receiving Party disclosed the Disclosing Party’s Confidential Information, the Receiving Party promptly shall notify the Disclosing Party and cooperate with the Disclosing Party to regain possession of its Confidential Information and prevent any further breach. In addition to all other remedies, a Party shall be entitled to seek specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Article 8 without furnishing proof of actual damages.

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ARTICLE 9

PATENT PROSECUTION AND ENFORCEMENT

9.1          Ownership of Licensed Technology.Optimer has, and shall retain all right, title and interest in and to, the Licensed Patents and Licensed Know-How.

9.2          Ownership of Inventions. Each Party shall solely own, and, except as otherwise provided herein, that Party alone shall have the right to apply for, Patents claiming any Inventions made solely by that Party or its Affiliate or their respective employees or independent contractors in the course of performing work pursuant to this Agreement.  Inventions that are jointly invented (as determined by US patent law) by employees or independent contractors of Optimer and Partner or their respective Affiliates (“Joint Inventions”) shall be owned jointly by Optimer and Partner.  Each Party shall be free (without requiring the consent of, or accounting for any sums to the other Party) to exploit and to grant licenses or other rights under Joint Inventions and Joint Patents except to the extent that such Joint Inventions or Joint Patents are exclusively licensed to the other Party pursuant to this Agreement.  Each Party shall promptly disclose to the other Party all Inventions arising under this Agreement prior to the filing of any patent application claiming such Invention.  The Parties will mutually agree to a form of invention disclosure to be used by the Parties in disclosing any such Invention.

9.3          Patent Prosecution and Maintenance.

(a)           Licensed Patents.  Optimer shall have the first right, but not the obligation, to control and manage the preparation, filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all Licensed Patents in the Territory, at Optimer’s sole cost and expense and by counsel of its own choice. Optimer (itself or through its patent counsel) shall keep Partner (or Partner’s patent counsel) reasonably informedof progress with regard to the preparation, filing, prosecution and maintenance of Licensed Patents in the Territory.  Optimer will notify Partner of all warning letters, conflict proceedings, reexaminations, reissuance, oppositions, revocation proceedings or any other material challenge relating to a given Licensed Patent in the Territory.  Optimer will consult with, and consider in good faith the requests and suggestions of, Partner with respect to strategies for filing and prosecuting Licensed Patents in the Territory.  Optimer shall keep Partner regularly updated as to the progress of prosecution of and all other proceedings relating to the filing, maintenance and any challenge to the Licensed Patents in the Territory. Optimer shall provide reasonable prior written notice to Partner before taking any material step in relation to the prosecution or maintenance of or any other proceedings relating to the Licensed Patents in the Territory and shall allow Partner to make comments and recommendations in relation thereto, which Optimer shall reasonably consider in good faith.  If Partner reasonably believes that a representation or omission made or proposed to be made by Optimer or its patent counsel is liable to mislead a patent office then the Parties will discuss the issue. If Optimer is not willing to change its view then to the extent necessary to comply with anti-trust law, Partner shall be

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entitled to contact such patent office directly in respect of such representation or omission.  In the event that Optimer desires to abandon or cease prosecution or maintenance of any Licensed Patent in the Territory, or not defend proceedings in relation to any Licensed Patent in the Territory, Optimer shall provide reasonable prior written notice to Partner of such intention to abandon, cease prosecution or maintenance or not defend proceedings (which notice shall, to the extent possible, be given no later than thirty (30) days prior to the next deadline for any action that must be taken with respect to any such Licensed Patent in the relevant patent office or proceeding).  In such case, at Partner’s sole discretion, upon written notice to Optimer from Partner, Partner may elect to continue prosecution and/or maintenance of any such Licensed Patent in the Territory, at its sole cost and expense and by counsel of its own choice, Optimer shall provide Partner reasonable assistance (at Partner’s expense) in doing so, and such Licensed Patent shall not be included in the definition of Valid Claim for the purposes of royalty payments by Partner hereunder but shall remain a Licensed Patent for the purposes of Section 2.1 of this Agreement.  If Optimer reasonably believes that a representation or omission made or proposed to be made by Partner or its patent counsel is liable to mislead a patent office then the Parties will discuss the issue. If Partner is not willing to change its view then to the extent necessary to comply with anti-trust law, Optimer shall be entitled to contact such patent office directly in respect of such representation or omission.  Optimer reserves all rights to practice under such Licensed Patents in and outside the Territory except as expressly licensed to Partner in this Agreement.

(b)           Joint Patents.Optimer shall have the first right, but not the obligation, to control and manage the preparation, filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all Patents that claim Joint Inventions (herein referred to as “Joint Patents”).  The determination of the countries in which to file Joint Patents shall be made by Optimer and Optimer shall have the right to direct and control all material actions relating to the prosecution or maintenance of Joint Patents, subject to Partner’s ability to comment on such filings and Optimer’s reasonable consideration of such comments. If Partner reasonably believes that a representation or omission made or proposed to be made by Optimer or its patent counsel is liable to mislead a patent office then the Parties will discuss the issue. If Optimer is not willing to change its view then to the extent necessary to comply with anti-trust law, Partner shall be entitled to contact such patent office directly in respect of such representation or omission All out of pocket costs of filing, prosecuting and maintaining Joint Patents shall be shared 50/50, unless otherwise agreed or unless Partner provides notice to Optimer that it does not wish to share such costs in relation to any particular Joint Patent in which case (i) Partner shall have no liability for such costs in relation to such Joint Patent, (ii) Partner shall not be able to exploit itself or through any third party or license or assign its share in such Joint Patent and (iii) Optimer may elect to continue prosecution and/or maintenance of such Joint Patent at its sole cost and expense.  In the event that Optimer desires not to file a Joint Patent in any particular country or to abandon or cease prosecution or maintenance of any Joint Patent, or not defend proceedings in relation to any Joint Patent, Optimer shall provide reasonable prior written notice to Partner of such intention not to file or to abandon or cease prosecution or maintenance or not defend proceedings (which notice shall, to the extent possible,

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be given no later than thirty (30) days prior to the next deadline for any action that must be taken with respect to any such Joint Patent in the relevant patent office or proceeding).  In such case, at Partner’s sole discretion, upon written notice to Optimer from Partner, Partner may elect to file and/or continue prosecution and/or maintenance of any such Joint Patent, at its sole cost and expense and by counsel of its own choice, and (1) such Joint Patent shall not be included in the definition of Valid Claim and (2) Optimer shall not be able to exploit itself or through any Third Party or license or assign its share in such Joint Patent.

(c)           Partner Patents.  Partner shall have the first right but not obligation to control and manage the preparation, filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all Partner Patents, at Partner’s sole cost and expense and by counsel of its own choice.  Partner shall keep Optimer reasonably informed of progress with regard to the preparation, filing, prosecution and maintenance of Partner Patents. In the event that Partner desires to abandon or cease prosecution or maintenance of any Partner Patent, or not defend proceedings in relation to any Partner Patent, outside the Territory (and, if Optimer has obtained an exclusive license under such Partner Patent in the Territory under Section 12.3, in the Territory) Partner shall provide reasonable prior written notice to Optimer of such intention to abandon or cease prosecution or maintenance of or not defend proceedings (which notice shall, to the extent possible, be given no later than thirty (30) days prior to the next deadline for any action that must be taken with respect to any such Partner Patent in the relevant patent office or proceeding).  In such case, at Optimer’s sole discretion, upon written notice to Partner from Optimer, Optimer may elect to continue prosecution and/or maintenance of any such Partner Patent outside the Territory (and, if Optimer has obtained an exclusive license under such Partner Patent in the Territory under Section 12.3, in the Territory), at its sole cost and expense and by counsel of its own choice in Partner’s name, and Partner shall provide Optimer reasonable assistance (at Optimer’s expense) in doing so.  If Partner reasonably believes that a representation or omission made or proposed to be made by Optimer or its patent counsel is liable to mislead a patent office then the Parties will discuss the issue. If Optimer is not willing to change its view then to the extent necessary to comply with anti-trust law, Partner shall be entitled to contact such patent office directly in respect of such representation or omission. Partner reserves all rights to practice under such Partner Patents outside the Territory (and if Optimer has obtained an exclusive license under such Partner Patent in the Territory under Section 12.3, in the Territory) in respect of all products other than those which contain or comprise a Compound.

9.4          Infringement by Third Parties.

(a)           Notice.  In the event that either Optimer or Partner becomes aware of any infringement or threatened infringement by a Third Party of any Licensed Patents or Partner Patents, it will notify the other Party in writing to that effect.  Any such notice shall include evidence to support an allegation of infringement or threatened infringement by such Third Party.

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(b)           Licensed Patents and Joint Patents.  Partner shall have the first right, but not the obligation, to bring and control any action or proceeding with respect to alleged or threatened infringement of any Licensed Patent or Joint Patent in the Territory, at Partner’s sole cost and expense and by counsel of its own choice.  Partner shall reasonably cooperate with Optimer in strategizing with respect to, and preparing and presenting, any such action.  Optimer shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.  If Partner fails to bring any such action within (i) ninety (90) days following the notice of alleged infringement, or (ii) ten (10) days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such action, whichever comes first, then Optimer shall have the right, but not the obligation, to bring and control any such action, at Optimer’s sole cost and expense and by counsel of its own choice.  Partner shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.

(c)           Partner Patents.  Partner shall have the first right, but not the obligation, to bring and control any action or proceeding with respect to alleged or threatened infringement of any Partner Patent, at Partner’s sole cost and expense and by counsel of its own choice.  Partner shall reasonably cooperate with Optimer in strategizing with respect to, and preparing and presenting, any such action.  Optimer shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.  If Partner fails to bring any such action outside the Territory (or, if Optimer has obtained an exclusive license under such Partner Patent in the Territory under Section 12.3, in the Territory) within (i) ninety (90) days following the notice of alleged infringement, or (ii) ten (10) days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such action, whichever comes first, then Optimer shall have the right, but not the obligation, to bring and control any such action outside the Territory (and, if Optimer has obtained an exclusive license under such Partner Patent in the Territory under Section 12.3, in the Territory), at Optimer’s sole cost and expense and by counsel of its own choice.  Partner shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.

(d)           Cooperation; Award.  In the event a Party brings an infringement action in accordance with this Section 9.4, the other Party shall cooperate fully, including, if required to bring such action, the furnishing of a power of attorney or being named as a party.  Neither Party shall enter into any settlement or compromise of any action under this Section 9.4 which would in any manner alter, diminish, or be in derogation of the other Party’s rights under this Agreement without the prior written consent of such other Party, which shall not be unreasonably withheld.  Except as otherwise agreed to in writing by the Parties, any recovery realized as a result of such action shall be used first to reimburse the documented out-of-pocket legal expenses of the Parties relating to such action, and any remainder shall be retained by the Party that brought and controlled such action for purposes of this Agreement, except that any such remainder retained by Partner shall be treated as Net Sales for purposes of this Agreement and included in Net Sales for purposes of calculating Averages Sales Price under the Supply Agreement.

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9.5          Infringement of Third Party Rights. Each Party shall promptly notify the other Party in writing of any allegation by a Third Party that the activity of either Party pursuant to this Agreement infringes or may infringe the intellectual property rights of such Third Party.  Optimer shall have the sole right to control any defense of any such claim involving alleged infringement of Third Party rights by Optimer’s activities, at Optimer’s sole cost and expense and by counsel of its own choice, and Partner shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.  Partner shall have the sole right to control any defense of any such claim involving alleged infringement of Third Party rights by Partner’s activities, at Partner’s sole cost and expense and by counsel of its own choice, and Optimer shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.  Neither Party shall enter into any settlement or compromise of any action under this Section 9.4 which would in any manner alter, diminish, or be in derogation of the other Party’s rights under this Agreement without the prior written consent of such other Party, which shall not be unreasonably withheld.

9.6          Patent Term Restoration.  At the request of the Party owning any Patents subject to this Agreement, the Parties hereto will cooperate with each other in obtaining patent term restoration, extensions and/or any other extensions of such Patents as available under Applicable Laws.

9.7          Trademarks.  Partner shall own and be responsible for all trademarks, trade names (including the trade names referred to in Section 4.2), branding, or logos related to Products in the Field in the Territory, and will be responsible for selecting, registering, defending, and maintaining the same at Partner’s sole cost and expense.

ARTICLE 10

REPRESENTATIONS, WARRANTIES AND COVENANTS; LIMITATION OF LIABILITY

10.1        Mutual Representations, Warranties and Covenants.  Each Party hereby represents and warrants to the other Party, as of the Effective Date, as follows:

(a)           Duly Organized.  Such Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and failure to have such would prevent such Party from performing its obligations under this Agreement.

(b)           Due Authorization; Binding Agreement.  The execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary corporate action.  This Agreement is a legal and valid obligation binding on such Party and

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enforceable in accordance with its terms and does not: (i) to such Party’s knowledge and belief, violate any law, rule, regulation, order, writ, judgment, decree, determination or award of any court, governmental body or administrative or other agency having jurisdiction over such Party; nor (ii) conflict with, or constitute a default under, any agreement, instrument or understanding, oral or written, to which such Party is a party or by which it is bound.

(c)           Consents.  Such Party has obtained, or is not required to obtain, the consent, approval, order or authorization of any Third Party, or has completed, or is not required to complete any registration, qualification, designation, declaration, or filing with, any Regulatory Authority or governmental authority, in connection with the execution and delivery of this Agreement and the performance by such Party of its obligations under this Agreement.

(d)           No Conflicting Grant of Rights.  Such Party has the right to grant the licenses contemplated under this Agreement and has not, and will not during the Term, grant any right to any Third Party which would conflict with the rights granted to the other Party hereunder.

(e)           Employee/Contractor Agreements.  All of such Party’s employees or contractors acting on its behalf pursuant to this Agreement are and will be obligated under a binding written agreement to comply with obligations of confidentiality and non-use consistent with those set forth in Article 8 and, (i) in the case of Partner, to assign to Partner or its Affiliate all Inventions (ii) in the case of Optimer to assign or exclusively license (with the right to sublicense) to Optimer all Data and Information relating to Compound and Products resulting from such activities.

(f)            Debarment.  Such Party is not debarred or disqualified under the United States Federal Food, Drug and Cosmetic Act or comparable Applicable Laws in the Territory and it does not, and will not during the Term, employ or use the services of any person or entity who is debarred or disqualified, in connection with the Development, manufacture or commercialization of the Products.  In the event that either Party becomes aware of the debarment or disqualification or threatened debarment or disqualification of any person or entity providing services to such Party, including the Party itself and its Affiliates or Sublicensees, which directly or indirectly relate to activities under this Agreement, the other Party shall be immediately notified in writing and such Party shall cease employing, contracting with, or retaining any such person to perform any services under this Agreement.

10.2        Representations and Warranties of Optimer.  Optimer represents and warrants to Partner that, as of the Effective Date (save in respect of the representations and warranties in Sections 10.2(h) and (k) which are given for the Term):

Intellectual Property

(a)           the rights or licenses granted to Partner under this Agreement are not subject to any right, license or interest by the U.S. Federal Government or any US state

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government (including any agencies or divisions thereof) due to funding obtained with respect to Products or clinical trials carried out in government-owned hospitals;

(b)           to the actual knowledge of Optimer’s […***…] (“Optimer’s Actual Knowledge”), no Third Party is infringing or is threatening to infringe or make unauthorized use of the any of the Licensed Technology;

(c)           to Optimer’s Actual Knowledge, there are no threatened or pending actions, suits, claims, interference proceedings or governmental investigations in any court, arbitration, patent office, administrative or other tribunal which are concerned with a challenge to the validity or ownership of any Compounds or the Licensed Technology by or against Optimer or any Optimer Current Affiliates and neither Optimer nor any Optimer Current Affiliate has received written notice of the same;

(d)           Neither Optimer nor any Optimer Current Affiliate has received written notice of any pending or threatened claims or actions claiming that the manufacture, sale, offering for sale, importation or use of the Products would infringe the intellectual property rights of any Third Party; and to Optimer’s Actual Knowledge no action, suit or claim has been initiated or threatened against Optimer, or against PAR, with respect to the Licensed Technology or Optimer’s right to enter into and perform its obligations under this Agreement;

(e)           the details of the Licensed Patents that are set out in EXHIBIT A are correct. Without derogation from the generality of the foregoing, the granted Patents are subsisting and all applications for Patents indicated in EXHIBIT A as pending are pending.  The legal and beneficial owner or applicant for registration of each of the Patents specified in EXHIBIT A is correctly stated;

(f)            the Licensed Technology is the only intellectual property Controlled by Optimer or any Optimer Current Affiliates in relation to the Existing Products in the Territory;

(g)           to Optimer’s Actual Knowledge, all actions required to be taken before the Effective Date to prosecute and maintain the Licensed Patents set out in EXHIBIT A (including payment of all applicable fees due and payable before such date) have been taken;

(h)           Optimer shall not grant any lien or security interest in favor of a Third Party in respect of the Licensed Technology or any revenue payable by Partner to Optimer pursuant to this Agreement unless such lien or security interest is subordinate and subject to the rights granted to Partner under the Licensed Technology as set forth in this Agreement or would not otherwise be reasonably expected to adversely affect such rights;

(i)            Optimer has provided Partner a true and complete copy of the PAR Agreement, the PAR Agreement is in full force and effect in accordance with its terms as of the Effective Date, and is binding on the parties thereto and the execution and delivery of this

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Agreement by Optimer and the performance by Optimer of its obligations under this Agreement in accordance with its terms do not and will not conflict with, or constitute a default under the PAR Agreement or create a right of termination of the PAR Agreement in PAR’s favor, and to Optimer’s Actual Knowledge neither PAR nor Optimer is in material breach of any of its obligations under the PAR Agreement;

(j)            The PAR Collaboration Agreement has terminated in all respects and the assignment in Section 2.6(g)(i) of the PAR Agreement has taken effect and the license in Section 2.6(g)(ii) of the PAR Agreement has been granted;

(k)           Optimer (i) is not in breach of and shall not breach its obligations under the PAR Agreement or take any other actions, in each case which would result in the termination of such agreement  and shall promptly inform Partner in the event that it receives written notice from PAR purporting to unilaterally terminate the PAR Agreement and (ii) shall not amend the PAR Agreement in a manner that would be to the detriment of the rights and obligations of Partner under this Agreement without Partner’s prior written consent;

(l)            This Agreement is consistent with the PAR Agreement in all material respects;

(m)          As of the Effective Date (i) that certain API Manufacturing and Supply Agreement between Optimer and Biocon Limited (“Biocon”), dated May 18, 2010, as amended (the “Biocon Agreement”) and that certain Manufacturing Services Agreement between Optimer and Patheon Inc. (“Patheon”), dated June 1, 2011, as amended (the “Patheon Agreement”) are in full force and effect in accordance with their respective terms; (ii) to Optimer’s Actual Knowledge, neither Biocon nor Optimer is in material breach of any of its obligations under the Biocon Agreement; and (iii) to Optimer’s Actual Knowledge, neither Patheon nor Optimer is in material breach of any of its obligations under the Patheon Agreement;

Regulatory

(n)           Partner has been granted access to true and complete copies of all of Optimer’s and the Optimer Current Affiliates’ regulatory filings for Products in the Field;

(o)           all clinical trials for Products conducted by or on behalf of Optimer and the Optimer Current Affiliates’ and included in Optimer’s regulatory filings for Products in the Field have been carried out in all material respects in accordance with all Applicable Laws;

(p)           it Controls or has a right of reference with respect to the Data used to support its regulatory filings for Products in the Field;

(q)           it has disclosed to Partner all clinical data generated by or on behalf of Optimer relating to SAEs relating to Products.

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(r)           Neither Optimer nor any Optimer Current Affiliate has knowingly withheld from any Regulatory Authority any material information in the possession of Optimer or its Affiliates related to the safety, toxicity, quality or efficacy of the Existing Product (i) that has been requested by a Regulatory Authority, or (ii) that it reasonably considers to be material for evaluation of the safety, toxicity, quality and/or efficacy of the Existing Product by a Regulatory Authority;

(s)           to Optimer’s Actual Knowledge, neither Optimer nor its Affiliates or any of its or their officers, agents or employees (during the course of their duties) in relation to researching, and developing the Existing Product has done or omitted to do anything which is a material contravention of any Applicable Law;

(t)            there has been no failure to obtain valid consents from data subjects involved in any clinical trials of the Existing Product;

(u)           it has disclosed to Partner all  the results of all clinical trials that have been started (i.e., in which patients have been enrolled) by or on behalf of Optimer and the Optimer Current Affiliates relating to the Existing Product whether discontinued or completed except for the clinical trials identified to Partner as […***…];

General

(v)            neither Optimer nor any Optimer Affiliate is engaged in any litigation, opposition or arbitration proceedings affecting or relating to the Products anywhere in the world (including but not limited to claims relating to product liability) as plaintiff or defendant and there are no such proceedings pending or threatened by, or against Optimer or any Optimer Affiliate and there are no material facts which Optimer believes are likely to result in a material judgment against Optimer or any Optimer Affiliate relating to the Products;

(w)           Optimer has not knowingly withheld from Partner any material CMC Information in the possession of Optimer or the Optimer Current Affiliates regarding the  Existing Product (i) that has been requested by Partner, or (ii) that it reasonably considers to be material to Partner’s evaluation of the quality of the Existing Product.  As used herein, “CMC Information” means information of the type required to appear in Module 3 of EMA MAA No. EMEA/H/C/002087;

(x)           Optimer has not knowingly withheld from Partner any material information in the possession of Optimer or the Optimer Current Affiliates related to the market and sales potential of the Existing Product (i) that has been requested by Partner, or (ii) that it reasonably considers to be material to Partner’s evaluation of the market and sales potential of the Existing Product in the Territory;

(y)           no US export control license is required in order (i) for Optimer to enter into this Agreement, (ii) for Optimer to transfer Licensed Know-How and Data to Partner, (iii) to

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Optimer’s Actual Knowledge, for Partner to purchase any Compounds and/or Existing Products, or (iv) to Optimer’s Actual Knowledge, in order to enable Partner to exercise its rights under this Agreement;

(z)no approval from U.S. federal government or any U.S. state government (including any agency or division thereof) or to Optimer’s Actual Knowledge under any Applicable Law, is required (i) in order to enter into this Agreement, (ii) transfer Licensed Know-How and Data to Partner, (iii) for Products to be manufactured for commercial distribution of such Products either inside or outside the US or (iv) in order to enable Partner to exercise its rights under this Agreement;

(aa)there are (i) no Competitive Products under development or being commercialized in the Field in the Territory that are Controlled by or on behalf of Optimer or its Affiliates and (ii) no products are under development by or on behalf of Optimer or its Affiliates in the Field in the Territory that are aimed to result in a pharmaceutical product for the treatment of CDI;

(bb)all material information referred to in Sections 10.2(q),(r),(w) and (x) has been made available to Partner at least twenty one (21) days prior to the Effective Date; and

(cc)except for Information Controlled by APEL (or its affiliates or sublicensees) under the APEL Agreement, Optimer and the Optimer Current Affiliates Control all material Information used by or on behalf of Optimer and the Optimer Current Affiliates in relation to the Existing Product.

10.3Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 10 OF THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND IN THIS AGREEMENT, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY OF PATENTS, OR THE PROSPECTS OR LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OF THE PRODUCTS.

10.4Limitation of Liability.  EXCEPT FOR (A) LOSSES CAUSED BY A PARTY’S BREACH OF ARTICLE 8, OR (B) LOSSES CAUSED BY A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD OR FRAUDULENT MISREPRESENTATION, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided however, that this Section 10.4 shall not be construed to limit either Party’s indemnification obligations under Article 11.  For clarification, payments to be madeunder Article 6 shall not be considered special, incidental, consequential or punitive damages.

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ARTICLE 11

INDEMNIFICATION

11.1        Indemnification of Optimer.  Partner shall indemnify and hold harmless each of Optimer and its Affiliates and their respective directors, officers, shareholders, employees, agents, servants, successors and assigns of any of the foregoing (the “Optimer Indemnitees”), from and against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“Losses”) incurred by any Optimer Indemnitee resulting from any claims, actions, suits or proceedings brought by a Third Party (a “Third Party Claims”) to the extent arising from, or occurring as a result of:  (a)  the Development, manufacture, use, handling, storage, import, offer for sale, sale or other disposition of Products in the Territory by Partner or its Affiliates or Sublicensees; (b) gross negligence or willful misconduct in connection with Partner’s performance of its obligations or exercise of its rights under this Agreement; or (c) any material breach of any representations, warranties or covenants by Partner set out in Section 10 of this Agreement; except to the extent such Third Party Claims fall within the scope of the indemnification obligations of Optimer set forth in Section 11.2 or arise out of the material breach by Optimer Europe of any of the terms of the Supply Agreement.

11.2        Indemnification of Partner.  Optimer shall indemnify and hold harmless each of Partner and its Affiliates and the directors, officers and employees of such entities, and the successors and assigns of any of the foregoing (the “Partner Indemnitees”), from and against any and all Losses incurred by any Partner Indemnitee resulting from any Third Party Claims to the extent arising from, or occurring as a result of: (a)  the Development, manufacture, use, handling, storage, import, offer for sale, sale or other disposition of Products outside the Territory (and, if Optimer obtains a license under Section 12.3(b), in the Territory) by Optimer or its Affiliates or licensees except for APEL; (c) gross negligence or willful misconduct in connection with Optimer’s performance of its obligations or exercise of its rights under this Agreement;or (d) any material breach of any representations, warranties or covenants by Optimer set out in Section 10 of this Agreement, except to the extent such Third Party Claims fall within the scope of the indemnification obligations of Partner set forth in Section 11.1 or arise out of the material breach by Partner of any of the terms of the Supply Agreement.

11.3        Procedure.  A party that intends to claim indemnification under this Article 11 (the “Indemnitee”) shall promptly notify the indemnifying Party (the “Indemnitor”) in writing of any Third Party Claim, in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof. The Indemnitee may participate at its expense in the Indemnitor’s defense of and settlement negotiations for any Third Party Claim with counsel of the Indemnitee’s own selection. The indemnity arrangement in this Article 11 shall not apply to amounts paid in settlement of any action with respect to a Third Party Claim, if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed

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unreasonably.  The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim shall only relieve the Indemnitor of its indemnification obligations under this Article 11 if and to the extent the Indemnitor is actually prejudiced thereby.  The Indemnitee shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action with respect to a Third Party Claim covered by this indemnification.

11.4        Insurance.  Each Party, at its own expense, shall maintain product liability and other appropriate insurance (or self-insure) in an amount consistent with industry standards during the Term and shall name the other Party as an additional insured with respect to such insurance.  Each Party shall provide a certificate of insurance (or evidence of self-insurance) evidencing such coverage to the other Party upon request.

ARTICLE 12

TERM AND TERMINATION

12.1        Term.  This Agreement shall commence on the Effective Date, and unless terminated earlier as provided in this Article 12, shall continue in full force and effect on a Product-by-Product basis until Partner has no remaining payment obligations with respect to such Product (the “Term”).  Upon expiration (but not an earlier termination) of this Agreement in respect of a particular Product  and payment in full by Partner of any amounts then due under this Agreement and the Supply Agreement in respect of such Product, Partner shall have a perpetual, non-exclusive, fully paid-up, royalty free license which includes the right to sublicense without Optimer’s consent through multiple tiers of sublicense, under the Licensed Technology and Optimer’s interest in any Joint Patents to Develop, keep, make, have made (excluding the manufacture of Compounds), use, sell, offer for sale, dispose of, offer to dispose of, export and import and otherwise commercialize such Product in the Field in the Territory.  For clarity, Partner shall retain ownership of Regulatory Approvals on expiration of this Agreement.

12.2        Early Termination.

(a)           Mutual Agreement.  The Parties may terminate this Agreement in its entirety before the end of the Term by mutual written agreement of the Parties.

(b)           Material Breach.  A Party shall have the right to terminate this Agreement in its entirety before the end of the Term upon written notice to the other Party if such other Party is in material breach of this Agreement and has not cured such breach within ninety (90) days (thirty (30) days with respect to any payment breach) after notice from the terminating Party requesting cure of the breach.  Any such termination shall become effective at the end of such ninety (90) day (thirty (30) day with respect to any payment breach) period unless the breaching Party has cured any such breach or default prior to the end of such period. This Section 12.2(b) together with Section 5.1(e) defines exclusively the Parties’ right to terminate in case of any material breach of this Agreement.

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(c)           Bankruptcy.  A Party shall have the right to terminate this Agreement in its entirety before the end of the Term upon written notice to the other Party upon the bankruptcy, dissolution or winding up of such other Party, or the making or seeking to make or arrange an assignment for the benefit of creditors of such other Party, or the initiation of proceedings in voluntary or involuntary bankruptcy, or the appointment of a receiver or trustee of such other Party’s property that is not discharged within ninety (90) days.

(d)           Other Optimer Termination Right.  Optimer shall have the right to terminate this Agreement in its entirety before the end of the Term immediately upon written notice to Partner if Partner or any of its Affiliates or Sublicensees, directly or indirectly through any Third Party, commences any 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 Licensed Patent.

(e)           Other Partner Termination Right.  Partner shall have the right to terminate this Agreement in its entirety before the end of the Term for any reason or for no reason at any time upon at least one hundred eighty (180) days’ prior written notice to Optimer.

12.3        Rights on Termination.

(a)           Termination of Rights and Obligations.  Upon expiration or termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate, except as provided in this Section 12.3 and Sections 12.5 and 12.8. Expiration or termination of this Agreement for any reason shall result in the immediate disbanding and termination of the JSC. Within thirty (30) days following the termination of this Agreement, each Party shall deliver to the other Party any and all Confidential Information of such Party then in its possession, except for one (1) copy which may be kept in such Party’s (or its counsel’s) office for archival purposes and except to the extent a Party retains the right to use such Confidential Information pursuant to any license granted under this Agreement which survives termination of this Agreement, as applicable.

(b)           Termination, Except for Termination for Cause by Partner under Section 12.2(b) or (c).  Upon any termination of this Agreement under Section 12.2, except termination of this Agreement by Partner pursuant to Section 12.2(b) or (c):

(i)            Development Transition.  The Parties shall work together in good faith to adopt, and Optimer shall have the final decision-making power with respect to, a plan to wind-down any Development activities with respect to Products in the Territory in an orderly fashion or, at Optimer’s election, promptly transition such Development activities to Optimer or its designee, with due regard for patient safety and the rights of any subjects that are participants in any clinical trials of Products and take any actions it deems reasonably necessary or appropriate to avoid any human health or safety problems and in compliance with all Applicable Laws.  Partner shall perform or cause to be performed its outstanding non-cancellable obligations with respect to Development of any Products that existed or accrued prior to the notice date of

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termination; provided, however, that in no case shall Partner be obligated to pursue such activities for a period exceeding […***…] after the date of notice of such termination.

(ii)           Commercialization Transition.  Partner and its Sublicensees shall continue, to the extent that Partner and its Sublicensees continue to have an inventory of Products, to fulfill orders received from customers for Products in the Territory until up to […***…] after the later of (A) the date upon which Optimer notifies Partner in writing that Optimer has secured an alternative distributor or licensee for the Products and (B) Partner has initiated transition of the MAAs and Regulatory Approvals for the Products in the Territory to such distributor or licensee, but in no event for more for than […***…] after the date of notice of termination.  For the Products sold by Partner or its Sublicensees after the effective date of termination, Partner shall continue to make payments to Optimer in accordance with Article 6.  Notwithstanding the foregoing, Partner and its Sublicensees shall cease such activities upon […***…] days’ written notice given by Optimer at any time after the effective date of a termination requesting that such activities cease.  Within […***…] days after Optimer has given notice to Partner requesting the cessation of activities pursuant to the provision of this Section 12.3(b)(ii), Partner shall notify Optimer of an estimate of the quantity of Products and shelf life remaining in Partner’s inventory and Optimer shall have the right to purchase any such quantities of Products from Partner at a price mutually agreed by  the Parties.  To the extent Optimer does not purchase such quantities, Partner may sell such quantities during the […***…] days after the effective date of such termination within the shelf life remaining for such Products.

(iii)                         Assignment of Filings and Marketing Approvals.  At Optimer’s option, which shall be exercised by written notice to Partner, to the extent permitted under Applicable Law, Partner shall assign or cause to be assigned to Optimer or its designee (or to the extent not so assignable, Partner shall take all reasonable actions to make available to Optimer or its designee the benefits of) all regulatory filings and registrations (including MAAs and Regulatory Approvals) for Products in the Territory, including any such regulatory filings and registrations made or owned by its Affiliates and/or Sublicensees.  Optimer shall notify Partner before the effective date of termination whether the regulatory filings and registrations should be assigned to Optimer or its designee, and if the latter, identify the designee, and provide Partner with all necessary details to enable Partner to effect the assignment (or availability).  If Optimer fail to provide such notification prior to the effective date of termination, Partner shall assign the regulatory filings and registrations to Optimer.

(iv)          Transition.  Partner shall use Commercially Reasonable Efforts to cooperate with Optimer and/or its designee to effect a smooth and orderly transition in the Development, sale and marketing, promotion and commercialization of Products in the Territory during the notice and the wind-down periods referenced in this Section 12.3(b).  Without limiting the foregoing, Partner shall use Commercially Reasonable Efforts to conduct, in an expeditious manner, any activities to be conducted under this Section 12.3(b).  Optimer shall use Commercially Reasonable Efforts to identify and finalize an agreement or other arrangement

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with a Third Party in relation to the Products and/or, to the extent Optimer is able to take over such activities under Applicable Law, take over, directly or through an Affiliate, all activities related to Products, and in particular Development activities on-going at the time of the effective date of the termination and the transfer of the regulatory filings and registrations (including MAAs and Regulatory Approvals) into the name of Optimer or Optimer’s designee so that the wind-down period shall be as limited as possible.

(v)            Rights Become Non-Exclusive.  Notwithstanding any other provision of this Agreement, following the effective date of termination and during the wind-down periods referenced in this Section 12.3(b), the license granted to Partner with respect to Products in the Field in the Territory shall be non-exclusive and limited to the activities expressly contemplated by this Section 12.3(b), and, without limiting the foregoing, Optimer shall have the right to engage one or more other distributors and/or licensees of the Products in the Field in the Territory.

(vi)          License Grant.  Partner shall, and it hereby does, grant to Optimer, effective upon such termination, (A) an exclusive (even as to Partner but subject to Section 12.3(b)(vii)), worldwide, irrevocable, royalty-bearing license, with the right to sublicense through multiple tiers of sublicense, under the Partner Technology and Partner’s interest in the Joint Patents, to Develop, keep, make, have made, use, sell, offer for sale, dispose of, offer to dispose of and import products that include a Compound, alone or in combination with any other active pharmaceutical ingredient, in any form or formulation, and (y) an exclusive, irrevocable, Territory—limited, license, with the right to sublicense through multiple tiers of sublicense, to use and display trademarks owned by Partner or its Affiliates solely related to Products in connection with the manufacture, use, offer for sale, sale, and import products that include a Compound, alone or in combination with any other active pharmaceutical ingredient, in any form or formulation, subject in each case to compliance by Optimer with the surviving provisions of this Agreement.  Such licenses shall be royalty bearing at the rate of […***…] percent ([…***…]%) of net sales of all such terminated Products and shall be granted on the terms of Sections 2.2, 6.3(e), (f) and (g), and Article 7 of this Agreement whereby the name “Optimer” is replaced by the name “Partner” and the name “Partner” by the name “Optimer” and whereby, in Section 6.3(e), the reference to Valid Claim shall be to a Valid Claim of Partner Patents or Joint Patents. Optimer shall be obliged to use the trademarks owned by Partner or its Affiliates solely related to the terminated Product in relation to all  manufacture, use, offer for sale, sale, and importation such terminated Product in the Territory.

(vii)         Acknowledgement.  Optimer acknowledges and agrees that the Partner Technology licensed to Optimer in accordance with Section 12.3(b)(vi) shall be Controlled (as defined in the APEL Agreement) by Optimer and upon termination of this Agreement shall automatically become included in the Licensed Know-How (as defined in the APEL Agreement) and shall be licensed to APEL on the terms of the APEL Agreement.

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(viii)        Sublicensees; Third Party Agreements.  Any agreements with Sublicensees shall terminate upon termination of this Agreement, subject to rights during the wind-down period as referenced in this Section 12.3(b).  At the written request of Optimer, Partner will assign any Product-specific Third Party agreements, to the furthest extent possible, provided that such assignment is permitted under the Product-specific supply Agreement or is accepted by the Third Party.  In the event such assignment is not requested by Optimer or is not accepted by such Third Party, then the rights of such Third Party with respect to Products shall terminate upon termination of Partner’s rights.  Partner shall ensure that Sublicensees and such Third Parties (if its contract is not assigned to Optimer pursuant to this Section 12.3(b)(vii)) shall transition any remaining Products back to Optimer in the manner set forth in this Section 12.3(b) as if such Affiliate or Third Party were named herein.  Partner shall include provisions requiring compliance with these provisions in the agreements with Sublicensees and Third Parties.

(c)           Termination for Cause by Partner under Section 12.2(b) or (c).  Upon any termination of this Agreement by Partner pursuant to Section 12.2(b) or (c):

(i)            Development Wind-Down.  The Parties shall work together in good faith to adopt, and Partner shall have the final decision-making power with respect to, a plan to wind-down any Development activities with respect to Products in the Territory in an orderly fashion, with due regard for patient safety and the rights of any subjects that are participants in any clinical trials of Products and take any actions it deems reasonably necessary or appropriate to avoid any human health or safety problems and in compliance with all Applicable Laws.  Partner shall perform or cause to be performed its outstanding non-cancellable obligations with respect to Development of any Products that existed or accrued prior to the notice date of termination; provided, however, that in no case shall Partner be obligated to pursue such activities for a period exceeding […***…] after the date of notice of such termination and such activities shall be at Optimer’s cost.

(ii)           Commercialization Wind-Down.  Partner and its Sublicensees may continue, to the extent that Partner and its Sublicensees continue to have an inventory of Products, to fulfill orders received from customers for Products in the Territory until up to […***…] after the effective date of termination.  For the Products sold by Partner or its Sublicensees after the effective date of termination, Partner shall continue to make payments to Optimer in accordance with Article 6.

12.4        Rights Upon Bankruptcy.All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code and other similar laws in the Territory (collectively, the “Bankruptcy Laws”), licenses of rights to “intellectual property” as defined in the applicable Bankruptcy Laws.  If a case is commenced during the Term by or against a Party under any Bankruptcy Laws, then, unless and until this Agreement is rejected as provided in such Bankruptcy Laws, such Party (in any capacity, including debtor-in-possession) and its successors and assigns (including a trustee serving under such Bankruptcy Laws) shall perform all of the

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obligations provided in this Agreement to be performed by such Party.  If a case is commenced during the Term by or against a Party under any Bankruptcy Laws, this Agreement is rejected as provided in such Bankruptcy Laws and the other Party elects to retain its rights hereunder as provided in such Bankruptcy Laws, then the Party subject to such case under such Bankruptcy Laws (in any capacity, including debtor-in-possession) and its successors and assigns (including a trustee serving under such Bankruptcy Laws), shall provide to the other Party copies of all such intellectual property and all embodiments thereof including all Information necessary for such other Party to prosecute, maintain and enjoy its rights under the terms of this Agreement promptly upon such other Party’s written request therefor.  All rights, powers and remedies of the non-bankrupt Party as provided herein are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or in equity (including, without limitation, the Bankruptcy Laws) in the event of the commencement of a case by or against a Party under any Bankruptcy Laws.

12.5        PAR Tripartite Agreement.  Prior to the execution of this Agreement PAR, Partner and Optimer have executed the PAR Tripartite Agreement by which PAR confirms that the rights granted to Optimer under the PAR Agreement shall be transferred directly to Partner in the event that the PAR Agreement terminates for any reason or that Optimer ceases to exist for any reason.

12.6        Exercise of Right to Terminate.  The use by either Party hereto of a termination right provided for under this Agreement shall not give rise to the payment of damages or any other form of compensation or relief to the other Party with respect thereto.

12.7        Damages; Relief.  Subject to Section 12.6 above, termination of this Agreement shall not preclude either Party from claiming any other damages, compensation or relief that it may be entitled to upon such termination.

12.8        Accrued Obligations; Survival.  The expiration or termination of this Agreement, in whole or part, for any reason shall not release either Party from any liability which, at the time of such expiration termination, has already accrued to such Party or which is attributable to a period prior to such expiration or termination, nor will any expiration or termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, at law or in equity, with respect to breach of this Agreement.  For clarity, any sums owed to Partner or Optimer as a result of any overpayment or underpayment by Partner, respectively, determined pursuant to Section 7.6 and 7.7 shall be immediately due and payable on termination. In addition, upon expiration or termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate, except those described in the following Articles and Sections: Sections 2.3, 2.6 (to the extent this Agreement expires according to its terms, but is not terminated pursuant to Section 12.2, and the Supply Agreement is thereafter terminated pursuant to Section 11.2(d) of the Supply Agreement), 4.2(d), 4.2(e) and 4.2 (f) (in the case of Sections 4.2(d), 4.2(e) and 4.2(f), after expiration but not early termination), 4.2(g) if this Agreement has expired and during any period that the Supply

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Agreement is still in force, 7.1 to the extent that there is a credit payable to Partner, 7.5, 7.6 and 7.7 (in the case of Sections 7.5, 7.6 and 7.7 for the three (3) year period following the end of the Fiscal Half Year during which expiration or early termination occurred), 8.1, 8.2, 8.3, 8.4, 8.5 8.7, 8.8, 9.1, 9.2, 9.3(b), 9.3(c), 9.4(c) and 9.4(d) (in the case of Sections 9.3(c), 9.4(c) and 9.4(d), to the extent Optimer has an exclusive license under such Partner Patent(s) in the applicable territory after expiration or termination), 9.4(b) and 9.4(d) in respect of Joint Patents, 9.7, 10.3, 10.4, 12.1, 12.3 (including any rights of Optimer described in other Sections as continuing or commencing in connection with the license granted to Optimer in Section 12.3(b)), 12.4, 12.5, 12.6, 12.7 and 12.8 and Articles 1, 11.1 to 11.3 inclusive (in respect of acts carried out prior to expiration or termination, provided that the Third Party Claim arising as a result of such acts may be brought after expiration or termination) 13 and 14.

ARTICLE 13

DISPUTE RESOLUTION

13.1        Objective.  The Parties recognize that disputes as to matters arising under or relating to this Agreement or either Party’s rights and/or obligations hereunder may arise from time to time.  It is the objective of the Parties to establish procedures to facilitate the resolution of such disputes in an expedient manner by mutual cooperation and without resort to litigation.  To accomplish this objective, the Parties agree to follow the procedures set forth in this Article 13 to resolve any such dispute if and when it arises.

13.2        Resolution by Executives.  Except as otherwise provided in Article 3, if an unresolved dispute as to matters arising under or relating to this Agreement or either Party’s rights and/or obligations hereunder arises, either Party may refer such dispute to the Executives, who shall meet in person or by telephone within thirty (30) days after such referral to attempt in good faith to resolve such dispute.  If such matter cannot be resolved by discussion of such officers within such thirty (30)-day period (as may be extended by mutual written agreement), such dispute shall be resolved in accordance with Section 13.3. The Parties acknowledge that these discussions between the Parties to resolve disputes are settlement discussions under applicable rules of evidence and without prejudice to either Party’s legal position.

13.3        Arbitration.

(a)           If the Parties do not resolve a dispute as provided in Section 13.2, and a Party wishes to pursue the matter, each such dispute that is not an “Excluded Claim” shall be resolved by binding arbitration administered by the International Centre for Dispute Resolution (ICDR) in accordance with its International Arbitration Rules as then in effect, and judgment on the arbitration award may be entered in any court having jurisdiction thereof.  The decision rendered in any such arbitration will be final and not appealable.  If either Party intends to commence binding arbitration of such dispute, such Party will provide written notice to the other Party informing the other Party of such intention and the issues to be resolved.  Within thirty

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(30) days after the receipt of such notice, the other Party may by written notice to the Party initiating binding arbitration, add additional issues to be resolved.

(b)           The arbitration shall be conducted by a panel of three (3) persons, none of whom shall be a current or former employee or director, or a then-current stockholder, of either Party, their respective Affiliates or any Sublicensee.  Within thirty (30) days after receipt of the original notice of binding arbitration (the “Notice Date”), each Party shall select one (1) person to act as arbitrator and the two (2) Party-selected arbitrators shall select a third arbitrator within ten (10) Business Days of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the ICDR.  The place of arbitration shall be New York, New York, and all proceedings and communications shall be in English.

(c)           It is the intention of the Parties that discovery, although permitted as described herein, will be limited except in exceptional circumstances.  The arbitrators will permit such limited discovery necessary for an understanding of any legitimate issue raised in the arbitration, including the production of documents.  No later than thirty (30) days after selection of the third arbitrator, the Parties and their representatives shall hold a preliminary meeting with the arbitrators, to mutually agree upon and thereafter follow procedures seeking to assure that the arbitration will be concluded within six (6) months from such meeting.  Failing any such mutual agreement, the arbitrators will design and the Parties shall follow procedures to such effect.

(d)           Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending the arbitration award.  The arbitrators shall have no authority to award punitive or any other non-compensatory damages, except as may be permitted by Section 10.4.  The arbitrators shall have the power to order that all or part of the legal or other costs incurred by a Party in connection with the arbitration be paid by the other Party. Each Party shall bear an equal share of the arbitrators’ and any administrative fees of arbitration.  In addition, in the event the arbitrators award damages to Partner pursuant to this Article 13 and Optimer is then, or becomes at any point, bankrupt or insolvent, the amount of such damages shall be applied as a credit to royalty payments otherwise owed to Optimer under Article 6.

(e)           Except to the extent necessary to confirm or enforce an award or as may be required by Applicable Law, neither a Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties.  In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

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(f)            As used in this Section, the term “Excluded Claim” shall mean (i) a dispute, controversy or claim that concerns (1) the validity, enforceability or infringement of a patent, trademark or copyright or (2) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory; or (ii) a claim for specific performance or injunctive or other equitable relief as a remedy for a breach or threatened breach of Article 8.

ARTICLE 14

GENERAL PROVISIONS

14.1        Standstill Agreement.   During the Term and for a period of […***…] years thereafter (the “Standstill Period”), neither Partner nor any of Partner’s Representatives (as defined below) will, in any manner, directly or indirectly:

(a)           make, effect, initiate, directly participate in or cause (i) any acquisition of beneficial ownership of any securities of Optimer or any securities of any subsidiary or other Affiliate of Optimer, if, after such acquisition, Partner would beneficially own more than […***…] of the outstanding common stock of Optimer, (ii) any acquisition of any assets of Optimer or any assets of any subsidiary or other Affiliate of Optimer, (iii) any tender offer, exchange offer, merger, business combination, recapitalization, restructuring, liquidation, dissolution or extraordinary transaction involving Optimer or any subsidiary or other Affiliate of Optimer, or involving any securities or assets of Optimer or any securities or assets of any subsidiary or other affiliate of Optimer, or (iv) any “solicitation” of “proxies” (as those terms are used in the proxy rules of the SEC) or consents with respect to any securities of Optimer; provided that nothing in this Section 14.1 shall preclude any activities of Partner or its Representatives with respect to the grant by Optimer or any subsidiary or other Affiliate of Optimer of any license, or the supply by Optimer or any subsidiary or other Affiliate of Optimer of any products, in each case to Partner or any of its Affiliates;

(b)form, join or participate in a group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) with respect to the beneficial ownership of any securities of Optimer;

(c)act, alone or in concert with others, to seek to control the management, board of directors or policies of Optimer;

(d)take any action that might require Optimer to make a public announcement regarding any of the types of matters set forth in Section 14.1(a);

(e)agree or offer to take, or encourage or propose (publicly or otherwise) the taking of, any action referred to in Section 14.1(a), (b), (c) or (d);

(f)assist, induce or encourage any Third Party to take any action of the type referred to in Section 14.1(a), (b), (c), (d) or (e);

***Confidential Treatment Requested

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(g)           enter into any discussions, negotiations, arrangement or agreement with any Third Party relating to any of the foregoing; or

(h)           request or propose that Optimer or any of Optimer’s Representatives amend, waive or consider the amendment or waiver of any provision set forth in this Section 14.1.

For purposes of this Agreement, a Party’s “Representatives” will be deemed to include each person or entity that is or becomes (i) a subsidiary or other Affiliate of such Party, or (ii) an officer, director, employee, partner, attorney, advisor, accountant, agent or representative of such Party or of any of such Party’s subsidiaries or other affiliates, providing such person is acting on behalf of such Party.

The obligations of Partner under this Section 14.1 above shall terminate in the event of (i) any bona fide unsolicited Third Party tender or exchange offer for at least fifty percent (50%) of the outstanding voting capital stock of Optimer, (ii) Optimer enters into any agreement for an Acquisition Transaction (as defined below) with any Third Party, or (iii) Optimer, upon the decision of Optimer’s Board of Directors, initiates a structured auction process with regard to an Acquisition Transaction, but excluding any market check in response to an unsolicited proposal made by any Third Party.  All of the provisions of this Section 14.1 above shall be reinstated and shall apply in full force according to their terms in the event that:  (A) if the provisions of Section 14.1 above shall have terminated as the result of a tender or exchange offer, such tender or exchange offer (as originally made or as amended or modified) shall have terminated (without closing) prior to the commencement of a tender or exchange offer by Partner or any of its Affiliates that would have been permitted to be made pursuant to the first sentence of this paragraph as a result of such Third Party tender or exchange offer; (B) any tender or exchange offer by Partner or any of its Affiliates (as originally made or as extended or modified) that was permitted to be made pursuant to this paragraph shall have terminated (without closing); or (C) if the provisions of Section 14.1 above shall have terminated as a result of any action by Optimer referred to in this paragraph, Optimer shall have determined not to take any of such actions (and no such transaction shall have closed) prior to the commencement of any action by Partner or any of its Affiliates that would have been permitted to be made pursuant to this paragraph as a result of the initial determination of Optimer referred to in this paragraph.  Upon reinstatement of the above provisions of Section 14.1, the provisions of this paragraph shall continue to govern in the event that any of the events described in this paragraph shall occur.

The term “Acquisition Transaction” shall mean (1) any sale, license, lease, exchange, transfer or other disposition of the assets of Optimer constituting more than fifty percent (50%) of the consolidated assets of Optimer or accounting for more than fifty percent (50%) of the consolidated revenues of Optimer in any transaction or series of related transactions (but excluding any development and/or commercial collaboration involving any of Optimer’s product candidates); (2) any offer to purchase, tender offer, exchange offer or any similar transaction or series of related transactions made by any person involving more than fifty percent (50%) of the

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outstanding shares of voting capital stock of Optimer; or (3) any merger, consolidation, business combination, share exchange, reorganization or similar transaction or series of related transactions involving Optimer, in each case excluding any such transaction whereby the holders of voting capital stock of Optimer immediately prior to any such transaction hold more than fifty percent (50%) of the voting capital stock of the acquiring or surviving entity (or its parent entity ) immediately after the consummation of any such transaction.

The expiration of the Standstill Period will not terminate or otherwise affect any of the other provisions of this Agreement.

14.2        Governing Law.  This Agreement and all questions regarding its existence, validity, interpretation, breach or performance of this Agreement and any dispute or claim arising out of or in connection with it (whether contractual or non-contractual in nature such as claims in tort, from breach of statute or regulation or otherwise), shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, United States, without reference to its conflicts of law principles to the extent those principles would require applying another jurisdiction’s laws (without limiting the Parties’ rights and obligations under Article 13).  The United Nations Conventions on Contracts for the International Sale of Goods shall not be applicable to this Agreement. Subject to Section 13, the Parties may commence an action, suit or proceeding arising out of or in connection with this Agreement in, and hereby consent to the non-exclusive jurisdiction of, the federal and state courts located in the County and State of New York.

14.3        Force Majeure.  Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement (other than failure to make payment when due) when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, fire, floods, or other acts of God, or acts, omissions or delays in acting by any governmental authority or the other Party.  The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.  Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the Party has not caused such event(s) to occur.

14.4        Assignment.  Except as expressly provided in this Section 14.4, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld; provided, however, that either Party may assign this Agreement and its rights and obligations hereunder without the other Party’s consent:

(a)           in connection with the transfer or sale of all or substantially all of the business of the assigning Party relating to Products to a Third Party, whether by merger, sale of stock, sale of assets or otherwise, provided that in the event of a transaction (whether this

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Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)), intellectual property rights of the acquiring party in such transaction (if other than one of the Parties to this Agreement) shall not be included in the intellectual property rights licensed under this Agreement; or

(b)           to an Affiliate, provided that the assigning Party shall remain liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate.

This Agreement shall be binding upon successors and permitted assigns of the Parties.  Any assignment not in accordance with this Section 14.4 will be null and void.

14.5        Severability.  If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties.  The Parties shall in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

14.6        Notices.  All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Optimer, addressed to:

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Rd., Suite C

San Diego, CA 92121, U.S.A.

Attention: Chief Executive Officer

Fax: (858) 909-0737

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If to Partner, addressed to:

Astellas Pharma, Inc.

2-3-11 Nihonbashi-Honcho

Chuo-ku, Tokyo, 103-8411

Japan

Attention: Kazunori Okimura, Vice President, Legal

Fax: +81-3-3244-5811

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.  Any such notice shall be deemed to have been given: (a) when delivered if personally delivered or sent by facsimile on a Business Day; (b) on the Business Day after dispatch if sent by nationally recognized overnight courier; and/or (c) on the third Business Day following the date of mailing if sent by mail.

14.7        Entire Agreement; Amendments.  This Agreement, together with the exhibits hereto and Letter Agreement, contain the entire understanding of the Parties with respect to the subject matter hereof and thereof and supersede and cancel all previous express or implied agreements and understandings, negotiations, writings and commitments, either oral or written, in respect to the subject matter hereof and thereof, including the Confidentiality Agreement.  This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both Parties hereto but “written instrument” does not include (a) the text of e-mails or similar electronic transmissions, or (b) the terms of any (i) shrink-wrap, click-wrap, browse-wrap or similar agreement between the Parties or (ii) website owned, operated or controlled by a Party.

14.8        Headings.  The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Sections hereof.

14.9        Independent Contractors.  It is expressly agreed that Optimer and Partner shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency.  Neither Optimer nor Partner shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

14.10      Waiver.  The waiver by either Party hereto of any right hereunder, or the failure of the other Party to perform, or a breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise.

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14.11      Cumulative Remedies.  No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

14.12      Waiver of Rule of Construction.  Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement.  Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

14.13      Interpretation.  All references in this Agreement to an Article, Section or Exhibit shall refer to an Article, Section or Exhibit in or to this Agreement, unless otherwise stated.  Any reference to any federal, national, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” and similar words means including without limitation.  The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision.  All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters, or calendar years, unless stated otherwise.  References to the singular include the plural.

14.14      No Third Party Beneficiaries.  This Agreement is neither expressly or impliedly made for the benefit of any Party other than Optimer and Partner, except as otherwise provided in this Agreement with respect to provisions under Section 7.6 for the benefit of PAR and with respect to Optimer Indemnitees under Section 11.1 and Partner Indemnitees under Section 11.2. This Agreement may be terminated, varied or amended in accordance with its terms or with the agreement of Partner and Optimer without the consent of the Optimer Indemnitees and/or Partner Indemnitees.

14.15      English Language.  This Agreement is in the English language, and the English language shall control their interpretation.  In addition, all notices required or permitted to be given under this Agreement, and all written, electronic, oral or other communications between the Parties regarding this Agreement, shall be in the English language.

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

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IN WITNESS WHEREOF, the Parties have executed this Collaboration and License Agreement as of the last date written below.

ASTELLAS PHARMA, INC.		OPTIMER PHARMACEUTICALS, INC.
By:	/s/ Yoshihiko Hatanaka	By:	/s/ Pedro Lichtinger
Name:	Yoshihiko Hatanaka	Name:	Pedro Lichtinger
Title:	President & CEO	Title:	President and Chief Executive Officer

SIGNATURE PAGE TO COLLABORATION AND LICENSE AGREEMENT

EXHIBIT A

Licensed Patents as of the Effective Date

[…***…]

***Confidential Treatment Requested

EXHIBIT B

PAR Tripartite Agreement

THIS AGREEMENT is made as of March 29, 2012 BETWEEN

(1)PAR PHARMACEUTICAL, INC., a company organized under the laws of the State of Delaware, having a place of business at 300 Tice Boulevard, Woodcliff Lake, NJ 07677, USA (“Par”);

(2)OPTIMER PHARMACEUTICALS, INC. a company organized under the laws of the State of Delaware, having a principal place of business at 10110 Sorrento Valley Rd., Suite C, San Diego, California 92121, USA (“Optimer”); and

(3)ASTELLAS PHARMA INC., a company organized under the laws of Japan, having a principal place of business at 2-3-11 Nihonbashi-Honcho, Chuo-ku, Tokyo, 103-8411, Japan (“Astellas”).

BACKGROUND

(A)Par and Optimer are parties to a Prospective Buy-Back Agreement, dated January 19, 2007 (the “Par Agreement”). Under the Par Agreement Par has, amongst other things, assigned to Optimer all of its right, title and interest in all OPT-80 Data solely and exclusively related to the Product and has granted Optimer a non-exclusive, fully-paid up, perpetual, royalty-free worldwide license, including the right to grant and authorize sublicenses, to use all OPT-80 Data primarily related to the Product but not assigned to Optimer (the “Licensed OPT-80 Data”) for any and all uses in connection with the Product (as the terms “OPT-80 Data” and “Product” are defined in the Par Agreement).

(B)Optimer and Astellas are about to enter into an agreement providing for the license to Astellas of all of Optimer’s rights in the product fidaxomicin (otherwise known as Opt-80), including its rights to the Opt-80 Data.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1Agreement of the Parties

1.1Capitalized terms used but not defined herein shall have their respective meanings assigned thereto in the Par Agreement.

1.2In the event that, to the extent permitted by the Par Agreement, the rights to the Licensed OPT-80 Data cease to be licensed to Optimer by Par under the Par Agreement for any reason, including, without limitation, the liquidation or dissolution of Optimer, and the agreement between Optimer and Astellas is continuing (or Astellas continues to have

rights to develop and commercialize the Product in the Territory (as defined below), including, without limitation, through the operation of Section 365(n) of Title 11 of the U.S. Code), then, subject to the terms and conditions hereof, the parties hereby agree that following shall apply:

(a)Par shall forthwith grant to Astellas a non-exclusive, fully-paid up, perpetual, royalty-free license, including the right to grant and authorize sublicenses, to use all OPT-80 Data primarily related to the Product but not assigned to Optimer under Section 2.6(g)(i) of the Par Agreement for any and all uses in connection with the Product in the Territory.  The term “Territory” shall mean Japan.

(b)If Par does not receive from Optimer the six and one-quarter percent (6.25%) of all Net Revenues as set out in Section 2.3(c) of the Par Agreement attributable to payments from Astellas to Optimer (the “Par Payment”), then Astellas shall pay Par amounts equal to six and one-quarter percent (6.25%) of the Net Revenues that Astellas would have had to pay to Optimer had the circumstances set forth in Section 1.2 not occurred.  Such payments shall be in accordance with Section 2.3(c) of the Par Agreement and end on the seventh (7th) anniversary of the first Commercial Launch (as defined in the Par Agreement).  For clarification, Par acknowledges and agrees that there shall not be any double-payment to Par to the extent that Par has received any Par Payment from Optimer, and Optimer acknowledges and agrees that there shall not be any double-payment by Astellas to Optimer to the extent that Astellas has paid any Par Payment to Par pursuant to this Agreement.

(c)Par shall hereby have the same right to audit Astellas’ books and records as provided to Par in Section 2.4 of the Par Agreement with respect to Optimer’s books and records.

(d)Astellas shall promptly reimburse, defend and indemnify the Par Indemnitees, and hold each of them harmless from and against, any and all Liabilities suffered, incurred, or sustained by any Par Indemnitee or to which a Par Indemnitee becomes subject, resulting from, arising out of, or relating to, the making, using, selling, offering for sale, promoting, distributing and/or otherwise commercializing Product distributed by or on behalf of Astellas or its Affiliates, agents, contractors or licensees.

(e)Indemnification Procedure.  In the event that Par intends to claim indemnification under Section 1.2(d), Par shall promptly notify Astellas in writing of any claim, complaint, suit, proceeding or cause of action in respect of which Par intends to claim such indemnification (for purposes of this Section 1.2(e), each a “Claim”), and Astellas shall have sole control of the defense and/or settlement thereof; provided that Par shall have the right to participate, at its own expense, with

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counsel of its own choosing in the defense and/or settlement of such Claim. The indemnification under Section 1.2(d) shall not apply to amounts paid with respect to settlement of any Claim if such settlement is effected without the consent of Astellas, which consent will not be unreasonably withheld or delayed. The failure to deliver written notice to Astellas within a reasonable period of time after the commencement of any such claim, suit or proceeding, if prejudicial to its ability to defend such action, shall relieve Astellas of any liability to Par under Section 1.2(d), but the omission to so deliver written notice to Astellas shall not relieve Astellas of any liability to Par under this Agreement otherwise than under Section 1.2(d). Without limiting the foregoing, Par shall keep Astellas fully informed of the progress of any Claim for which it intends to claim indemnification under Section 1.2(d). Par under Section 1.2(d), and its employees, at Astellas’s request and expense, shall provide full information and reasonable assistance to Astellas and its legal representatives with respect to such Claims covered by this indemnification.

1.3Except as provided herein, no other terms of the Par Agreement shall apply as between Par and Astellas.

2General

2.1The terms of this Agreement and the discussions, correspondence and negotiations leading to the making of this Agreement shall remain confidential to the parties who shall not disclose the terms of this Agreement to any other person save that the obligations of confidentiality in this Section 2.1 shall not extend to any matter which a party can show is in or has become part of the public domain other than as a result of a breach of the obligations of confidentiality under this Agreement; or was in its written records prior to the date of this Agreement; was independently disclosed to it by a third party entitled to disclose the same; or is required to be disclosed under any applicable law, or by order of a court or governmental body or other competent authority, including the requirements of the U.S. Securities and Exchange Commission and any stock exchange on which a party’s or its parent company’s capital stock is listed.

2.2No party shall assign, delegate, sub-contract, transfer, charge or otherwise dispose of all or any of its rights under this Agreement without the other parties’ prior written consent.  Notwithstanding the foregoing, a party may assign this Agreement and its rights and obligations hereunder without the other parties’ consent in connection with the transfer or sale of all or substantially all of the business of such party relating to fidaxomicin to a third party, whether by merger, sale of stock, sale of assets or otherwise.

2.3Nothing in this Agreement shall create or be deemed to create a partnership or joint venture or relationship of employer and employee or principal and agent between the parties.

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2.4This Agreement sets out the entire agreement between the parties in relation to its subject matter and overrides any prior correspondence or representations.  All warranties and conditions not set out in this Agreement whether implied by statute or otherwise are excluded to the extent permitted by law. No party shall have any claim against another for any misrepresentation unless such misrepresentation was made fraudulently.

2.5Any variation to this Agreement must be in writing and signed by a duly authorised representative of each of the parties to this Agreement.

2.6The waiver by any party of any breach of this Agreement shall not prevent the subsequent enforcement of that provision and shall not be deemed to be a waiver of any subsequent breach of that or any other provision.  Any waiver of any breach of this Agreement shall be in writing.

2.7If any provision of this Agreement is ruled to be invalid for any reason, that invalidity will not affect the rest of this Agreement which will remain valid and enforceable in all respects.

2.8This Agreement shall be entered into in the form of counterparts executed by each of the Parties.  A facsimile, scanned or other electronic signature shall be valid and binding upon the signatory.

2.9Any notice or other document to be given to a party under this Agreement shall be given by sending the same by any postal service requiring proof of receipt by signature to the address of the party specified in this Agreement or its registered office, attention: Chief Legal Officer.

2.10This Agreement and any issues, disputes or claims arising out of or in connection with it (whether contractual or non-contractual in nature such as claims in tort, from breach of statute or regulation or otherwise) shall be governed by, and construed in accordance with, the substantive law of the State of Delaware, without regard to the conflicts of law provisions thereof.  The parties hereby submit to the exclusive jurisdiction of the courts of the State of Delaware.

IN WITNESS OF THE ABOVE the parties have signed this Agreement on the date written at the head of this Agreement.

ASTELLAS PHARMA INC.

By:

Name:

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Title:

Date:

PAR PHARMACEUTICAL, INC.

By:

Name:

Title:

Date:

OPTIMER PHARMACEUTICALS, INC.

By:

Name:

Title:

Date:

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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

EXECUTION COPY

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (the “Agreement”) is entered into on March 29, 2012 (the “Effective Date”) between Optimer Luxembourg 2 S.à r.l., a company organized under the laws of Luxembourg (“Optimer”), having a principal place of business at 6C, rue Gabriel Lippmann, L-5365 Munsbach, Luxembourg, and Astellas Pharma Inc., a company organized under the laws of Japan (“Partner”), having a principal place of business at 2-3-11 Nihonbashi-Honcho, Chuo-ku, Tokyo, 103-8411, Japan.

RECITALS

WHEREAS, Optimer U.S.A. (as defined below) has developed fidaxomicin for the treatment of Clostridium difficile infection and owns or controls certain patents, know-how and other intellectual property relating to fidaxomicin;

WHEREAS, Partner is engaged in the research, development and commercialization of pharmaceutical products;

WHEREAS, Partner and Optimer U.S.A. are entering into a Collaboration and License Agreement on even date herewith (as may be amended, the “License Agreement”) under which Partner is receiving a license to develop and commercialize Products in the Territory; and

WHEREAS, Optimer desires to supply Product to Partner in connection with the License Agreement and on the terms and conditions set forth herein.

AGREEMENT

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

1.DEFINITIONS

1.1          “Actual Discount” shall mean, with respect to a given Fiscal Half Year, the amount equal to (a) […***…] (b) […***…], which amount may be a negative number.

1.2          “Actual Transfer Price” shall have the meaning set forth in Section 4.1(a)(i)(2).

1.3          “Additional Product” shall mean any pharmaceutical product containing or comprising a Compound as the sole active pharmaceutical ingredient, […***…], to

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which Partner has a license under the License Agreement, other than the Existing Product, but not combination products or non-oral formulations.

1.4          “Affiliate” of a Party shall mean any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, as the case may be, but for only so long as such control exists.  As used in this Section 1.4, “control” shall mean (a) to possess, directly or indirectly, the power to direct the management or policies of an entity, whether through ownership of voting securities, by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of more than fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting share capital or other equity interest in such entity.

1.5          “APEL” shall mean Astellas Pharma Europe Limited, an Affiliate of Partner.

1.6          “[…***…]” shall have the meaning set forth in […***…].

1.7          “API” shall mean the active pharmaceutical ingredient of the Existing Product.

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

1.9          “Assignment Agreement” shall have the meaning set forth in Section 2.4.

1.10        “Audit Disagreement” shall have the meaning provided in Section 4.3(e).

1.11        “Buffer Stock” shall have the meaning provided in Section 7.5(a).

1.12        “Bulk Product” shall mean the Existing Product in tablet form without being packaged in a blister or bottle.

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

1.14        “Calendar Quarter” shall mean a period of three (3) consecutive months during a Calendar Year beginning on and including January 1st, April 1st, July 1st or October 1st.

1.15        “Calendar Year” shall mean a period of twelve (12) consecutive months beginning on and including January 1st.

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1.16        “CDI” shall mean Clostridium difficile infection or Clostridium difficile-associated diarrhea (CDAD) in humans.

1.17        “Certificate of Analysis” shall have the meaning provided in Section 6.1(d).

1.18        “cGMP” shall mean all applicable current good manufacturing practices as adopted by the applicable Regulatory Authority in the Territory and in the country where such Manufacture takes place, including standards relating to Manufacturing practices for active pharmaceutical ingredients, intermediates, bulk products or finished pharmaceutical products.

1.19        “COGS Plus” shall mean […***…] of Cost of Goods.

1.20        “Compound” shall mean […***…] or any salt, hydrate, solvate, polymorph, stereo-isomer, ester, chelate, clathrate, acid, base, epimer, enantiomer, crystalline form, metabolite or prodrug or any other non-covalent derivative or crystalline form thereof.

1.21        “Confidential Information” shall have the meaning provided in Section 10.1.

1.22        “Confidentiality Agreement” shall mean that certain agreement dated October 26, 2011 between Optimer U.S.A. and Partner.

1.23        “Control” (including any variations such as “Controlled” and “Controlling”) shall mean with respect to any Information, patent or other intellectual property rights, possession by a Party of the ability (whether by ownership or license, other than pursuant to this Agreement) to grant the applicable license under this Agreement, without violating the terms of an agreement with a Third Party.

1.24        “Cost of Goods” shall mean all out-of-pocket costs incurred by Optimer for Supplied Products, including (i) all payments made to Third Parties for products and services purchased from such Third Parties, including payments for API, and if applicable, tableting, bottling or other formulation of API, and packaging in blister and bottle packaged form, and (ii) all sales and excise taxes imposed thereon, customs duties and charges levied by government authorities, and costs for shipping, storage and insurance with respect to Supplied Products.

1.25        “Develop” shall mean to develop (including clinical, non-clinical and chemistry, manufacturing and controls (CMC) development), analyze, test and conduct preclinical, clinical and all other regulatory trials for a Compound or Product, as well as any and all activities pertaining to new indications, pharmacokinetic studies and all related activities including work on new formulations, new methods of treatment and CMC activities including new manufacturing methods.  “Developing” and “Development” shall have correlative meanings.

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1.26        “Disclosing Party” shall have the meaning provided in Section 10.1.

1.27        “Discount Percentage” shall mean […***…], as such percentage may be adjusted in accordance with Section 4.1(b)(iii).

1.28        “Discount Term” shall mean, on a Product-by-Product basis, the period of time commencing on the […***…] of Launch Quantities of Products from Optimer under this Agreement until the […***…] during which Generic Entry occurs.

1.29        “Excluded Claim” shall have the meaning provided in Section 13.3(f).

1.30        “Existing Product” shall mean that certain pharmaceutical product Controlled by Optimer as of the Effective Date that is formulated as a tablet for oral administration and contains two hundred (200) milligrams of Compound as the sole active pharmaceutical ingredient.

1.31        “FDA” shall mean the United States Food and Drug Administration, or any successor agency or agencies thereto having the administrative authority to regulate the marketing of human pharmaceutical products in the United States.

1.32        “Field” shall mean the diagnosis, prevention and treatment of any disease or condition in humans, including CDI.

1.33        “First Commercial Sale” shall mean, on a Product-by-Product basis, the first bona fide, arm’s length sale of a Product in the Territory following receipt of Regulatory Approval of such Product in the Territory.  Sales of a Product for registration samples, compassionate use sales, named patient use and inter-company transfers to Affiliates of a Party will not constitute a First Commercial Sale.

1.34        “Fiscal Half Year” shall mean a period of six (6) consecutive months beginning on and including April 1st or October 1st, provided, that the first Fiscal Half Year shall be the period beginning on the Effective Date and ending on March 31st.

1.35        “Generic Entry” shall mean that a Generic Product is sold in the Territory and sales of the Generic Product are greater than […***…] of total sales by volume of all sales of such Product (including such Generic Product) in the Territory in a Calendar Quarter.

1.36        “Generic Product” shall mean any product that is introduced in the Territory by an entity other than Partner or its Affiliate or Sublicensee which contains […***…] as contained in a Product sold by Partner or its Sublicensee […***…].

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1.37        “Indemnitee” shall have the meaning provided in Section 12.3.

1.38        “Indemnitor” shall have the meaning provided in Section 12.3.

1.39        “Information” shall mean information, ideas, inventions, discoveries, concepts, formulas, practices, procedures, processes, methods, knowledge, know-how, trade secrets, technology, inventories, machines, techniques, development, designs, drawings, computer programs, skill, experience, documents, apparatus, results, clinical and regulatory strategies, documentation, information and submissions pertaining to, or made in association with, filings with any Regulatory Authority, data, including pharmacological, toxicological and clinical data, analytical and quality control data, manufacturing data and descriptions, patent and legal data, market data, financial data or descriptions, devices, assays, chemical formulations, specifications, material, compositions of matter, product samples and other samples, physical, chemical and biological materials and compounds, and the like, in written, electronic or other form, now known or hereafter developed, whether or not patentable.

1.40        “Joint Patents” shall mean all Patents that claim Inventions that are jointly invented (as determined by US patent law) by employees or independent contractors of Optimer U.S.A. and Partner or their respective Affiliates. For purposes of this Section 1.39, “Inventions” shall mean any discovery or invention, whether or not patentable, made by a party to the License Agreement or its Affiliates or its or their respective employees, agents or independent contractors during the course of Development, Manufacturing, regulatory or commercial activities in the Territory with respect to Compounds or Products in the Field in the Territory (and, if Partner or its Affiliates or their respective employees, agents or independent contractors performs any such activities pursuant to this Agreement outside the Territory, either alone or jointly with Optimer U.S.A. or its Affiliates or their respective employees, agents or independent contractors, any discovery or invention made during such activities), in each case pursuant to the License Agreement during the term of the License Agreement and solely to the extent such discovery or invention relates to Compounds or Products in the Field, together with all intellectual property rights relating thereto.

1.41        “Latent Defect” means a defect that causes Supplied Product to fail to conform to the warranties set forth in Section 9.1, which defect is not discoverable upon reasonable physical inspection and testing performed pursuant to Section 6.2 but is discovered at a later time (e.g., in the course or as a result of long-term stability studies).

1.42        “Launch Quantities” shall have the meaning provided in Section 3.1.

1.43        “Licensed Patents” shall mean (a) all Patents that Optimer U.S.A. or any Optimer Current Affiliate (as defined in the License Agreement) Controls as of the Effective Date or during the term of the License Agreement, which Patents are necessary or useful to Develop,

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keep, use, sell, offer for sale, dispose of, offer to dispose of and import Products (including any Compound contained therein), and (b) if API is Supplied Product, all Patents that Optimer U.S.A. or any Optimer Current Affiliate Controls as of the Effective Date or during the term of the License Agreement, which Patents are necessary or useful to tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products, in each case (a) and (b) in the Field in the Territory including, but not limited to, those Patents listed on EXHIBIT A of the License Agreement.

1.44        “Losses” shall have the meaning provided in Section 12.1.

1.45        “MAA” shall mean a marketing authorization application or equivalent application, and all amendments and supplements thereto, filed with the applicable Regulatory Authority in the Territory.

1.46        “MAA Approval” shall mean, with respect to each country in or outside the Territory for a particular Product, approval by the applicable Regulatory Authority in such country (which, in the Territory, shall be the MHLW) of the MAA for such Product filed in such country.  It is understood that, as used herein, MAA Approval does not include pricing or reimbursement approval.

1.47        “Manufacture” shall mean all activities related to the manufacturing of a pharmaceutical product, or any ingredient thereof, including manufacturing Supplied Product or supplies for Development, manufacturing of Supplied Product for commercial sale, in-process and semi-finished product testing, release of Supplied Product or any component or ingredient thereof, quality assurance activities related to manufacturing and release of Supplied Product, ongoing stability tests and regulatory activities related to any of the foregoing.  “Manufactured” or “Manufacturing” shall have correlative meaning.

1.48        “Manufacturing Process” shall have the meaning provided in Section 7.4.

1.49        “Manufacturing Services Agreement” shall have the meaning set forth in Section 2.4.

1.50        “MHLW” shall mean the Ministry of Health, Labour and Welfare, or any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products in the Territory.

1.51        “Net Sales” shall mean, with respect to any Product, the gross amounts invoiced for sales or other dispositions of such Product by or on behalf of Partner or its Sublicensees, as applicable, to Third Parties (other than Sublicensees) less the following deductions to the extent included in the gross invoiced sales price for such Product or otherwise directly paid or incurred by Partner or its Sublicensees, as applicable, with respect to the sale or other disposition of such Product:

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(a)           normal and customary trade and quantity discounts actually allowed and properly taken directly with respect to sales of such Product (provided that such discounts are not applied disproportionately to such Product when compared to the other products of Partner or its Sublicensee, as applicable);

(b)           credits or allowances given or made for rejection of or return of previously sold Products or for retroactive price reductions and billing errors;

(c)           rebates and chargeback payments granted to managed health care organizations, pharmacy benefit managers (or equivalents thereof), national, state/provincial, local, and other governments, their agencies and purchasers and reimbursers, or to trade customers;

(d)           costs of freight, insurance, and other transportation charges directly related to the distribution of such Product;

(e)           taxes, duties or other governmental charges (including any tax such as a value added or similar tax, other than any taxes based on income) levied on or measured by the billing amount for such Product, as adjusted for rebates and refunds; and

(f)            an allowance of up to […***…] for bad debts consistently applied in accordance with GAAP.

Upon any sale or other disposition of any Product that should be included within Net Sales for any consideration other than exclusively monetary consideration on bona fide arm’s-length terms, then for purposes of calculating Net Sales under this Agreement, such Product shall be deemed to be sold exclusively for money at the average sales price during the applicable reporting period generally achieved for such Product in the country in which such sale or other disposition occurred when such Product is sold alone and not with other products.

In no event will any particular amount, identified above, be deducted more than once in calculating Net Sales.  Sales of a Product between Partner and its Sublicensees for resale shall be excluded from the computation of Net Sales, but the subsequent resale of such Product to a Third Party shall be included within the computation of Net Sales.  Any free-of-charge disposal or use of a Product for development, regulatory or marketing purposes, such as clinical trials, compassionate use or indigent patient programs, shall not be deemed a sale or disposition for purposes of calculating Net Sales. If any Product is sold as a Bundled Product for a single invoiced amount (a “Combination Sale”), the Net Sales amount for the Product sold in such a Combination Sale shall be that portion of the gross amount invoiced for such Combination Sale (less all permitted deductions) determined as follows:

Except as provided below, the Net Sales amount for a Combination Sale shall equal the gross amount invoiced for the Combination Sale, reduced by the permitted deductions (the “Net Combination Sale Amount”), multiplied by the fraction A/(A+B), where:

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[…***…].

In the event that the Compound Component included in a Bundled Product is sold as a separate product in the Territory, but the Other Component included in such Bundled Product is not sold separately in the Territory, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Net Combination Sale Amount by the fraction A/C where:

[…***…].

In the event that the Compound Component included in a Bundled Product is not sold as a separate product in the Territory, but the Other Component included in such Bundled Product is sold separately in the Territory, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Net Combination Sale Amount by the fraction (C-D)/C, where:

[…***…].

Where the calculation of Net Sales resulting from a Combination Sale in the Territory cannot be determined by any of the foregoing methods, the calculation of Net Sales for such Combination Sale shall be that portion of the Net Combination Sale Amount reasonably determined in good faith by mutual agreement of the Parties as properly reflecting the relative value of the Compound Component included in the Bundled Product and the value of the Other Component(s) included in the Bundled Product.

1.52        “NHI” shall mean the Japanese National Health Insurance pricing system.

1.53        “NHI Price” shall mean, with respect to a Supplied Product in a given Fiscal Half Year, the price per tablet (or bottle or such other unit of the Product, as applicable) approved by the Regulatory Authority in the Territory to obtain reimbursement for the Product that incorporates or is comprised of such Supplied Product, as in effect on the last Business Day prior

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to the beginning of such Fiscal Half Year during which such shipment of Supplied Product is delivered.

1.54        “Objection Notice” shall have the meaning provided in Section 6.2(c).

1.55        “Optimer Indemnitee” shall have the meaning provided in Section 12.1.

1.56        “Optimer U.S.A.” shall mean Optimer Pharmaceuticals, Inc.

1.57        “PAR” shall mean Par Pharmaceutical, Inc.

1.58        “PAR Agreement” shall mean that certain Prospective Buy-Back Agreement, dated January 19, 2007, by and between Optimer U.S.A. and PAR, as amended in accordance with its terms.

1.59        “PAR Tripartite Agreement” shall have the meaning provided in the License Agreement.

1.60        “Partner Indemnitee” shall have the meaning provided in Section 12.2.

1.61        “Party” shall mean Optimer or Partner individually, and “Parties” shall mean Optimer and Partner collectively.

1.62        “Phase I Clinical Trial” shall mean a clinical trial of a Product in humans that would provide for first testing of a Product in humans and would satisfy the requirements of 21 C.F.R. §312.21(a) or analogous regulatory requirements in the Territory.

1.63        “Phase II Clinical Trial” shall mean a clinical trial of a Product in human patients in the Territory that would satisfy the requirements of 21 C.F.R. §312.21(b) or analogous regulatory requirements in the Territory, and is intended to explore one or more doses, dose response, or duration of effect, and to generate at least initial evidence of clinical activity and safety, for a Product in the Field in the target patient population.

1.64        “Phase III Clinical Trial” shall mean a pivotal clinical trial of a Product conducted in human patients designed to ascertain efficacy and safety of such Product for the purpose of submitting an application for Regulatory Approval to the competent Regulatory Authority in the Field in the Territory.

1.65        “Product” shall mean any pharmaceutical product containing or comprising a Compound as the sole active pharmaceutical ingredient, in oral […***…] formulation only. For clarification, Products containing or comprising different dosages of the same formulation of a Compound (for example, the Existing Product and […***…] and/or Products containing or comprising different formulations of the same dosage of a Compound (for example, the Existing Product and […***…])

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shall be different Products.

1.66        “Product Specifications” shall mean the specifications for Supplied Product mutually agreed by the Partiesno later than […***…] after the Effective Date or, for Supplied Product for use in Phase I Clinical Trials, mutually agreed by the Parties promptly after the Effective Date as set forth in Section 2.3(d)(i), and any specifications mutually agreed to by the Parties established in connection with Supplied Product and changes to such specifications made at the request of a Regulatory Authority in the Territory or by mutual agreement of the Parties from time to time.  In the event Additional Product(s) become subject to this Agreement as agreed by the Parties, the Product Specifications shall be revised to include the specifications mutually agreed to by the Parties with respect to such Additional Product(s).

1.67        “Provisional Discount” shall mean, with respect to any shipment of Supplied Product, the amount equal to (a) […***…] (b) […***…], which amount may be a negative number.

1.68        “Provisional Sales” shall mean, with respect to any shipment of Supplied Products, the quantity of Supplied Products provisionally allocated for sales or other dispositions for value, determined as follows:

(a)           if the Supplied Product is API, (A/B) x C where A is […***…] B is […***…] C is […***…] to take into account expected losses during Manufacture or free-of-charge disposal or use of a Product for Development, regulatory or marketing purposes, such as clinical trials, compassionate use or indigent patient programs; or for holding in inventory pending sale or other disposition for value; or

(b)           if the Supplied Product is Bulk Product, D x E, where D is […***…] and E is […***…] to take into account expected losses during Manufacture or free-of-charge disposal or use of a Product for Development, regulatory or marketing purposes, such as clinical trials, compassionate use or indigent patient programs; or for holding in inventory pending sale or other disposition for value; or

(c)           if the Supplied Product is neither API nor Bulk Product, such other estimated units of such Supplied Product as agreed in writing by the Parties in good faith, consistent with the above provisions.

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1.69“Provisional Transfer Price” shall have the meaning set forth in Section 4.1(a)(i)(1).

1.70“Quality Agreement” shall have the meaning provided in Section 6.3.

1.71“Raw Materials” shall have the meaning provided in Section 7.1.

1.72“Receiving Party” shall have the meaning provided in Section 10.1.

1.73“Regulatory Approval” shall mean any and all approvals (including price and reimbursement approvals, if required), licenses, registrations, or authorizations of Regulatory Authorities in any country that are necessary for the manufacture, use, storage, import, transport and/or sale of a Product in the Field in such country.

1.74“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 the Field in the Territory.  If governmental approval is required for pricing or reimbursement for a Product to be reimbursed by national health insurance (or its local equivalent), “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.

1.75“Sales Report” shall have the meaning set out in the License Agreement.

1.76“SEC” shall have the meaning provided in Section 10.5(a).

1.77“Sublicensee” shall mean an Affiliate of Partner or a Third Party to whom Partner grants a right (a) to Develop, keep, use, sell, offer for sale, dispose of, offer to dispose of or import a Product in the Field in the Territory, or (b) to the extent a license under the Licensed Technology is necessary in order for Partner to tablet or otherwise formulate API into Products or to blister, bottle (if applicable) or package API into Products, to tablet, have tableted or otherwise formulate or have formulated API into Products, or to blister, bottle (if applicable) or package API into Products in the Field in the Territory, in each case beyond the mere right to purchase a Product from Partner or its Affiliates, and “Sublicense” shall mean an agreement or arrangement between Partner and a Sublicensee granting such rights.

1.78“Supplied Product” shall mean (a) API, (b) if agreed by the Parties pursuant to Section 2.3(b), Bulk Product, (c) API or such other form of Product as is agreed by the Parties pursuant to Section 2.3(d) for any Development activities of Partner or its Sublicensees permitted under the License Agreement, and placebo for such Development activities, (d) […***…], or (e) if agreed by the Parties, any Additional Product […***…], in the form agreed to by the

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Parties.  […***…].

1.79“Term” shall have the meanings provided in Section 11.1.

1.80“Territory” shall mean Japan.

1.81“Third Party” shall mean any entity other than Optimer or Partner or an Affiliate of Optimer or Partner.

1.82“Third Party Claims” shall have the meaning provided in Section 12.1.

1.83“Transfer Price” shall have the meaning provided in Section 4.1(a).

1.84“Valid Claim” shall mean (a) an unexpired claim of an issued patent within the Licensed Patents or Joint Patents which has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (b) a claim of a pending patent application; provided, however, that if a claim of a pending patent application shall not have issued within […***…] after the earliest filing date from which such claim takes priority, such claim shall not constitute a Valid Claim for the purposes of this Agreement after such […***…] deadline unless and until a patent issues with such claim, and […***…]; provided further, that, for clarity, […***…].

2.SUPPLY OF SUPPLIED PRODUCTS.

2.1Supply by Optimer.  Optimer will Manufacture or have Manufactured and supply or have supplied to Partner such quantities of Supplied Productsas requested by Partner to cover total commercial requirements of Partner and its Sublicensees for Supplied Products in the Territory, including Supplied Products requested by Partner for promotional activities.  In addition, Optimer will provide or have provided Supplied Products to Partner for any Development activities permitted under the License Agreement.  Optimer will be the exclusive supplier to Partner and its Sublicensees of Supplied Products during the Term. Partner agrees that in no event shall Partner or its Sublicensees Manufacture or have Manufactured Supplied Products, or purchase Supplied Products from any party other than Optimer, except that if API is Supplied Product, Partner or its Sublicensees may tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products, as permitted under this

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Agreement and the License Agreement.  Optimer shall require its Third Party manufacturer(s) of Supplied Products to comply in all material respects with the requirements set forth in this Agreement and the Quality Agreement, including the establishment and deployment of regular and as-needed inspections of the facilities of such Third Party manufacturer(s) by Partner and the execution of regular and as-needed audits of such Third Party manufacturer(s).  Optimer shall not amend its agreements with Third Party manufacturer(s) of Supplied Products to the extent they apply to the Territory in a manner inconsistent with this Agreement and the Quality Agreement nor terminate them to the extent they apply to the Territory without prior written consent of Partner, not to be unreasonably withheld.

2.2Partner Responsibilities.  Partner shall have the right and responsibility, at its expense, for all activities required to make finished Products ready for sale to the market in the Territory.  Without limiting the foregoing, Partner shall be responsible, at its expense, for (a) all labeling and other written, printed or graphic content (i) affixed to the applicable Products or any container or wrapper utilized with Products, or (ii) accompanying the applicable Products, including package inserts, and (b) all primary containers for Products, including bottles, cartons, shipping cases or any other like matter used in packaging or accompanying the Products.

2.3Form of Supplied Product.

(a)API.  Unless otherwise agreed by the Parties, Optimer shall supply API as Supplied Product and Partner shall tablet or otherwise formulate API into Products and blister, bottle (if applicable) and package API into Products.  Partner shall be responsible, at its own expense, for developing and obtaining approval of Regulatory Authorities for Manufacturing activities relating to tableting or otherwise formulating API into Products and blistering, bottling (if applicable) and packaging API into Products in the Territory done by Partner or any of its Affiliates or any Third Party on their behalf.

(b)Bulk Products.

(i)The Parties may agree that Optimer will supply Bulk Products, rather than API, as Supplied Products.

(ii)Partner shall, at Partner’s cost, manage and generate the protocols and reports arising out of any transport studies relating to Bulk Products in the Territory, and shall keep Optimer updated with regard thereto, including by providing such protocols and reports to Optimer promptly following generation thereof.

(c)Packaging.  Subject to Section 2.3(d)(i), Partner shall be responsible, at its own expense, for developing and obtaining approval of Regulatory Authorities for packaging of Products in the Territory, whether such Products have been tableted by Partner or supplied as Bulk Products by Optimer. Partner intends to carry out primary and secondary packaging activities in the Territory but if this proves to be impractical, then Partner may decide that such packaging shall be carried out by Optimer’s Third Party packager outside the Territory. In this

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event Partner shall contract directly with such Third Party packager, and Optimer shall assist Partner in any negotiations with such packager. If, in the course of supplying packaged Product to both Optimer and Partner, such Third Party packager has limited available production capacity at a particular time such that it cannot fulfill both Partner’s and Optimer’s (including its Affiliates’ and other licensees’) requirements for packaged Products then Optimer and Partner shall jointly instruct such Third Party packager to allocate its available production capacity for the production of packaged Bulk Product in a manner proportional to the actual requirements of Optimer and its Affiliates and other licensees and Partner for such products at that time.

(d)Products for Use in Development Activities.  Optimer shall supply Supplied Products for use in any Development activities of Partner or its Sublicensees permitted under the License Agreement, as follows:

(i)For Phase I Clinical Trials of the Existing Product in the Field in the Territory, Optimer shall supply as Supplied Products for use in such Phase I Clinical Trials (A) API which Partner shall tablet, bottle (if applicable) or otherwise formulate into Products and blister, bottle (if applicable) and package into Products, or (B) if agreed by the Parties, Bulk Product or the finished packaged Product and placebo in the formulation and dosages required for such Phase I Clinical Trials in accordance with Applicable Laws and the Development Plan, and in each case (A) or (B) the Parties shall (x) discuss and agree the process and timing of the transfer of any Licensed Know-How (as defined in the License Agreement) which is necessary for Partner to tablet, have tableted or otherwise formulate or have formulated such Supplied Products and blister, bottle (if applicable) and package such Supplied Products for use in such Phase I Clinical Trials and (y) agree to the Product Specifications for such Supplied Products promptly after the Effective Date. If requested by Partner within […***…] after the Effective Date:

(1)within […***…] of the Effective Date (such efforts to be initiated within […***…] of the Effective Date), Optimer shall provide Partner all testing methods and protocols in Optimer’s Control relevant to the Manufacture and release of such Supplied Products (it being understood that this does not include methods and other Information for the Manufacture of API), together with reasonable quantities of all relevant materials (including the standard for analysis) to carry out such tests; and

(2)within […***…] of the Effective Date, Optimer shall ship to Partner […***…] of API (all of which shall come from the same batch of API) with a remaining shelf life of at least […***…]; and

(ii)For Phase II Clinical Trials and Phase III Clinical Trials of Products in the Field in the Territory, Optimer shall supply as Supplied Products for use in such clinical trials (A) API which Partner shall tablet, bottle (if applicable) or otherwise formulate into Products and blister, bottle (if applicable) and package into Products, or (B) if agreed by the Parties, Bulk Product or the finished packaged Product and placebo in the formulation and

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dosages required for such Phase II Clinical Trials or Phase III Clinical Trials, as applicable, in accordance with Applicable Laws and the Development Plan.

(e)Purchase Orders.  Subject to any modified purchase order timelines agreed by the Parties pursuant to Section 2.3(d) in respect of supply of Supplied Products for clinical trials, Partner shall purchase all Supplied Products for use in any Development activities by submitting purchase orders in accordance with Section 3.3, except that, with respect to purchase orders for Supplied Products, such purchase orders must be submitted at least […***…] in advance for API, and at least […***…] in advance for Bulk Product or other forms of Supplied Products, of the desired shipment date specified in such purchase order.

2.4Manufacturing Services Agreement and Assignment Agreement.  Partner acknowledges that Optimer and Optimer U.S.A. are parties to that certain Manufacturing Services Agreement, dated March 29, 2012 (as amended, the “Manufacturing Services Agreement”) pursuant to which Optimer has engaged Optimer U.S.A. to perform certain Manufacturing services, and to that certain Assignment Agreement, dated March 29, 2012 (as amended, the “Assignment Agreement”) pursuant to which Optimer U.S.A. has assigned to Optimer certain rights and obligations under Third Party Manufacturing agreements relating to the Manufacture and supply of Supplied Products.  Optimer agrees that it will not amend, modify or supplement the Manufacturing Services Agreement or the Assignment Agreement, in each case in a manner that would adversely affect the rights and/or obligations of Astellas under this Agreement, without the prior written consent of Astellas.  In addition, Optimer agrees that it will not terminate, or consent to Optimer U.S.A.’s termination of, the Manufacturing Services Agreement or the Assignment Agreement, without the prior written consent of Astellas, which consent shall not be unreasonably withheld or delayed.  In the event of any breach by Optimer U.S.A. of the Manufacturing Services Agreement or the Assignment Agreement that is reasonably likely to adversely affect Partner’s rights under this Agreement, Optimer shall promptly notify Partner, and Optimer shall, if requested by Partner in writing, enforce Optimer’s rights under the Manufacturing Services Agreement or Assignment Agreement, as applicable, including by, if necessary, bringing proceedings against Optimer U.S.A.

2.5Limited Right to […***…] upon Failure by Optimer to Supply.  In the event that, at any time prior to […***…] after First Commercial Sale, Optimer fails to supply in accordance with this Agreement any Supplied Products ordered by Partner for a period of at least […***…] after the date that such Supplied Product should have been delivered in accordance with this Agreement (and Optimer does not cure such failure within such […***…] period), as an alternative to termination of this Agreement by Partner, Partner has the limited right to […***…]; provided that the purchase price for supply of such Supplied Products […***…] for supply to Partner for the Territory shall be calculated in accordance with this Agreement and shall be paid to Optimer, […***…].  The Parties agree that

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such limited right to […***…] shall only continue so long as Optimer is unable to comply with its obligations to supply Supplied Products to Partner in accordance with this Agreement and that such limited right shall be automatically suspended upon Optimer recommencing supply of Supplied Products in accordance with this Agreement.

3.FORECASTS AND PURCHASE ORDERS.

3.1Commercial Launch.  Partner shall notify Optimer approximately […***…] in advance of the anticipated First Commercial Sale of any Product.  Such notification shall include a preliminary estimate of the quantity of Supplied Product needed for the commercial launch.  Partner may change the estimated date of the First Commercial Sale and the estimated quantity of Supplied Product needed for such commercial launch at any time by notifying Optimer; provided, however, that Partner will provide Optimer with an estimate of the minimum amount of Supplied Product that will be necessary for commercial launch at least […***…] prior to such launch (the “Launch Quantities”).

3.2Rolling Forecasts.  In the first week of each month, starting […***…] before the anticipated First Commercial Sale of any Product, Partner shall provide Optimer with a written […***…] rolling forecast of its anticipated requirements for Supplied Product in the Territory; provided, that anticipated requirements for Supplied Products for the […***…] in each such forecast may be set forth on a quarterly rather than monthly basis (each a “Forecast”).  Each Forecast is a non-binding estimate and shall not obligate Partner to purchase the volume of Supplied Product set forth in it; provided, however, that the volume of API forecasted for the first […***…] and the volume of other Supplied Products (including Bulk Products) forecasted for the first […***…] of each Forecast shall be binding upon Partner.  Optimer shall not be obligated to Manufacture or supply Partner with quantities of a given Supplied Product in excess of […***…] percent ([…***…]%) of the most recent […***…] estimate of such Supplied Product (whether it is API, Bulk Product or another Supplied Product) provided to Optimer in a Forecast with respect to such Supplied Product but agrees to use commercially reasonable efforts to do so.

3.3Purchase Orders.  Partner shall order Product by submitting written purchase orders, in such form as the Parties shall agree from time to time, to Optimer specifying the quantities of Supplied Product ordered, the desired shipment date for such Supplied Product and any special shipping instructions.  Partner shall order Supplied Product in lots of a defined number of units/lot pursuant to each purchase order as reasonably specified by Optimer.  Partner shall submit each purchase order to Optimer at least […***…] in advance of the desired shipment date specified in such purchase order.  Optimer shall use commercially reasonable efforts to make each shipment of Supplied Product in the quantity and on the shipment date specified for it on Partner’s purchase order, via the mode(s) of transportation and to the party and destination specified on such purchase order.  Any purchase orders for Supplied Product submitted by Partner to Optimer shall reference this Agreement and shall be governed exclusively by the terms contained herein.  The Parties hereby agree that the terms and

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conditions of this Agreement shall supersede any term or condition in any order, confirmation or other document furnished by Partner or Optimer that is in any way inconsistent with these terms and conditions.

3.4Quantity of Orders; Batches.  The Parties agree that Forecasts and orders of Supplied Products that are in the form of Bulk Products will be expressed by multiples of whole batches of Supplied Product.  In the event that Supplied Products are Bulk Product, based on current theoretical yields, it is estimated that each batch of Supplied Product that is Bulk Product shall contain approximately […***…], based upon current production yield estimates.  Forecasts and orders of Supplied Products that are API will be expressed in quantities that are required by Partner, subject to a minimum order quantity of […***…] and provided that each such Forecast and order shall be expressed in multiples of […***…] unless otherwise agreed in writing by Optimer prior to an order.  Partner acknowledges and agrees that, in any shipment, Supplied Products that are API may be from multiple batches of Supplied Products; provided, that, (a) Optimer shall use all reasonable efforts to minimize the number of batches from which API is taken for any shipment and (b) for API ordered for use in Development activities, if Partner notifies Optimer in such order that such API shall be used in Development activities, then the API shipped for such order shall be from one batch.

4.PRICE.

4.1Price.

(a)Transfer Price.  Partner will pay Optimer a transfer price for Supplied Products as set forth below (the “Transfer Price”):

(i)The Transfer Price for Supplied Products purchased during the Discount Term for Products shall be calculated as follows (with references to Products in this Section 4.1 and in defined terms used herein referring to Products that incorporate or are comprised of such Supplied Products):

(1)Partner shall pay to Optimer a provisional Transfer Price for Supplied Products (the “Provisional Transfer Price”) equal to (A) — (B), but in no event less than (C), where:

(A) = the product of the NHI Price multiplied by [...***...] multiplied by the Provisional Sales;

(B) = Provisional Discount; and

(C) = […***…].

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(2)Within thirty (30) days following the end of each Fiscal Half Year, Partner shall calculate the actual Transfer Price for Supplied Products (the “Actual Transfer Price”), which shall be equal to (X) — (Y), where:

(X) = Net Sales during such Fiscal Half Year; and

(Y) = Actual Discount.

(3)The Parties acknowledge that Supplied Products may be ordered, shipped and/or invoiced at the Provisional Transfer Price in one Fiscal Half Year but Products incorporated into or comprising such Supplied Products may be sold by Partner or its Sublicensee in the next Fiscal Half Year or thereafter.

(ii)The Transfer Price for Supplied Products purchased before or after the Discount Term, on a Product-by-Product basis, shall equal COGS Plus.

(b)Deduction from Transfer Price and Adjustment to Discount Percentage.

(i)In the event the rights to the Licensed OPT-80 Data (as defined in the PAR Agreement) cease to be licensed to Optimer by PAR under the PAR Agreement for any reason and Partner obtains a license with respect to such OPT-80 Data directly from PAR pursuant to the PAR Tripartite Agreement, then Partner may deduct from the Transfer Price for the applicable Supplied Products or from royalties owed to Optimer U.S.A. under the License Agreement, but not both, the amount actually paid by Partner to PAR under the PAR Tripartite Agreement for such license with respect to such OPT-80 Data up to the amount that Optimer would have been obligated to pay to PAR under the PAR Agreement with respect to such payment; provided that in no event shall such deduction reduce such Transfer Price to an amount less than Cost of Goods.

(ii)On a Product-by-Product basis, in the event Partner or its Affiliate is required to pay to a Third Party royalties or amounts payable in lieu of royalties (including without limitation any lump sum payments) in order to obtain a license under Dominating Patent Rights with respect to a Product in the Territory then Partner may […***…] of the amounts actually paid to such Third Party in consideration for such license under Dominating Patent Rights from the Transfer Price for the applicable Supplied Products payable pursuant to Section 4.1(a)(i) (but not Section 4.1(a)(ii)) or any royalty payments owing to Optimer U.S.A. under the License Agreement, but not both; provided that (x) in no event shall such deduction reduce the Provisional Transfer Price or the Actual Transfer Price to an amount less than COGS Plus […***…] of the amount by which the Provisional Transfer Price or Actual Transfer Price, as applicable, exceeds COGS Plus, and (y) in no event shall such deduction reduce the royalties due to Optimer U.S.A. in any Calendar Quarter with respect to such Product to […***…] of the amount that would otherwise be due to Optimer U.S.A. under Section 6.3(a) of the License Agreement (such limitation in (y), the “Floor”).  If the

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[…***…] then Partner […***…].  As used herein, “Dominating Patent Rights” shall mean issued Patents of Third Parties, including without limitation issued Patents of Third Parties which form the basis of infringement actions under Section 9.5 of the License Agreement, without a license to which Patents the use, marketing, sale, offer for sale, packaging, promotion, import, export or other commercialization of the applicable Product in the Territory would infringe such Patents. For clarity, the deduction described in this Section 4.1(b)(ii) and in Section 6.3(d) of the License Agreement may only be applied once.

(iii)In respect of any Product, if on the date that is the later to occur of: (A) the expiration of the last-to-expire Valid Claim within the Licensed Patents or Joint Patents that claims such Product or Compound contained therein or a method of manufacture or use of such Product or Compound, and (B) […***…] after the First Commercial Sale, the Discount Term has not expired, then the Discount Percentage shall be […***…].

(iv)If, following expiration of the Discount Term for a Product, all sales of Generic Products in the Territory cease as a result of patent infringement proceedings in respect of the Licensed Patents or Joint Patents brought by either Party in accordance with Section 9.5 of the License Agreement, then the Discount Term shall revive and amounts payable pursuant to Sections 4.1(a)(i)(1) and 4.1(a)(i)(2) shall become payable until any subsequent Generic Entry. Such revival shall only be effective once.

(c)Examples.  Examples of calculations of the Transfer Price of Supplied Products are set forth in EXHIBIT A.

4.2Invoices; Method of Payments.

(a)Optimer shall invoice Partner the Transfer Price for Supplied Products supplied under Section 4.1(a)(ii) and the Provisional Transfer Price for all other Supplied Products at the time of shipment of such Supplied Products.  For each Fiscal Half Year, Partner shall calculate the Actual Transfer Price, and (1) in the event that the Actual Transfer Price calculated for such Fiscal Half Year is higher than the Provisional Transfer Price paid for Supplied Products supplied in such Fiscal Half Year, the Partner shall pay Optimer the difference within […***…] after the end of the applicable Fiscal Half Year, and (2) in the event that the Actual Transfer Price calculated for such Fiscal Half Year is lower than the Provisional Transfer Price paid for Supplied Products supplied in such Fiscal Half Year, Optimer shall credit the difference against future payments due from Partner to Optimer under this Article 4 except that in the event of termination of this Agreement in which case Optimer shall pay the difference to Partner within […***…] of such termination.

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(b)All amounts used in calculating the Provisional Transfer Price and the Actual Transfer Price shall be denominated in U.S. Dollars.  All payments due hereunder to Optimer shall be paid to Optimer in U.S. Dollars not later than […***…] following the date of receipt of the applicable invoice but not earlier than the date of shipment, unless such shipment of Supplied Product is rejected in accordance with the provisions of Section 6.2.  All payments under this Agreement shall be made by bank wire transfer in immediately available funds to a Swiss account designated in writing by Optimer or by other mutually acceptable means.  Payments hereunder will be considered to be made as of the day on which they are received by Optimer’s designated bank.  When conversion from any currency other than United States Dollars is required to calculate the Provisional Transfer Price, the Actual Transfer Price or any payment due hereunder, such conversion shall be at an exchange rate equal to the trailing three (3)-month average of the daily end of day rate in New York per the Bloomberg News Service.

(c)In the event that any payment due under this Agreement is not made when due, the payment shall accrue interest from the date due at a rate per annum equal to one percent (1%) above the U.S. Prime Rate (as set forth in the Wall Street Journal, Eastern U.S. Edition) for the date on which payment was due, calculated daily on the basis of a 365-day year, or similar reputable data source; provided that, in no event shall such rate exceed the maximum legal annual interest rate.  The payment of such interest shall not limit Optimer from exercising any other rights it may have as a consequence of the lateness of any payment.

(d)Optimer will pay any and all withholding taxes levied on account of any payments made to it under this Agreement as required based on a determination of the applicable taxing authority.  All payments to be made by a Party under this Agreement will be made without any deduction or withholding for or on account of taxes.  If any authority requires Partner to withhold taxes from any payment made to Optimer under this Agreement, then (i) in respect of payments already made by Partner to Optimer prior to notification of such requirement, Optimer shall repay Partner any such withholding tax and penalties that Partner is required to pay to any authority within thirty (30) days of Optimer receiving proof of such payment from Partner and (ii) following notification of such requirement Partner will (1) deduct such withholding taxes from each payment made to Optimer, (2) timely pay the withholding taxes to the proper taxing authority, and (3) send proof of payment to Optimer and certify its receipt by the taxing authority within thirty (30) days following such payment.  Partner shall fully cooperate in processing any required filings on behalf of Optimer with the tax authorities in the Territory in order to obtain a refund of any withholding taxes paid.  For clarity, this Section 4.2(d) shall not apply to GST, VAT, or any other tax on any payment made to Optimer other than withholding taxes required based on a determination by the applicable taxing authority.

4.3Records.

(a)During the Term, and for a period of three (3) years thereafter, Optimer shall, and shall ensure that its Affiliates shall, keep at either its normal place of business, or at an off-site storage facility, detailed, accurate and up to date: (i) records and books of account

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sufficient to confirm the calculation of the Cost of Goods; and (ii) information and data contained in any invoices provided to Partner in connection with this Agreement.

(b)On no less than sixty (60) days’ prior written notice from Partner, Optimer shall make all such records, books of account, information and data concerning the Cost of Goods available for inspection during normal business hours by an independent, certified public accountant selected by Partner and reasonably acceptable to Optimer, which acceptance will not be unreasonably withheld or delayed, for the purpose of general review or audit; provided that Partner may not request such inspection more than once in any calendar year.  As a condition to such inspection, the independent public accountant selected shall execute a written agreement, reasonably satisfactory in form and substance to Optimer, to maintain in confidence all information obtained during the course of any such examination and all reasonable documents will be disclosed to the accountant under these confidential terms.  Additionally no accountant may be employed on a contingency basis.

(c)Partner shall be solely responsible for its costs in making any such review and audit, unless Partner identifies a discrepancy in the calculation of the Cost of Goods paid by Partner to Optimer under this Agreement in any calendar year from those properly payable for that calendar year of ten percent (10%) or greater, in which event Optimer shall be solely responsible for the cost of such review and audit and refund Partner any overpayment.  All information disclosed by Optimer or its Affiliates pursuant to this Section 4.3 shall be deemed Confidential Information of Optimer.

(d)In the event the auditor determines Optimer’s statement was inaccurate, any overpayment to Optimer by Partner shall be promptly refunded to Partner or credited toward any unpaid invoice by Optimer to Partner, and any underpayment by Partner shall be promptly paid to Optimer.

(e)If there is a dispute between the Parties related to GAAP compliance following any audit performed pursuant to Section 4.3, either Party may refer the issue (an “Audit Disagreement”) to an independent certified public accountant for resolution. In the event an Audit Disagreement is submitted for resolution by either Party, the Parties shall comply with the following procedures:

(i)The Party submitting the Audit Disagreement for resolution shall provide written notice to the other Party that it is invoking the procedures of this Section.

(ii)Within thirty (30) days of the giving such notice, the Parties shall jointly select a recognized international accounting firm to act as an independent expert to resolve such Audit Disagreement.

(iii)The Audit Disagreement submitted for resolution shall be described by the Parties to the independent expert, which description may be in written or oral form, within ten (10) days of the selection of such independent expert.

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(iv)The independent expert shall render a decision on the matter as soon as practicable.

(v)The decision of the independent expert shall be final and binding and shall not be subject to Section 13 hereof, unless such Audit Disagreement involves alleged fraud, breach of this Agreement or construction or interpretation of any of the terms and conditions hereof.

(vi)All fees and expenses of the independent expert, including any Third Party support staff or other costs incurred with respect to carrying out the procedures specified at the direction of the independent expert in connection with such Audit Disagreement, shall be borne by the Party against whom such expert rules.

5.SHIPMENT AND DELIVERY.

5.1Delivery Terms.  Optimer will ship Supplied Products to Partner in such quantities and on such monthly shipment dates as are specified in purchase orders.  The Launch Quantities shall be shipped to Partner at least […***…] before the anticipated First Commercial Sale provided that Partner submits a binding forecast/purchase order for Launch Quantities no less than […***…] before the anticipated First Commercial Sale.  Deliveries shall be made […***…] (Incoterms 2010) Optimer’s or its Third Party manufacturer’s designated facility.  All shipments of the Supplied Products to Partner shall be made via such carrier(s) as Partner may direct.  Title and risk of loss shall pass to Partner upon delivery to the carrier.  Freight charges shall be billed ship collect to Partner.  For clarity, Partner shall be the importer of record for all Supplied Products supplied under this Agreement, and shall be solely responsible, at its expense, for all required documentation and communications with the applicable customs office in connection therewith.  Partner shall disclose to Optimer all documentation submitted to the applicable customs office in connection with its import of Supplied Products including, without limitation, any calculations relating to value of Supplied Products required to be disclosed to the customs office in connection therewith, and to cooperate with Optimer in connection therewith.

5.2Shelf Life.  Supplied Products which are API will have a remaining shelf life of […***…] from the date of shipment to Partner. Supplied Products which are Bulk Products will have a remaining shelf life of at least […***…] from the date of shipment to Partner.  The Parties will discuss steps to enable extension of the shelf life of Bulk Products from […***…] to […***…], and upon approval by the applicable Regulatory Authorities, the Parties would agree to extend the period set forth in the preceding sentence from […***…] from the date of shipment to […***…] from the date of shipment.  For clarity, the provisions set forth in this Section 5.2 shall not apply to any Supplied Products other than Supplied Products that are Bulk Products or API.

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6.QUALITY ASSURANCE; ACCEPTANCE.

6.1Specifications; Testing.

(a)Batch Testing.  Optimer will have standard analytical testing performed on each Manufactured batch of Supplied Product to be shipped to Partner to verify that it meets the Product Specifications, according to the procedure described in the corresponding documentation and that the Supplied Product was Manufactured in accordance with Applicable Laws.

(b)Certificate of Compliance.  In connection with shipment of any batch of Supplied Product, Optimer shall provide Partner with a document certifying with respect to a particular batch (identified by batch number) that such batch was Manufactured in accordance with applicable cGMP, all other Applicable Laws and the Product Specifications.

(c)Quality Control Problem.  In addition, in the event Partner or Optimer identifies a quality problem with respect to any batch of Supplied Product, then, if requested by Partner in writing, Optimer shall authorize Partner to consult at Optimer’s (and, if requested by Partner and subject to Optimer prior written consent, not to be unreasonably withheld, its Third Party Manufacturer’s, so long as such consultation is permitted under the applicable agreement with such Third Party Manufacturer) facilities the full batch records corresponding to the applicable batch; provided, that if Partner requests to consult at Optimer’s Third Party Manufacturer’s facilities the full batch records corresponding to the applicable batch, such consent shall not be unreasonably withheld, so long as the applicable agreement between Optimer and such Third Party Manufacturer permits such consultation.

(d)Certificate of Analysis.In connection with shipment of any batch of Supplied Product, Optimer shall provide Partner with a certificate of analysis (the “Certificate of Analysis”).  Such Certificate of Analysis shall certify with respect to each shipment (i) the quantity of the shipment; provided, that the quantity of any Bulk Product shall be provided at scale count accuracy only; and (ii) that Supplied Product delivered conforms to the Product Specifications, as well as any further information required by the relevant regulatory authorities that Partner may have previously notified Optimer is necessary.  Partner shall be under no obligation to accept any shipment of Supplied Product without an accompanying Certificate of Analysis.

(e)Technology Transfer of Analytical Methods.Optimer (either itself or through its Affiliate, Optimer U.S.A.) shall coordinate the transfer of analytical methods for analysis and testing of Supplied Products to Partner in accordance with Applicable Laws in the Territory. Optimer (either itself or through its Affiliate, Optimer U.S.A.) shall use commercially reasonable efforts to complete such transfer […***…] before the date of the first shipment of any particular Supplied Product to Partner.  Partner shall reimburse Optimer (including, if applicable, its Affiliates) for reasonable out of pocket expenses it incurs in connection with such technology transfer within thirty (30) days of invoice provided such expenses have been

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previously agreed by Partner in writing, such agreement not to be unreasonably withheld or delayed.

6.2Acceptance and Rejection.

(a)Supplied Product Testing.  Partner, at its expense, shall perform such samplings and tests that are designed, in accordance with the methods of analysis and the Product Specifications, to determine whether the batch of Supplied Product shipped to Partner meets the Product Specifications.  Partner may reject any shipment (or portion thereof) of Supplied Product if the Supplied Product fails to conform to any warranty set forth in Section 9.1 of this Agreement based on Partner’s test results by providing to Optimer written notice of such rejection and the reasons therefor within thirty (30) days of delivery of such Supplied Product; otherwise, Partner shall be deemed to have accepted such shipment of Supplied Product; provided, however, that in the case of Supplied Product having any Latent Defect, Partner shall notify Optimer promptly once it discovers the possibility that a Supplied Product may have a Latent Defect and subsequently may reject such Supplied Product by giving written notice to Optimer of Partner’s rejection of such Supplied Product within thirty (30) days after such discovery of such Latent Defect.

(b)Replacement of Supplied Product and Dispute Procedure.  If Optimer notifies Partner in writing, within thirty (30) days of Optimer’s receipt of notice that Partner is rejecting the Supplied Product, that Optimer disagrees with Partner’s test results (an “Objection Notice”), the following procedures shall apply.  Partner and Optimer will review Partner’s test results and attempt to reach agreement as to whether or not the Supplied Product fails to conform to any warranty set forth in Section 9.1 of this Agreement.  If Partner and Optimer fail within ten (10) days after delivery of the Objection Notice to agree as to whether the Supplied Product is defective, representative samples of the batch of Supplied Product in question shall be submitted to a mutually-acceptable independent laboratory or consultant for analysis or review.  The results of such evaluation shall be binding upon the Parties.  The Parties shall share equally the cost of such evaluation, including the assay transfer cost, except that the Party that is determined to have been incorrect in its determination of whether the Supplied Product should be rejected shall assume the responsibility for, and pay, the costs of any such evaluation and reimburse the other for any amounts previously paid to the independent laboratory or consultant in connection with that determination.

(c)Cost of Replacement of Rejected Product.  If any shipment of Supplied Product is rejected by Partner, Partner’s duty to pay all amounts payable to Optimer in respect of the rejected Supplied Product shall be suspended unless and until there is a determination by the independent laboratory or consultant in support of Optimer’s Objection Notice in accordance with Section 6.2(b).  If only a portion of a shipment is rejected, Partner’s duty to pay the amount allocable to the defective portion only shall be suspended.

(d)Return of Rejected Product.  If a shipment or partial shipment is rejected by Partner pursuant to the provisions of this Section 6.2 and there is not a determination by the

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independent laboratory or consultant in support of Optimer’s Objection Notice in accordance with Section 6.2(c), Partner shall return to Optimer at Optimer’s request and expense (or, at the election of Optimer, destroy at Optimer’s cost and provide evidence of such destruction to Optimer) any such rejected Supplied Product (provided that if the Supplied Product has been packaged by or on behalf of Partner at the time of rejection Partner shall not be obliged to remove any packaging prior to its return).  Optimer shall (i) credit the original invoice in respect of the rejected Supplied Product, and (ii) adjust the invoice to Partner for any Supplied Product that was not rejected, payment of which is due in accordance with the terms of the original invoice.

(e)Supply of Replacement Product.  During the pendency of any rejection discussions Optimer shall use commercially reasonable efforts to supply Partner with additional Supplied Product which Partner shall purchase on the same terms as the Supplied Product that is the subject of the rejection discussions.

6.3Quality Agreement.  Within ninety (90) days from the Effective Date (or such longer period as agreed by the Parties but in any event at least three (3) months prior to the first shipment of Supplied Product to Partner), the Parties will enter into an agreement that details the quality assurance obligations of each Party (the “Quality Agreement”); provided, however, that the Product Specification for Supplied Product for use in Phase I Clinical Trials shall be discussed and agreed upon by the Parties promptly after the Effective Date as set forth in Section 2.3(d)(i).  The Product Specifications shall be incorporated into the Quality Agreement.  In the event of a conflict between the terms of the Quality Agreement and the terms of this Agreement, the provisions of this Agreement shall govern; provided, however, that the Quality Agreement shall govern in respect of quality issues.

7.MANUFACTURE OF SUPPLIED PRODUCT.

7.1Raw Materials.  Optimer shall be responsible for obtaining, and shall store at no cost to Partner, any raw materials, components, other ingredients and materials for blister packaging, in each case to the extent applicable, required for the Manufacture of Supplied Products (“Raw Materials”), in reasonable quantities consistent with Partner’s Forecasts and purchase orders.

7.2Manufacture of Supplied Product.  Optimer will Manufacture Supplied Products in accordance with the Product Specifications, cGMPs and Applicable Laws.  The Parties shall notify each other within five (5) Business Days of any new instructions or specifications required by Regulatory Authorities with jurisdiction over the Manufacture, import, export, use or sale of Supplied Products.  The Parties shall confer with each other with respect to any response regarding such instruction or specification and the best means to comply with such requirements and the Parties will share equally the costs for implementing such changes.

7.3Packaging.  Optimer shall package Supplied Product to be supplied in accordance with the standard operating procedures to be used by Optimer in manufacturing the Supplied

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Product under this Agreement in accordance with the Product Specifications and Applicable Laws.

7.4Changes to the Product Specifications or to the Manufacturing Process.  A Party proposing (a) a change to the Product Specifications or the Raw Materials, equipment (other than changes for maintenance, repair, and like-for-like replacement) or process used to Manufacture the Supplied Product, or (b) a change to the procedures used to Manufacture the Supplied Product that would require approval of the applicable Regulatory Authority in the Territory (collectively, the “Manufacturing Process”) shall provide written notice to the other Party.  If the proposed change is required by a Regulatory Authority, then such notice shall include disclosure of the Regulatory Authority request and relevant correspondence.  Any changes to the Product Specifications or to the Manufacturing Process shall be in compliance with all Regulatory Approvals for the Supplied Product in the Territory.  Optimer shall notify Partner of any proposed change to the Product Specifications or to the Manufacturing Process.  If Partner does not notify Optimer of an objection within ten (10) Business Days of receipt of Optimer’s notice and, as far as Optimer is aware having made due enquiry, such change would not require approval or notification of the applicable Regulatory Authority in the Territory, then Optimer may proceed with the change without the prior written approval of Partner. If Partner notifies Optimer within such ten (10) Business Days period that such change would require approval or notification of the applicable Regulatory Authority in the Territory then Optimer shall not make such change without the prior written consent of Partner.  In respect of any changes which would not require approval or notification of the applicable Regulatory Authority in the Territory, if Partner notifies  Optimer of an objection to such change within ten (10) Business Days of Optimer’s notice, the Parties will discuss the change in good-faith for up to an additional ten (10) Business Days (or longer, if agreed by the Parties) in the interest of reaching a mutually agreeable resolution; provided, that if agreement is not reached on such change (and that change does not require notification or approval of the applicable Regulatory Authority in the Territory) then Optimer may proceed with such change following such discussions. If the change is proposed by Partner or is required by a Regulatory Authority in the Territory (but not outside the Territory), then Partner shall bear any expenses of implementing such change.  If the change is proposed by Optimer or is required by a Regulatory Authority outside the Territory (but not in the Territory), then Optimer shall bear any expenses of implementing such change.  If the change is required by a Regulatory Authority or Applicable Laws both in and outside the Territory, then the Parties shall share any expenses of implementing such change equally.  The Parties agree that the notification and approval procedures with respect to changes to the Product Specifications and the Manufacturing Process set forth in this Section 7.4 will take effect commencing on MAA Approval of the applicable Supplied Product. For clarity, Optimer shall have the right to change equipment for maintenance, repair, and like-for-like replacement without notice to or consent of Partner.

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7.5Buffer Stock.

(a)Requirement of Optimer Buffer Stock.  Optimer or its Affiliates shall have available a buffer stock of API (the “Buffer Stock”) in the following amounts at the following times:

(i)Beginning on the date that is […***…] prior to the anticipated date of the First Commercial Sale until […***…] after First Commercial Sale: […***…] of Buffer Stock based upon the quantities of Supplied Product forecast to be ordered by Partner in the most recent applicable months of the Forecast; and

(ii)At any time after […***…] after First Commercial Sale: […***…] of Buffer Stock based upon the quantities of Supplied Product ordered by Partner in the previous […***…] period.

(b)Optimer (either itself or through its Affiliates) shall store such Buffer Stock at one or more locations separate from the site of its Third Party manufacturer of API.

(c)Inventory.  Partner shall carry and cause its Sublicensees to carry reasonable quantity of inventory of Supplied Product, at their own expense.

7.6Discussion Regarding Second Source.  The Parties will assess the desirability of identifying a second source for supply of Supplied Product and discuss whether to qualify a second source of Supplied Product, taking into account pricing, regulatory and other relevant issues.

7.7Supplied Product Shortfall.  Optimer shall use commercially reasonable efforts to avoid shortfalls in supply of Supplied Products based on the Forecasts provided by Partner.  Subject to Section 14.2, in the event Optimer is unable to supply to Partner, in whole or in part, Supplied Products requested for any reason (except to the extent caused by Partner), then Optimer shall promptly notify Partner, in writing, of such shortage, or potential shortage, or inability to timely supply Supplied Product and, if possible, the date when Optimer will again be able to supply Supplied Product.  Optimer will use commercially reasonable efforts to remedy any shortfall of Supplied Product as soon as practicable and Optimer will allocate its available production capacity for the production of Supplied Product in a manner proportional to the utilization of all customers (including Optimer and its Affiliates and other licensees) of such capacity in the prior […***…] period and will allocate such Supplied Product on a proportional basis with respect to remaining shelf-life as well.  In no event shall the delay in any of the Development activity due to supply shortage by Optimer amount to a breach of the License Agreement by Partner.

***Confidential Treatment Requested

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8.REGULATORY.

8.1Regulatory Compliance.  Optimer shall comply with all regulatory requirements with respect to Supplied Product imposed by Applicable Laws upon Optimer as the Manufacturer of the Supplied Product.  Optimer shall, on a timely basis, provide Partner with such information in Optimer’s possession as the Manufacturer of Supplied Product.  Optimer shall also provide, upon request by Partner, information concerning its production processes and quality control procedures with respect to the Supplied Product.

8.2cGMP Compliance and QA Audits.  Upon no less than sixty (60) days’ advance written notice to Optimer, Partner shall have the right to have representatives visit Optimer’s (but not, for clarity, its Third Party Manufacturer’s) Manufacturing facilities during normal business hours to discuss any related issues with Optimer’s (but not, for clarity, its Third Party Manufacturer’s) Manufacturing and management personnel and to review and inspect (a) Optimer’s Manufacturing and storage facilities, (b) the quality control procedures, and/or (c) any records and reports pertinent to the Manufacture, disposition or transport of Supplied Product as may be necessary to evidence Optimer’s compliance with all applicable Regulatory Approvals for the Manufacture of Supplied Product, including compliance with cGMP.  Such visits shall occur no more than once per year, except in the case of audits by Partner that are required by Applicable Laws, and except that additional visit(s) may occur in the event of significant deviations, quality problems or recalls requiring resolution by the Parties.  Partner shall also have the right to be present at audits and inspections conducted by Optimer of its Third Party Manufacturer(s) if permitted under the applicable agreement between Optimer and its Third Party Manufacturer(s); provided, that if such agreement contains limits on the number of individuals or entities that may be present during such audit or inspection, Optimer shall use its reasonable discretion in determining which individuals or entities may participate in such audit or inspection (which may or may not include Affiliates, employees, licensees or independent consultants of Partner); provided further, that Optimer shall use reasonable efforts to ensure that a representative of APEL or Partner shall participate in such audit or inspection, and if Partner or APEL has the right to so participate, Partner and APEL shall decide which of Partner or APEL shall participate in such audit or inspection.  For clarity, in no event shall both Partner and APEL have the right to participate in any audit or inspection under this Section 8.2 unless otherwise agreed in writing by Optimer and, if applicable, the Third Party Manufacturer. Optimer shall notify Partner within ten (10) days after receiving a written notice of such audits and inspections. Partner representatives will be advised of the confidentiality obligations of Partner under this Agreement and will follow such security, safety and facility access procedures as are reasonably designated by Optimer and its Third Party manufacturer(s), as applicable.

8.3Recall of Supplied Product.  For any Supplied Product, in the event that: (a) any Regulatory Authority in the Territory issues a request, directive or order that Supplied Product be recalled or retrieved; (b) a court of competent jurisdiction orders that Supplied Product be recalled or retrieved; or (c) Partner reasonably determines, after reasonable, good faith discussion with Optimer to the extent that time allows, that Supplied Product should be recalled or retrieved, Partner shall promptly notify Optimer of such event (to the extent time allows) and

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shall conduct such activity and take appropriate corrective actions, and Optimer shall provide such assistance to Partner as is reasonably necessary to carry out such activities.  All reasonable costs and expenses of such recall and corrective actions shall be equitably allocated between the Parties taking into account the relative fault of Partner and the relative fault of Optimer.

8.4Compliance with Laws.  Optimer shall comply with all Applicable Laws in performing its obligations under this Agreement.  Optimer represents and warrants to Partner that it has and will maintain during the Term all government permits, including, health, safety and environmental permits, necessary for the conduct of the actions and procedures that it undertakes pursuant to the Agreement.

8.5Documentation.  Optimer shall keep complete, accurate and authentic accounts, notes, data and records of the work performed under this Agreement (including batch records) and shall maintain complete and adequate records pertaining to the methods and facilities used for the Manufacture, processing, testing, packing, labeling, holding and distribution of a Supplied Product in accordance with Applicable Laws so that such Supplied Product may be used in humans.

8.6Samples.  Optimer shall retain samples of Supplied Product for a period of […***…] (or, if longer, the minimum period required by Applicable Law) after Partner’s acceptance of such batch.

9.REPRESENTATIONS AND WARRANTIES.

9.1Supplied Product Warranty.  Optimer represents and warrants that Supplied Product delivered hereunder will (a) be Manufactured by Optimer in accordance with all applicable Regulatory Approvals, cGMPs and other Applicable Laws, (b) conform to the Product Specifications at the time of delivery,(c) if the Supplied Product is API, have a remaining shelf life of no less than […***…] from date of shipment to Partner, (d) if the Supplied Product is Bulk Product, have a remaining shelf life of no less than […***…] from date of shipment to Partner, (d) not be adulterated or misbranded under Applicable Laws, (e) at the time of shipment, be free and clear of any lien or encumbrance, and (f) be supplied in accordance with the Quality Agreement.

9.2No Debarred or Disqualified Persons.  Optimer represents and warrants that it shall not employ, contract with, or retain any person directly or indirectly to perform any services under this Agreement if such a person (a) is under investigation by the FDA or any other Regulatory Authority for debarment or is presently debarred by the FDA pursuant to 21 U.S.C. § 335a or its successor provisions, or (b) has a disqualification hearing pending or has been disqualified by the FDA pursuant to 21 C.F.R. § 312.70 or its successor provisions or by any other Regulatory Authority pursuant to comparable Applicable Laws.  In addition, Optimer represents and warrants that neither it nor its Current Affiliates have engaged in any conduct or activity which could lead to any of the above-mentioned disqualification or debarment actions.  If, during the Term, Optimer or any person employed or retained by it to perform under this

***Confidential Treatment Requested

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Agreement (i) comes under investigation by the FDA or other Regulatory Authority for a debarment action or disqualification, (ii) is debarred or disqualified, or (iii) engages in any conduct or activity that could lead to any of the above-mentioned disqualification or debarment actions, Optimer shall immediately notify Partner of same and cease employing, contracting with, or retaining any such person to perform any services under this Agreement.

9.3Mutual Representations and Warranties.  Each Party represents and warrants to the other that:  (a) it is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof; (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate or partnership action; and (c) this Agreement is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

9.4Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 8.4, 9.1, 9.2 AND 9.3 OF THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND IN THIS AGREEMENT, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY OF PATENTS, OR THE PROSPECTS OR LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OF THE PRODUCTS.

9.5Limitation of Liability.  EXCEPT FOR (A) LOSSES CAUSED BY A PARTY’S BREACH OF SECTION 10, OR (B) LOSSES CAUSED BY A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD OR FRAUDULENT MISREPRESENTATION ((A) AND (B), THE “EXCEPTION CONDITIONS”) NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT.  Notwithstanding anything contained in any other provision of this Agreement, except for the Exception Conditions, Optimer’s aggregate liability for the Term to Partner and its Affiliates and their respective employees, directors, officers, shareholders and agents, for any Losses arising under, in connection with or otherwise in relation to this Agreement shall not exceed […***…] and shall not exceed […***…]; provided, however, that the foregoing shall not limit Optimer’s indemnification obligations set forth in this Section 12 with

***Confidential Treatment Requested

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respect to bodily injury (including death).  For clarification, payments to be made under Section 4 shall not be considered special, incidental, consequential or punitive damages.

10.CONFIDENTIALITY

10.1Confidential Information.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, the Parties agree that the receiving Party (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement (or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement) any information and materials furnished to it or its Affiliates by the other Party (the “Disclosing Party”) or its Affiliates pursuant to this Agreement or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement, in any form (written, oral, photographic, electronic, magnetic, or otherwise), including, but not limited to, all information concerning any Compound and/or Product and any other technical or business information of whatever nature (collectively, “Confidential Information”).  Each Party may use such Confidential Information only to the extent required to accomplish the purposes of this Agreement or any other written agreement between the Parties or their Affiliates concerning the subject matter of this Agreement.  Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own (but in no event less than reasonable care) to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information.  Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information.

10.2Exceptions.  Notwithstanding Section 10.1 above, the obligations of confidentiality and non-use shall not apply to information that the Receiving Party can prove by competent written evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party or any of its Affiliates, generally known or available; (b) is known by the Receiving Party or any of its Affiliates, other than under an obligation of confidentiality to the Disclosing Party, at the time of receiving such information; (c) is hereafter furnished to the Receiving Party or any of its Affiliates by a Third Party, which Third Party did not receive such information directly or indirectly from the Disclosing Party under an obligation of confidence; (d) is independently discovered or developed by the Receiving Party or any of its Affiliates without the use of Confidential Information belonging to the Disclosing Party; or (e) is the subject of a written permission to disclose provided by the Disclosing Party.

10.3Permitted Disclosures.  Notwithstanding the provisions of Section 10.1, the Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary in the following instances:

(a)complying with applicable court orders or governmental regulations;

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

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(c)disclosure to PAR under terms of confidentiality to the extent necessary to fulfill obligations under the PAR Agreement;

(d)disclosure to Affiliates, sublicensees and potential sublicensees (in the case of Partner), contractors, employees and consultants, in each case who need to know such information for the Manufacture of Supplied Products in accordance with this Agreement, on the condition that any such Third Parties agree to be bound by confidentiality and non-use obligations that are no less stringent than those confidentiality and non-use provisions contained in this Agreement; and

(e)disclosure 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, that any such Third Party agrees to be bound by confidentiality and non-use obligations that are no less stringent than those confidentiality and non-use provisions contained in this Agreement.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Section 10.3(a), it will, except where impracticable, give reasonable advance notice to the other Party of such disclosure and use efforts to secure confidential treatment of such information at least as diligent as such Party would use to protect its own confidential information, but in no event less than reasonable efforts.  In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information hereunder.

10.4Confidentiality of this Agreement and its Terms.  Except as otherwise provided in this Section 10, each Party agrees not to disclose to any Third Party the existence of this Agreement or the terms of this Agreement without the prior written consent of the other Party hereto, except that each Party may disclose the terms of this Agreement that are not otherwise made public as contemplated by Section 10.5 or as permitted under Section 10.3.

10.5Public Announcements.

(a)As soon as practicable following the date hereof, the Parties shall each issue a mutually agreed to press release announcing the existence of this Agreement and the License Agreement in the form attached as EXHIBIT C to the License Agreement.  Except as required by Applicable Law (including disclosure requirements of the U.S. Securities and Exchange Commission (“SEC”) or any stock exchange on which securities issued by a Party or its Affiliates are traded), neither Party shall make any other public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld or delayed; provided that each Party may make any public statement in response to questions by the press, analysts, investors or those attending industry conferences or financial analyst calls, or issue press releases, so long as any such public statement or press release is not inconsistent with prior public disclosures or public statements approved by the other Party pursuant to this Section 10.5 and which do not reveal non-public

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information about the other Party.  In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment upon the proposed text.

(b)The Parties will coordinate in advance with each other in connection with the filing of this Agreement (including redaction of certain provisions of this Agreement) with the SEC or any stock exchange on which securities issued by a Party or its Affiliate are traded, and each Party will use reasonable efforts to seek confidential treatment for the terms proposed to be redacted; provided that each Party will ultimately retain control over what information to disclose to the SEC or any stock exchange, as the case may be, and provided further that the Parties will use their reasonable efforts to file redacted versions with any governing bodies which are consistent with redacted versions previously filed with any other governing bodies.  Other than such obligation, neither Party (or its Affiliates) will be obligated to consult with or obtain approval from the other Party with respect to any filings to the SEC or any stock exchange.

(c)Except as expressly permitted in this Agreement or as required by Applicable Law, neither Party may use the other Party’s trademarks, service marks or trade names, or otherwise refer to or identify that other Party in marketing or promotional materials, press releases, statements to news media or other public announcements, without the other Party’s prior written consent, which that other Party may grant or withhold in its sole discretion.

10.6Equitable Relief.  Given the nature and value of the Confidential Information and the competitive damage and irreparable harm that would result to a Party upon unauthorized disclosure, use or transfer of its Confidential Information to any Third Party, the Parties agree that monetary damages may not be a sufficient remedy for any breach of this Section 10.  If the Receiving Party becomes aware of any breach or threatened breach of this Section 10 by a Third Party to whom the Receiving Party disclosed the Disclosing Party’s Confidential Information, the Receiving Party promptly shall notify the Disclosing Party and cooperate with the Disclosing Party to regain possession of its Confidential Information and prevent any further breach. In addition to all other remedies, a Party shall be entitled to seek specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Section 10 without furnishing proof of actual damages.

11.TERM AND TERMINATION

11.1Term.  The term of this Agreement (the “Term”) shall commence on the Effective Date and continue until terminated pursuant to Section 11.2.

11.2Termination.

(a)Mutual Agreement.  The Parties may terminate this Agreement in its entirety by mutual written agreement of the Parties.

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(b)Material Breach.  A Party shall have the right to terminate this Agreement in its entirety upon written notice to the other Party if such other Party is in material breach of this Agreement and has not cured such breach within ninety (90) days (thirty (30) days with respect to any payment breach) after notice from the terminating Party requesting cure of the breach.  Any such termination shall become effective at the end of such ninety (90) day (thirty (30) day with respect to any payment breach) period unless the breaching Party has cured any such breach or default prior to the end of such period.

(c)Bankruptcy.  A Party shall have the right to terminate this Agreement upon written notice to the other Party upon the bankruptcy, dissolution or winding up of such other Party, or the making or seeking to make or arrange an assignment for the benefit of creditors of such other Party, or the initiation of proceedings in voluntary or involuntary bankruptcy, or the appointment of a receiver or trustee of such other Party’s property that is not discharged within ninety (90) days.

(d)Termination After Discount Term.  Each Party shall have the right to terminate this Agreement (i) as to a particular Product upon eighteen (18) months prior written notice to the other Party following expiration of the Discount Term for such Product; or (ii) in its entirety upon eighteen (18) months prior written notice to the other Party following expiration of all Discount Terms of all Products.

11.3Effect of Termination; Surviving Obligations.

(a)Effect of Termination.  Upon termination of this Agreement all rights and obligations of the Parties under this Agreement shall terminate.

(b)Return of Confidential Information.  Within thirty (30) days following the termination of this Agreement, each Party shall deliver to the other Party any and all Confidential Information of such Party then in its possession, except for one (1) copy which may be kept in such Party’s ( or its counsel’s) office for archival purposes and except to the extent a Party retains the right to use such Confidential Information pursuant to any license granted under the License Agreement which survives termination of the License Agreement, as applicable.

(c)Surviving Obligations.  Termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such termination.  Except as set forth below or elsewhere in this Agreement, including Section 11.3(a), the obligations and rights of the Parties under the following provisions of this Agreement shall survive termination of this Agreement:

Section 1 — Definitions

Section 4.3 — Records

Section 10 — Confidentiality

Section 11.3 — Effect of Termination; Surviving Obligations

Section 11.4 — Exercise of Right to Terminate

Section 11.5 — Damages; Relief

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Section 12 — Indemnification

Section 13 — Dispute Resolution

Section 14 — General Provisions

11.4Exercise of Right to Terminate.  The rightful use by either Party hereto of a termination right provided for under this Agreement shall not give rise to the payment of damages or any other form of compensation or relief to the other Party with respect thereto.

11.5Damages; Relief.  Subject to Section 11.4 above, termination of this Agreement shall not preclude either Party from claiming any other damages, compensation or relief that it may be entitled to upon such termination.

12.INDEMNIFICATION

12.1Indemnification of Optimer.  Partner shall indemnify and hold harmless each of Optimer and its Affiliates and their respective directors, officers, shareholders, employees, agents, servants, successors and assigns of any of the foregoing (the “Optimer Indemnitees”), from and against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“Losses”) incurred by any Optimer Indemnitee resulting from any claims, actions, suits or proceedings brought by a Third Party (“Third Party Claims”) to the extent arising from, or occurring as a result of:  (a) gross negligence or willful misconduct in connection with Partner’s performance of its obligations or exercise of its rights under this Agreement; or (b) any material breach of any representations, warranties or covenants by Partner under this Agreement; except to the extent such Third Party Claims fall within the scope of the indemnification obligations of Optimer set forth in Section 12.2.

12.2Indemnification of Partner.  Optimer shall indemnify and hold harmless each of Partner and its Affiliates and the directors, officers and employees of such entities, and the successors and assigns of any of the foregoing (the “Partner Indemnitees”), from and against any and all Losses incurred by any Partner Indemnitee resulting from any Third Party Claims to the extent arising from, or occurring as a result of: (a) gross negligence or willful misconduct in connection with Optimer’s performance of its obligations or exercise of its rights under this Agreement;or (b) any material breach of any representations, warranties or covenants by Optimer under this Agreement other than those set forth in Section 9.1, except to the extent such Third Party Claims fall within the scope of the indemnification obligations of Partner set forth in Section 12.1.

12.3Procedure.  A party that intends to claim indemnification under this Section 12 (the “Indemnitee”) shall promptly notify the indemnifying party (the “Indemnitor”) in writing of any Third Party Claim, in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof. The Indemnitee may participate at its expense in the Indemnitor’s defense of and settlement negotiations for any Third Party Claim with counsel of the Indemnitee’s own selection. The

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indemnity arrangement in this Section 12 shall not apply to amounts paid in settlement of any action with respect to a Third Party Claim, if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably.  The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim shall only relieve the Indemnitor of its indemnification obligations under this Section 12 if and to the extent the Indemnitor is actually prejudiced thereby.  The Indemnitee shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action with respect to a Third Party Claim covered by this indemnification.

13.DISPUTE RESOLUTION

13.1Objective.  The Parties recognize that disputes as to matters arising under or relating to this Agreement or either Party’s rights and/or obligations hereunder may arise from time to time.  It is the objective of the Parties to establish procedures to facilitate the resolution of such disputes in an expedient manner by mutual cooperation and without resort to litigation.  To accomplish this objective, the Parties agree to follow the procedures set forth in this Section 13 to resolve any such dispute if and when it arises.

13.2Resolution by Executives.  If an unresolved dispute as to matters arising under or relating to this Agreement or either Party’s rights and/or obligations hereunder arises (other than any dispute to be resolved as provided in Section 6.2), either Party may refer such dispute to the Chief Executive Officer of Optimer and the President and Chief Executive Officer or its designee of Partner, who shall meet in person or by telephone within thirty (30) days after such referral to attempt in good faith to resolve such dispute.  If such matter cannot be resolved by discussion of such officers within such thirty (30)-day period (as may be extended by mutual written agreement), such dispute shall be resolved in accordance with Section 13.3. The Parties acknowledge that these discussions between the Parties to resolve disputes are settlement discussions under applicable rules of evidence and without prejudice to either Party’s legal position.

13.3Arbitration.

(a)If the Parties do not resolve a dispute as provided in Section 13.2, and a Party wishes to pursue the matter, each such dispute that is not an “Excluded Claim” shall be resolved by binding arbitration administered by the International Centre for Dispute Resolution (ICDR) in accordance with its International Arbitration Rules as then in effect, and judgment on the arbitration award may be entered in any court having jurisdiction thereof.  The decision rendered in any such arbitration will be final and not appealable.  If either Party intends to commence binding arbitration of such dispute, such Party will provide written notice to the other Party informing the other Party of such intention and the issues to be resolved.  Within thirty (30) days after the receipt of such notice, the other Party may by written notice to the Party initiating binding arbitration, add additional issues to be resolved.

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(b)The arbitration shall be conducted by a panel of three (3) persons, none of whom shall be a current or former employee or director, or a then-current stockholder, of either Party, their respective Affiliates or any Sublicensee.  Within thirty (30) days after receipt of the original notice of binding arbitration (the “Notice Date”), each Party shall select one (1) person to act as arbitrator and the two (2) Party-selected arbitrators shall select a third arbitrator within ten (10) Business Days of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the ICDR.  The place of arbitration shall be New York, New York, and all proceedings and communications shall be in English.

(c)It is the intention of the Parties that discovery, although permitted as described herein, will be limited except in exceptional circumstances.  The arbitrators will permit such limited discovery necessary for an understanding of any legitimate issue raised in the arbitration, including the production of documents.  No later than thirty (30) days after selection of the third arbitrator, the Parties and their representatives shall hold a preliminary meeting with the arbitrators, to mutually agree upon and thereafter follow procedures seeking to assure that the arbitration will be concluded within six (6) months from such meeting.  Failing any such mutual agreement, the arbitrators will design and the Parties shall follow procedures to such effect.

(d)Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending the arbitration award.  The arbitrators shall have no authority to award punitive or any other non-compensatory damages, except as may be permitted by Section 9.5.  The arbitrators shall have the power to order that all or part of the legal or other costs incurred by a Party in connection with the arbitration be paid by the other Party. Each Party shall bear an equal share of the arbitrators’ and any administrative fees of arbitration..  In addition, in the event the arbitrators award damages to Partner pursuant to this Section 13 and Optimer is then, or becomes at any point, bankrupt or insolvent, the amount of such damages shall be applied as a credit to royalty payments otherwise owed to Optimer under Section 6.

(e)Except to the extent necessary to confirm or enforce an award or as may be required by Applicable Law, neither a Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties.  In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

(f)As used in this Section, the term “Excluded Claim” shall mean (i) a dispute, controversy or claim that concerns (1) the validity, enforceability or infringement of a patent, trademark or copyright or (2) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory; or (ii) a claim for specific performance or injunctive or other equitable relief as a remedy for a breach or threatened breach of Section 10.

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14.GENERAL PROVISIONS

14.1Governing Law.  This Agreement and all questions regarding its existence, validity, interpretation, breach or performance of this Agreement and any dispute or claim arising out of or in connection with it (whether contractual or non-contractual in nature such as claims in tort, from breach of statute or regulation or otherwise), shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, United States, without reference to its conflicts of law principles to the extent those principles would require applying another jurisdiction’s laws (without limiting the Parties’ rights and obligations under Section 13).  The United Nations Conventions on Contracts for the International Sale of Goods shall not be applicable to this Agreement. Subject to Section 13, the Parties may commence an action, suit or proceeding arising out of or in connection with this Agreement in, and hereby consent to the non-exclusive jurisdiction of, the federal and state courts located in the County and State of New York.

14.2Force Majeure.  Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement (other than failure to make payment when due) when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, fire, floods, or other acts of God, or acts, omissions or delays in acting by any governmental authority or the other Party.  The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.  Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the Party has not caused such event(s) to occur.

14.3Assignment.  Except as expressly provided in this Section 14.3 or Section 14.4, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld; provided, however, that either Party may assign this Agreement and its rights and obligations hereunder without the other Party’s consent:

(a)in connection with the transfer or sale of all or substantially all of the business of the assigning Party relating to Products to a Third Party, whether by merger, sale of stock, sale of assets or otherwise; or

(b)to an Affiliate, provided that the assigning Party shall remain liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate.

This Agreement shall be binding upon successors and permitted assigns of the Parties.  Any assignment not in accordance with this Section 14.3 or Section 14.4 will be null and void.

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14.4Optimer Third Party Manufacturer.  The Parties acknowledge and agree that Optimer plans to use a Third Party manufacturer to Manufacture and supply Supplied Products under this Agreement and that the terms “Optimer shall” or “Optimer will” or the like, shall be deemed to be followed by the words “or Optimer’s designated Third Party manufacturer will” or “or “Optimer’s designated Third Party manufacturer shall” or “Optimer shall require that its designated Third Party manufacturer shall” or the like, with respect to Optimer’s Manufacturing and supply obligations herein. Optimer shall consult Partner on the terms of any agreements with any Third Party manufacturers relating to Products that will be or may be supplied under this Agreement that are being negotiated by Optimer at the Effective Date or negotiated afterwards and take Partner’s reasonable comments and suggestions into account.  In addition, Optimer shall have the right to transfer its obligations to Manufacture and supply Supplied Products under this Agreement to any Current Affiliate (as defined in the License Agreement) of Optimer but only with the prior written consent of Partner, not to be unreasonably withheld or delayed; provided that Partner may not withhold its consent to Optimer’s transfer its obligations to Manufacture and supply Supplied Products under this Agreement to any Current Affiliate if such Current Affiliate and Optimer U.S.A. are subject to contractual obligations to Partner relating to supply of Supplied Products that are at least as protective of Partner as the contractual obligations of Optimer and Optimer U.S.A. to Partner relating to Supplied Products as of the Effective Date.

14.5Severability.  If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties.  The Parties shall in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

14.6Notices.  All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Optimer, addressed to:

Optimer Luxembourg 2 S.à r.l.

6C, rue Gabriel Lippmann

L-5365 Munsbach, Luxembourg

Attention: Olivier Dorier

Fax: +352 26 25 88 79

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If to Partner, addressed to:

Astellas Pharma, Inc.

2-3-11 Nihonbashi-Honcho

Chuo-ku, Tokyo, 103-8411

Japan

Attention: Kazunori Okimura, Vice President, Legal

Fax: +81-3-3244-5811

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.  Any such notice shall be deemed to have been given: (a) when delivered if personally delivered or sent by facsimile on a Business Day; (b) on the Business Day after dispatch if sent by nationally recognized overnight courier; and/or (c) on the third Business Day following the date of mailing if sent by mail.

14.7Entire Agreement; Amendments.  This Agreement, together with the exhibit hereto, contains the entire understanding of the Parties with respect to the subject matter hereof and thereof and supersede and cancel all previous express or implied agreements and understandings, negotiations, writings and commitments, either oral or written, in respect to the subject matter hereof and thereof, including the Confidentiality Agreement.  This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both Parties hereto, but “written instrument” does not include (a) the text of e-mails or similar electronic transmissions, or (b) the terms of any (i) shrink-wrap, click-wrap, browse-wrap or similar agreement between the Parties or (ii) website owned, operated or controlled by a Party.

14.8Headings.  The captions to the several Sections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Sections hereof.

14.9Independent Contractors.  It is expressly agreed that Optimer and Partner shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency.  Neither Optimer nor Partner shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

14.10Waiver.  The waiver by either Party hereto of any right hereunder, or the failure of the other Party to perform, or a breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise.

14.11Cumulative Remedies.  No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

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14.12Waiver of Rule of Construction.  Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement.  Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

14.13Interpretation.  All references in this Agreement to a Section or Exhibit shall refer to a Section or Exhibit in or to this Agreement, unless otherwise stated.  Any reference to any federal, national, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” and similar words means including without limitation.  The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision.  All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters, or calendar years, unless stated otherwise.  References to the singular include the plural.

14.14No Third Party Beneficiaries.  This Agreement is neither expressly or impliedly made for the benefit of any Party other than Optimer and Partner, except as otherwise provided in this Agreement with respect to Optimer Indemnitees under Section 12.1 and Partner Indemnitees under Section 12.2. This Agreement may be terminated, varied or amended in accordance with its terms or with the agreement of Partner and Optimer without the consent of the Optimer Indemnitees and/or Partner Indemnitees.

14.15English Language.  This Agreement is in the English language, and the English language shall control their interpretation.  In addition, all notices required or permitted to be given under this Agreement, and all written, electronic, oral or other communications between the Parties regarding this Agreement, shall be in the English language.

14.16Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the Parties hereto have executed this Supply Agreement as of the Effective Date.

ASTELLAS PHARMA INC.		OPTIMER LUXEMBOURG 2 S.À R.L.
By:	/s/ Yoshihiko Hatanaka	By:	/s/ Olivier Dorier
Name:	Yoshihiko Hatanaka	Name:	Olivier Dorier
Title:	President & CEO	Title:	Manager

EXHIBIT A

EXAMPLE TRANSFER PRICE CALCULATIONS

[…***…]

***Confidential Treatment Requested

EX-10.6

Exhibit 10.6

January 31, 2012

Via Federal Express

Emily Wang

Supervisor

6F., No.306, Sec. 2, Bade Rd., Zhongshan Dist.,

Taipei City 104, Taiwan (R.O.C.)

Re:OPT-822/821 Products

Dear Emily,

Optimer Pharmaceuticals, Inc. (“Optimer”) and Optimer Biotechnology, Inc. (“OBI”) are parties to an Intellectual Property Assignment and License Agreement effective as of October 30, 2009 (the “Agreement”).  This letter agreement (this “Letter Agreement”) confirms the mutual agreement of Optimer and OBI concerning the parties’ interest in entering into a license agreement pursuant to which OBI would license certain patents and know-how to Optimer concerning the compound(s) known as OPT-822/821.  All capitalized terms, where not otherwise defined in this Letter Agreement, will have the meanings set forth in the Agreement.

By our mutual execution of this Letter Agreement, the parties agree to the following:

If OBI or one of its Affiliates receives any Offer (as defined below) within the period of the Effective Date of the Agreement and through the ten (10) year anniversary of the Effective Date, then Optimer shall have a right of first refusal (the “Right of First Refusal”) to obtain an exclusive, royalty-bearing license (including the right to sublicense) under the OPT-822/821 Patents and the OBI OPT-822/821 Technology to develop, make, have made, use, sell, offer for sale, have sold, and import OPT-822/821 Products in the Offered Territory (as defined below) related to such Offer.  Notwithstanding the foregoing, in the event that OBI undergoes a change of control, this Letter Agreement shall be automatically terminated.  In this paragraph,  a “change of control” is deemed to occur if OBI (a) completes a transaction in which OBI merges or consolidates with any other entity (other than a subsidiary of OBI); or (b) effects any other transaction or series of transactions (other than a stock offering resulting in OBI’s shares being listed on a national or other publicly recognized stock exchange and other than other bona-fide fund raising from existing or new investors in the ordinary course of business), such that in either case of clause (a) or (b) the shareholders of OBI immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or

Confidential

10110 SORRENTO VALLEY ROAD, SUITE C   SAN DIEGO, CALIFORNIA 92121   TEL: 858-909-0736 FAX: 858-909-0737

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capital stock of the surviving entity following the closing of such merger, consolidation, other transaction or series of transactions.

Prior to OBI or any of its Affiliates accepting a bona fide offer (an “Offer”), whether written or oral, to exclusively (or co-exclusively with OBI or any of its Affiliates) license any of the OPT-822/821 Patents and/or OBI OPT-822/821 Technology in a territory that includes any part of the world other than the countries of Taiwan R.O.C., China, the territory of Hong Kong, Indonesia, India and the ASEAN Secretariat countries, comprising Thailand, Vietnam, Laos, Cambodia, Burma, Thailand, Malaysia, Singapore, Brunei, Pakistan or the Philippines (the “Excluded Countries”), OBI shall deliver a written notice to Optimer specifying the OPT-822/821 Patents and/or OBI OPT-822/821 Technology to be licensed and all material terms of such proposed transaction (an “Offer Notice”); provided, however, that if the Offer has been made in writing, the Offer Notice shall include a copy of such Offer.  The previous sentence notwithstanding, OBI shall not be obligated to disclose the name of any potential counterparty with respect to an Offer to the extent such disclosure would be prohibited by a confidentiality agreement with such potential counterparty.  The territory that is the subject of any applicable Offer, excluding any Excluded Countries, is referred to as the “Offered Territory”.  Optimer shall have thirty (30) calendar days after the receipt of the Offer Notice to notify OBI in writing whether it wishes to exercise the Right of First Refusal (an “Exercise Notice”).  If Optimer delivers an Exercise Notice within such thirty (30) calendar day period, then OBI shall negotiate in good faith with Optimer to execute and deliver appropriate documentation to consummate an exclusive license in the Offered Territory within sixty (60) days after OBI’s receipt of the Exercise Notice, including sharing of such information regarding OPT-822/821 as Optimer may reasonably request to evaluate the Offer.  If Optimer and OBI are unable to execute and deliver appropriate documentation to consummate such transaction within sixty (60) days after OBI’s receipt of the Exercise Notice or Optimer affirmatively indicates in writing that it is not interested in exercising its Right of First Refusal or continuing to negotiate, OBI shall be free to accept the applicable Offer and exclusively license the OPT-822/821 Patents and/or the OBI OPT-822/821 Technology in the Offered Territory pursuant to the terms contained in the Offer Notice; provided, however, that neither OBI nor its Affiliates shall consummate any licensing transaction related to the applicable Offer with a third party which contains terms more favorable than those set forth in the applicable Offer Notice or those offered by Optimer during any negotiation period without first re-offering such more favorable terms to Optimer in accordance with this Letter Agreement.

As consideration for the grant of the Right of First Refusal, Optimer hereby waives OBI’s obligations under Section 5.1 of the Agreement with respect to OPT-822/821; provided that such obligations shall be reinstated if and when OBI undergoes a change of control which results in the termination of this Letter Agreement.

Each party will keep the contents, terms and existence of this Letter Agreement, as well as information exchanged by the parties relating to the OPT-822/821 Patents and/or the OBI OPT-822/821 Technology, including, without limitation, technical information, know-how, scientific information, formulae, manufacturing data and procedures, marketing information and strategies, sales and financial data (collectively, “Confidential Information”), in complete confidence and will not, without the prior written consent of the other party, use or exploit, in whole or in part, any Confidential Information other than as contemplated herein or disclose any Confidential Information to any person not

2

otherwise contemplated herein; provided, however, that (a) each party may disclose Confidential Information to its Affiliates and third-party manufacturers and their respective officers and employees and to their respective legal, accounting, tax, regulatory and other professional advisors whose knowledge of such Confidential Information, in the reasonable opinion of the disclosing party, is necessary for assessing and/or implementing the transactions contemplated hereby; (b) each party will use reasonable efforts to ensure that each person to whom any Confidential Information is disclosed pursuant to clause (a) above adheres to the terms of this undertaking as if he, she, or it were a party hereto; and (c) either party may disclose Confidential Information to the extent required by law (including requirements of any regulatory body or securities exchange on which a party’s common stock is listed) but shall use commercially reasonable efforts to provide adequate prior notice to the other party to seek a protective order or other relief to prevent such disclosure.

This Letter Agreement may not be assigned by any party without the prior written consent of the other party; provided that Optimer may assign its Right of First Refusal (including any portion thereof with respect to a particular territory or territories) to any subsidiary that is wholly-owned, directly or indirectly, by Optimer.

[Signature Page Follows]

3

Please sign two (2) originals of this Letter Agreement and return one to Optimer at the address above.

OPTIMER PHARMACEUTICALS, INC.
By:
Name:	Pedro Lichtinger
Title:	President and Chief Executive Officer
Date:
ACCEPTED and AGREED:
OPTIMER BIOTECHNOLOGY, INC.
By:
Name:	Emily Wang
Title:	Supervisor
Date:

4

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: May 10, 2012

/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, Kurt M. Harman, 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: May 10, 2012

/s/ Kurt M. Hartman

Kurt M. Hartman

General Counsel, Chief Compliance Officer, Senior 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 Kurt M. Hartman, the General Counsel, Chief Compliance Officer, Senior Vice-President and Acting 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 March 31, 2012, 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: May 10, 2012

/s/ Pedro Lichtinger	/s/ Kurt M. Hartman
Pedro Lichtinger	Kurt M. Hartman
Chief Executive Officer (Principal Executive Officer)	General Counsel, Chief Compliance Officer, Senior Vice-President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or 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

Investment Securities

3 Months Ended

Mar. 31, 2012

Investment Securities

Investment Securities

4.     Investment Securities

The following is a summary of the Company’s consolidated investment securities, all of which are classified as available-for-sale. Determination of estimated fair value is based upon quoted market prices, pricing vendors or quotes from brokers/dealers as of the dates presented.

	March 31, 2012
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Government agencies	$	38,395,951	$	38,391	$	—	$	38,434,342
Corporate bonds	9,384,180		5,668		—		9,389,848
Investment in Cempra	—		948,627		—		948,627
	$	47,780,131	$	992,686	$	—	$	48,772,817

	December 31, 2011
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Government agencies	$	69,241,792	$	106,347	$	—	$	69,348,139
Corporate bonds	9,429,485		13,442		—		9,442,927
	$	78,671,277	$	119,789	$	—	78,791,066

None of the investments had a net unrealized loss position as of March 31, 2012.

In February 2012, Cempra completed its initial public offering and the Company has determined that its equity in Cempra had readily determinable value at that time and recorded its fair value in the Company’s books. Prior to February 2012, the Company assigned no value to its equity in Cempra.

The amortized cost and estimated fair value of securities available-for-sale at March 31, 2012, by contractual maturity, are as follows:

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	47,780,131	$	47,824,190

The weighted-average maturity of the Company’s short-term investments as of March 31, 2012 and 2011 was approximately four months and twelve months, respectively.

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2012

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 as of March 31, 2012:

	Quoted Prices in Active Markets(Level 1)		Other Observable Inputs(Level 2)		Unobservable Inputs(Level 3)		Total
Cash equivalents	$	22,232,400	$	—	$	—	$	22,232,400
Marketable securities	—		47,824,190		—		47,824,190
Auction rate securities	—		—		882,000		882,000
Investment in Cempra	948,627		—		—		948,627
Other assets — forward contracts not designated as hedges	—		199,779		—		199,779
	$	23,181,027	$	48,023,969	$	882,000	$	72,086,996

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.

Marketable Securities.  With the exception of auction rate securities, the Company obtains pricing information from quoted market prices, pricing vendors or quotes from brokers/dealers. The Company conducts reviews of its primary pricing vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable.

The fair value of U.S. Treasury securities and government-related securities, and corporate bonds are generally determined using standard observable inputs, including reported trades, quoted market prices, and broker/dealer quotes and thus these securities are in Level 2.

The fair value of preferred auction rate securities (“ARPS”) is estimated by the Company using a discounted cash flow model that incorporates transaction details such as contractual terms, maturity and 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 the security in the near term. The ARPS does not have observable inputs and thus the ARPS is included in Level 3.

Available- for- sale security.  Equity securities that have readily determinable fair values not classified as trading securities or as held-to-maturity securities are classified as available-for-sale securities.  Any unrealized gains and losses are reported in other comprehensive income until realized. During the quarter ended March 31, 2012, Cempra became a publicly traded company and as such the Company assigned a value to the shares received in March 2006 (see Note 8) and recorded the entire amount as an unrealized gain. The Company considers the equity it owned in Cempra as available-for-sale.  For the quarter ended March 31, 2012, the Company recorded an unrealized gain of $948,627 and has included the fair value of $948,627 in short-term investment as of March 31, 2012. Cempra’s stock is actively traded in the market and thus is in Level 1.

Derivative Instruments. Derivative instruments consist of a forward contract to manage foreign exchange risk for certain transactions denominated in a foreign currency. The forward contract is valued using a standard calculation that is primarily based on observable inputs, such as foreign currency exchange rates and thus the forward contract is included in Level 2.  For the quarter ended March 31, 2012, included in its interest income and other, net, the Company recognized a gain of $63,773 on its forward contract.

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, 2012	$	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 March 31, 2012	$	882,000
Change in unrealized gains (losses) included in net income related to assets still held	$	—

As of March 31, 2012, the Company held one ARPS valued at $882,000 with a perpetual maturity date that resets every 28 days.  Although as of March 31, 2012, 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 (USD $)	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 22,232,400	$ 31,787,512
Short-term investments	48,772,817	78,791,066
Trade accounts receivable, net	5,348,118	6,563,645
Accounts receivable, other	53,490,730	52,289,290
Inventory, net	5,869,326	3,947,380
Prepaid expenses and other current assets	2,683,572	3,781,830
Total current assets	138,396,963	177,160,723
Equity investment in OBI	29,213,896
Property and equipment, net	3,418,935	2,590,715
Long-term investments	882,000	882,000
Other assets	1,424,724	1,389,734
Total assets	173,336,518	182,023,172
Current liabilities:
Accounts payable	7,810,199	9,860,462
Accrued expenses	27,988,106	21,447,544
Total current liabilities	35,798,305	31,308,006
Deferred rent	148,246	151,141
Stockholders' equity:
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized, no shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively
Common stock, par value $0.001 per share, 75,000,000 shares authorized, 46,760,532 shares and 46,689,951 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	46,761	46,690
Additional paid-in capital	362,289,774	358,895,471
Accumulated other comprehensive income (loss)	966,669	(46,725)
Accumulated deficit	(225,913,237)	(214,992,783)
Total Optimer Pharmaceuticals, Inc. stockholders' equity	137,389,967	143,902,653
Noncontrolling interest		6,661,372
Total stockholders' equity	137,389,967	150,564,025
Total liabilities and stockholders' equity	$ 173,336,518	$ 182,023,172

XML

Interim Financial Information

3 Months Ended

Mar. 31, 2012

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. Optimer has two active wholly-owned subsidiaries, Optimer Pharmaceuticals Canada, Inc., which is incorporated and located in Canada, and Optimer Luxembourg 2 S.à r.l. (“Optimer Europe”), which is incorporated in Luxembourg. During the first quarter of 2012, the Company established, as part of its international structure strategy, additional wholly-owned subsidiaries, including Optimer Pharmaceuticals U.S. Holdings LLC, Optimer Bermuda, and Optimer Luxembourg 1 S.à r.l.  As of March 31, 2012, there were no activities in these additional wholly-owned subsidiaries.

The Company had a majority-owned subsidiary, Optimer Biotechnology, Inc. (“OBI”), which is incorporated and located in Taiwan. In February 2012, OBI issued 36 million newly-issued shares of its common stock resulting in gross proceeds to OBI of approximately 540 million New Taiwan dollars (approximately $18.3 million based on then-current exchange rates).  The Company did not participate in the February 2012 financing.  Also, in March, 2012, the Company sold 1.5 million shares it owned of OBI. As a result, the Company owned approximately 43% of OBI and thus OBI ceased being a majority-owned subsidiary of the Company.   These transactions during the first quarter of 2012 triggered consideration regarding whether or not to consolidate OBI as well as an evaluation to consider whether OBI is a variable interest entity (“VIE”).  As a result of its evaluation, the Company determined OBI was not a VIE and that Optimer no longer had control over the operations and decision making of the voting interest entity. As a result of this evaluation, the Company deconsolidated OBI and derecognized the OBI assets, liabilities, and noncontrolling interest from its financial statements. For the quarter ended March 31, 2012, the gain attributed to the deconsolidation was $23.8 million. As of the date of deconsolidation, February 7, 2012, the Company began accounting for its investment in OBI under the equity method and accordingly recognized its share of OBI’s losses in the amount of $485,969 for the period from February 7, 2012 through March 31, 2012.

Optimer is a biopharmaceutical company focused on discovering, developing and commercializing innovative hospital specialty products.  The Company currently has one anti-infective product, DIFICID™ (fidaxomicin), which is approved in the United States, and approved in Europe as DIFICLIR™, for the treatment of Clostridium difficile-associated diarrhea (“CDAD”) and is developing additional product candidates using its proprietary technology, including its OPopS™ drug discovery platform.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the three months ended March 31, 2012 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, 2011, which was filed with the Securities and Exchange Commission (“SEC”) on March 8, 2012.

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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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.     Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include all the accounts of the Company and its majority owned subsidiaries.  All intercompany balances and transactions have been eliminated in consolidation.

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.  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. As of March 31, 2012, cash, cash equivalents and short-term investments totaled approximately $71.0 million.

Accounts Receivable

Trade accounts receivable are recorded net of reserves for estimated chargeback obligations, prompt payment discounts, service fee arrangements and any allowance for doubtful accounts. Reserves for other sales related allowances such as rebates, distribution and other fees, and product returns are included in accrued expenses in the Company’s consolidated balance sheet. The allowance for prompt pay discounts and service fee arrangements was $994,880 and zero at March 31, 2012 and 2011, respectively.

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.  Net inventory consisted of the following as of the dates indicated:

	March 31,			December 31,
	2012			2011
Raw materials	$	4,298,510		$	1,815,696
Work in process	886,005			1,321,763
Finished goods	1,228,633			809,921
	$	6,413,148		$	3,947,380
Reserved	(543,822		)	—
	$	5,869,326		3,947,380

Investment in OBI

Beginning as of February 7, 2012, the Company accounted for its investment in OBI under the equity method of accounting as the Company ceased to have voting control or other elements of control that would require consolidation. The investment is subsequently adjusted for the Company’s share in equity in net loss and cash contributions and distributions. In addition, the Company records adjustments to reflect the amortization of basis differences attributable to the fair values in excess of net book values of identified tangible and intangible assets which were generated at the date of deconsolidation.  Any difference between the carrying amount of the investment on the Company’s balance sheet and the underlying equity in net assets is evaluated for impairment at each reporting period. As of March 31, 2012, the Company’s investment in OBI was $29.2 million.

Foreign Currency Translation

The functional currency for the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rates on the balance sheet dates. Net revenues and expenses are translated using the average exchange rates prevailing during the year. Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive income (loss) within stockholders’ equity in the consolidated balance sheets. Foreign currency transaction gains and losses are reported in operating expenses, net in the consolidated statements of operations.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, short-term investments and accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.  The fair value of available-for-sale securities is based upon quoted market prices for those securities.

Derivatives

The Company may use derivatives to manage foreign currency risk and interest rate risk and not for speculative or trading purposes. The Company’s objective is to reduce the risk to earnings and cash flows associated with changes in foreign currency exchange rates. Gains and losses resulting from changes in the fair values of those derivative instruments are recorded to earnings or other comprehensive income (loss) depending on the use of the derivative instrument and whether it qualifies for hedge accounting.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current period presentation.  Specifically, it has consolidated its sales and marketing expense and its general and administrative expense into a single selling, general and administrative expense category.  This reclassification has no impact on the net loss from operations or stockholders’ equity as previously reported.

Revenue Recognition

DIFICID is available through three major wholesalers and regional wholesalers that provide DIFICID to hospital and retail pharmacies, and long-term care facilities. The Company recognizes revenue from product sales when there is persuasive evidence of an arrangement, delivery has occurred, title has passed to the customer, the price is fixed and determinable, the buyer is obligated to pay the Company, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from the Company, the Company has no obligation to bring about the sale of the product, the amount of returns can be reasonably estimated and collectability is reasonably assured. The Company recognizes product sales of DIFICID upon delivery of product to the wholesalers.

The Company’s net product revenues represent total product revenues less allowances for customer credits, including estimated rebates, discounts and returns. These allowances are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Allowances for rebates, discounts and returns are established based on the contractual terms with customers, communications with customers as well as expectations about the market for the product and anticipated introduction of competitive products.  Product shipping and handling costs are included in cost of sales.

Product Sales Allowances.  The Company establishes reserves for prompt payment discounts, government rebates, product returns and other applicable allowances.

Allowances against receivable balances primarily relate to prompt payment discounts and fee for service arrangements with its contracted wholesalers and are recorded at the time of sale, resulting in a reduction in product sales revenue.  Accruals related to government rebates, product returns and other applicable allowances are recognized at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.

Prompt Payment Discounts.  The Company offers a prompt payment discount to its contracted wholesalers.  Since the Company expects its customers will take advantage of this discount, the Company accrues 100% of the prompt payment discount that is based on the gross amount of each invoice, at the time of sale.  The accrual is adjusted quarterly to reflect actual earned discounts.

Government Rebates and Chargebacks.  The Company estimates government mandated rebates and discounts relating to federal and state programs such as Medicaid, Veterans’ Administration (“VA”) and Department of Defense programs, the Medicare Part D Coverage Discount Program, as well as certain other qualifying federal and state government programs.  The Company estimates the amount of these reductions based on DIFICID patient data, actual sales data and market research data related to payor mix.  These allowances are adjusted each period based on actual experience.

Medicaid rebate reserves relate to the Company’s estimated obligations to states under statutory “best price” obligations which may also include supplemental rebate agreements with certain states.  Rebate accruals are recorded during the same period in which the related product sales are recognized.  Actual rebate amounts are determined at the time of claim by the state, and the Company will generally make cash payments for such amounts after receiving billings from the state.

VA rebates or chargeback reserves represent the Company’s estimated obligations resulting from contractual commitments to sell DIFICID to qualified healthcare providers at a price lower than the list price charged to the Company’s distributor.  The distributor will charge the Company for the difference between what the distributor pays for the product and the ultimate selling price to the qualified healthcare provider.  Rebate accruals are established during the same period in which the related product sales are recognized. Actual chargeback amounts for Public Health Service are determined at the time of resale to the qualified healthcare provider from the distributor, and the Company will generally issue credits for such amounts after receiving notification from the distributor.

Although allowances and accruals are recorded at the time of product sale, certain rebates will generally be paid out, on average, up to six months or longer after the sale.  Reserve estimates are evaluated quarterly and, if necessary, adjusted to reflect actual results.  Any such adjustments will be reflected in the Company’s operating results in the period of the adjustment.

Product Returns.  The Company’s policy is to accept returns of DIFICID for six months prior to and twelve months after the product expiration date.  The Company also permits returns if the product is damaged or defective when received by its customers. The Company will provide a credit for such returns to customers with whom the Company has a direct relationship. Once product is dispensed, it cannot be returned, but the Company allows partial returns in states where such returns are mandated. The Company does not exchange product from inventory for the returned product.

Allowances for product returns are recorded during the period in which the related product sales are recognized, resulting in a reduction to product revenue.  The Company estimates product returns based upon historical trends in the pharmaceutical industry and trends for similar products sold by others.

Collaborations, Milestones and Royalties

In order to determine the revenue recognition for contingent milestones, the Company evaluates the contingent milestones at the inception of a collaboration agreement.

Accounting Standard Codification (“ASC”) Topic 605-28, Revenue Recognition — Milestone Method (“ASC 605-28”), established the milestone method as an acceptable method of revenue recognition for certain contingent event-based payments under research and development arrangements.  Under the milestone method, a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved.  A milestone is an event (i) that can be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and (iii) that would result in additional payments being due to the Company.  The determination that a milestone is substantive is judgmental and is made at the inception of the arrangement.  Milestones are considered substantive when the consideration earned from the achievement of the milestone is (i) commensurate with either the Company’s performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from the Company’s performance to achieve the milestone, (ii) relates solely to past performance and (iii) is reasonable relative to all deliverables and payment terms in the arrangement.

Other contingent event-based payments received for which payment is either contingent solely upon the passage of time or the results of a collaborative partner’s performance are not considered milestones under ASC 605-28.  In accordance with ASC Topic 605-25, Revenue Recognition — Multiple-Element Arrangements, such payments will be recognized as revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured.

Revenues recognized for royalty payments, if any, are recognized as earned in accordance with the terms of various research and collaboration agreements.

For collaboration agreements with multiple deliverables, the Company recognizes collaboration revenues and expenses by analyzing each element of the agreement to determine if it is to be accounted for as a separate element or single unit of accounting. If an element is to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for that element are applied to determine when revenue is to be recognized. If an element is not to be treated separately for revenue recognition purposes, the revenue recognition principles most appropriate for the bundled group of elements are applied to determine when revenue is to be recognized.

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.

In connection with certain research and 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.

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

Research and Development Expenses

The Company expenses costs related to research and development until technological feasibility has been established for the product.  Once technological feasibility is established, all product costs are generally capitalized until the product is available for general release to customers.  The Company has determined that technological feasibility for its product candidates will be reached when the requisite regulatory approvals are obtained to make the product available for sale, which, in the United States, generally occurs upon the approval of the New Drug Application (“NDA”) for such product.

The Company’s research and development expenses consist primarily of license fees, salaries and related employee benefits, costs associated with clinical trials managed by the Company’s contract research organizations and costs associated with non-clinical activities and regulatory approvals.  The Company uses external service providers and vendors to conduct clinical trials, to manufacture supplies of product candidates to be used in clinical trials and to provide various other research and development-related products and services.

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

Net Income (Loss) Per Share Attributable to Common Stockholders

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Common stock equivalents consist of common shares issuable upon the exercise of stock options, and warrants and upon the vesting of restricted stock units.

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 Adopted Accounting Pronouncements

Effective January 1, 2012, the Company adopted the following accounting standards issued by the Financial Accounting Standards Board (“FASB”).

The Company adopted the amendments to 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 adoption of these amendments did not have a material impact on the Company’s financial position, cash flow or results of operations.

The Company adopted an amendment on 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 adoption of these amendments did not have a material impact on the Company’s financial position, cash flow or results of operations.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2012	Dec. 31, 2011
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	46,760,532	46,689,951
Common stock, shares outstanding	46,760,532	46,689,951

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information
Entity Registrant Name	OPTIMER PHARMACEUTICALS INC
Entity Central Index Key	0001142576
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
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		47,054,266
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

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Consolidated Statements of Operations (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues:
Product, net	$ 14,380,541
Licensing		69,165,000
Research grant and collaboration agreement	2,106	111,639
Total revenues	14,382,647	69,276,639
Cost and expenses:
Cost of product sales	2,284,260
Cost of licensing		4,273,532
Research and development	11,067,967	8,378,009
Selling, general and administrative	25,522,282	11,806,275
Co-promotion expenses with Cubist	10,081,583
Total operating expenses	48,956,092	24,457,816
Income (loss) from operations	(34,573,445)	44,818,823
Gain on deconsolidation of OBI	23,782,229
Loss related to equity method investment	(485,969)
Interest income (loss) and other, net	76,387	23,242
Consolidated net income (loss)	(11,200,798)	44,842,065
Net loss attributable to noncontrolling interest	280,344	290,805
Net income (loss) attributable to Optimer Pharmaceuticals, Inc.	(10,920,454)	45,132,870
Net income (loss) per share - basic (in dollars per share)	$ (0.23)	$ 1.06
Net income (loss) per share - diluted (in dollars per share)	$ (0.23)	$ 1.04
Weighted average number of shares used to compute net income (loss) per share - basic (in shares)	46,722,617	42,661,533
Weighted average number of shares used to compute net income (loss) per share - diluted (in shares)	46,722,617	43,399,798
Comprehensive income	$ (10,187,404)	$ 45,081,207

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Stock Based Compensation

3 Months Ended

Mar. 31, 2012

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, 2012, 2011, 2010 and 2009.

In March and 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 employees or non-employee directors 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.

Restricted Stock Units

In February 2012, the Compensation Committee of the Board of Directors (“Compensation Committee”) approved the grant to certain employees of restricted stock units (“RSUs”) covering up to an aggregate of 187,500 shares of common stock, which vest over three years beginning on January 1, 2012 .  Restricted stock units are valued based on the fair market value of the Company’s stock on the date of grant.

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

In February 2012, the Compensation Committee also granted to certain executives performance-based RSUs covering up to an aggregate of 250,000 shares of common stock, which vest over time beginning on the date the Company determines that a specified product revenue goal has been achievable.

In May 2010, the Company’s Board of Directors appointed Pedro Lichtinger as its President and CEO and as a member of the Board.  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 the applicable 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. Through March 31, 2012, 246,874 shares had vested.  Dr. Chang’s consulting agreement was terminated in April 2012 and as a result, the unvested portion of the performance-based options were cancelled.  However, due to Dr. chang’s continuing role as a director, his other equity awards remain outstanding and continue to vest as per the vesting term of the awards.

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

Stock options are valued using the Black-Scholes option pricing model on the date of grant. This option pricing model involves a number of estimates, including the expected lives of stock options, the Company’s anticipated stock volatility and interest rates.  The Company recognizes compensation expense for performance-based stock awards granted to employees under the accelerated attribution method.  The following table shows the assumptions used to compute stock-based compensation expense for the stock options, restricted stock units  and ESPP purchase rights during the three months ended March 31, 2012 and 2011, using the Black-Scholes option pricing model:

	Three months endedMarch 31,
Stock Options, including performance-based options	2012		2011
Risk-free interest rate	1.52-2.17	%	2.19-2.58	%
Dividend yield	0.00	%	0.00	%
Expected life of options (years)	6.08-8.33		5.27-9.49
Volatility	69.71-70.26	%	69.66-73.63	%

	Three months endedMarch 31,
ESPP purchase rights	2012		2011
Risk-free interest rate	0.09	%	0.18	%
Dividend yield	0.00	%	0.00	%
Expected life of options (years)	0.5		.05
Volatility	42.61	%	40.01	%

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, RSUs, and other stock awards issued to employees and consultants, and employee stock purchases, recognized for the three months ended March 31, 2012 and 2011, was comprised as follows:

	Three months ended March 31,
	2012		2011
Research and development	$	964,783	$	675,522
Selling, general and administrative	2,122,915		1,455,710
Total stock-based compensation expense	$	3,087,698	$	2,131,232

At March 31, 2012, the total unrecognized compensation expense related to unvested stock options and restricted stock units issued to employees was approximately $30.5 million and the related weighted-average period over which such expense is expected to be recognized is approximately 3.2 years.

Optimer Biotechnology, Inc.

Stock Options

Until February 7, 2012, we consolidated OBI into our results of operations and recoded stock based compensation related to options granted by OBI. 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 ended March 31, 2012 and 2011:

	Three months ended March 31,
	2012		2011
Research and development	$	8,465	$	12,424
Selling, general and administrative	9,181		34,768
Stock-based compensation expense	$	17,646	$	47,192

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Net Income (Loss) Per Share Attributable to Common Stockholders

3 Months Ended

Mar. 31, 2012

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 (loss) per share for the periods indicated:

	Three Months Ended March 31,
	2012			2011
Numerator:
Net income (loss) — basic and diluted	$	(10,920,454	)	$	45,132,870
Denominator:
Weighted average number of shares of common stock outstanding - basic	46,722,617			42,661,533
Effect of dilutive securities:
ESPP shares	—			14,247
Stock award common share equivalents	—			724,018
Weighted average number of shares of common stock outstanding - diluted	46,722,617			43,399,798
Net income (loss) per share - basic	$	(0.23	)	$	1.06
Net income (loss) per share - diluted	$	(0.23	)	$	1.04

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Other Collaborative Agreements

3 Months Ended

Mar. 31, 2012

Other Collaborative Agreements

Other Collaborative Agreements

8.     Other Collaborative Agreements

Astelllas Pharma Inc. (“Astellas Japan”)

In March 2012, the Company entered into a collaboration and license agreement with Astellas Japan pursuant to which the Company granted to Astellas Japan an exclusive, royalty-bearing license under certain of its know-how and intellectual property to develop and commercialize fidaxomicin in Japan.  Under the terms of the license agreement, Astellas Japan agreed to use commercially reasonable efforts to develop and commercialize fidaxomicin in Japan at its expense, and is obligated to achieve certain additional regulatory and commercial diligence milestones with respect to fidaxomicin in Japan.  In addition, under the terms of the license agreement, Astellas Japan granted to the Company an exclusive, royalty-free license under know-how and intellectual property generated by Astellas Japan and its sublicensees in the course of developing fidaxomicin and controlled by Astellas Japan or its affiliates for use by the Company and any of its sublicensees in the development and commercialization of fidaxomicin outside Japan and, following termination of the license agreement and subject to payment by the Company of a single-digit royalties, in Japan.  In addition, under the terms of a supply agreement entered into by Astellas Japan and Optimer Luxembourg, on the same date, Optimer Luxembourg will be the exclusive supplier of fidaxomicin to Astellas Japan for Astellas Japan’s development and commercialization activities in Japan during the term of the supply agreement.

Under the terms of the license agreement, Astellas Japan is obligated to pay the Company an upfront fee equal to $20,000,000 in April 2012. The Company is also eligible to receive additional cash payments totaling up to $70,000,000 upon the achievement by Astellas Japan of specified regulatory and commercial milestones.  In addition, the Company will be entitled to receive royalties on net sales of fidaxomicin products in Japan above an agreed threshold, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas Japan on a product-by-product basis until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan. Under the supply agreement, in exchange for commercial supply of fidaxomicin, Astellas Japan is obligated to pay Optimer Luxembourg a price equal to net sales of fidaxomicin products in Japan minus a discount that is based on a high double-digit percentage of such net sales and a mark-up to cost of goods.  This price will be payable by Astellas Japan on a product-by-product basis for commercial supply until a generic product accounts for a specified market share of the applicable fidaxomicin product in Japan.

The license agreement will continue in effect on a product-by-product basis until expiration of Astellas Japan’s obligation to pay royalties with respect to each fidaxomicin product in Japan, unless terminated early by either party.  Following expiration of the license agreement, Astellas Japan’s license to develop and commercialize the applicable fidaxomicin product will become non-exclusive.  Each of the Company and Astellas Japan may terminate the license agreement 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 license agreement prior to expiration in the event Astellas Japan 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 under the license agreement, and Astellas Japan may terminate the license agreement prior to expiration for any reason upon 180 days’ prior written notice to the Company.  Upon any such termination, the license granted to Astellas Japan (in total or with respect to the terminated product, as applicable) will terminate and revert to the Company.  The supply agreement will continue in effect until terminated by either party.  Each of Optimer Luxembourg and Astellas Japan may terminate the supply agreement (i) upon the material breach of such agreement by the other party, (ii) upon the bankruptcy or insolvency of the other party or (iii) on a product-by-product basis following expiration of Astellas Japan’s obligation to pay the price described above with respect to the applicable fidaxomicin product, or in its entirety following expiration of Astellas Japan’s obligation to pay the price described above with respect to all fidaxomicin products.

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 for each element. As the Company has not delivered any of the identified deliverables, no revenue has been recognized as of March 31, 2012.  Based on the results of the Company’s analysis, it was determined that the upfront payment of $20 million will be earned upon the delivery of the license and related know-how, which did not occur during the first quarter of 2012, and thus was not recognized as of March 31, 2012. The upfront payment of $20 million was received from Astellas Japan during April 2012.

Cubist Pharmaceuticals, Inc.(“Cubist”)

In April 2011, the Company entered into a co-promotion agreement with 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 is 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 is obligated to 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. Except for the first quarterly payment which the Company paid in advance, all subsequent payments are paid in arrears. 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.  Based on the level of sales to date, the Company expects to achieve the first year sales target and has accrued $6.5 million representing a pro-rated portion of the $5 million bonus as well as a portion of estimated gross profit on sales above the sales target which will become due to Cubist in August 2012, assuming such estimated levels of revenues are met.

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.

The following is a summary of accrued expenses related to the Company’s co-promotion agreement with Cubist during the three months ended March 31, 2012:

Expenses	Three Months Ended March 31, 2012
Target bonus and portion of gross profit payments	$	6,480,000
Service fees	$	3,601,583
Total	$	10,081,583

Astellas Pharma Europe Ltd. (“APEL”)

In February 2011, the Company entered into a collaboration and license agreement with APEL pursuant to which the Company granted to APEL 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 Commonwealth of Independent States (“CIS”). In March 2011, the parties amended the agreements to include certain additional countries in the CIS and all additional territories in Africa (all such countries and territories are referred to as the APEL territories). Under the terms of the agreement, APEL has agreed to use commercially reasonable efforts to develop and commercialize DIFICID in the APEL territory at its expense, and to achieve certain additional regulatory and commercial diligence milestones with respect to DIFICID in the APEL territory.  The Company and APEL may also agree to collaborate in, and share data resulting from, global development activities with respect to DIFICID, in which case the Company and APEL will be obligated to co-fund such activities.  In addition, under the terms of the agreement, APEL granted the Company an exclusive, royalty-free license under know-how and intellectual property generated by APEL and its sublicensees in the course of developing DIFICID and controlled by APEL or its affiliates for use by the Company and any of its sublicensees in the development and commercialization of DIFICID outside the APEL territory and, following termination of the agreement and subject to payment by the Company of single-digit royalties, in the APEL territory.  In addition, under the terms of a supply agreement entered into between the Company and APEL on the same date, the Company will be the exclusive supplier of DIFICID to APEL for APEL’s development and commercialization activities in the APEL territory during the term of the supply agreement, and APEL 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 APEL, in March 2011, APEL 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 APEL of specified regulatory and commercial milestones and contingent events. Of this amount, 40 million Euros will become due 30 days subsequent to the earlier to occur of launch in two major countries or six months after EMA approval and 10 million Euros will become payable to the Company upon the launch in any country in the APEL territory. In December 2011, the Company received an approval from the EMA for DIFICLIR™ (fidaxomicin) tablets and thus recorded the 40 million Euro milestone as revenue and a receivable in the fourth quarter of 2011. The Company expects to receive the 40 million Euro payment in mid-2012. The Company entered into a forward contract in order to limit the Company’s foreign currency exposure. The Company is eligible to receive additional milestone payments totaling up to 65 million Euros upon the achievement of certain 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 its performance or on the occurrence of a separate outcome resulting from its 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 as to whether or not the milestones will be met and the achievement of the milestones is based in part on the occurrence of a separate outcome resulting from its 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 APEL territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by APEL 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 for each element. Based on the results of the Company’s analysis, it 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 APEL will continue in effect on a product-by-product and country-by-country basis until expiration of APEL’s obligation to pay royalties with respect to each DIFICID product in each country in the APEL territory, unless terminated early by either party as more fully described below.  Following expiration, APEL’s license to develop and commercialize the applicable DIFICID product in the applicable country will become non-exclusive.  The Company and APEL 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 APEL 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 APEL 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 us.  Upon any such termination, the license granted to APEL (in total or with respect to the terminated product or terminated country, as applicable) will terminate and revert to the Company.

Par Pharmaceuticals, Inc. (“Par”)

In February 2007, the Company repurchased the rights to develop and commercialize DIFICID in North America and Israel from 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 net sales by the Company, its affiliates or its licensees of DIFICID in North America and Israel, and a 1.5% royalty on 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, 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, 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 APEL agreement.  In the fourth quarter of 2011, the Company also recorded $3.3 million in royalties related to the $53.6 million EMA approval milestone due from APEL.  For the quarter ended March 31, 2012, the Company recorded approximately $719,000 in royalties related to DIFICID net sales in the U.S.

Biocon Limited (“Biocon”)

In May 2010, the Company entered into a long-term supply agreement with Biocon, for the commercial manufacture of DIFICID API.  Pursuant to the agreement, Biocon agreed to manufacture and supply 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 it 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.  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 obtained marketing authorization for DIFICID in the United States.  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 that it indicates in binding forecasts.

Patheon Inc. (“Patheon”)

In June 2011, the Company entered into a commercial 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.  The Company 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 us, (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.

Cempra Pharmaceuticals, Inc. (“Cempra”)

In March 2006, the Company entered into a collaborative research and development and license agreement with Cempra.  The Company granted to Cempra an exclusive worldwide license, except in ASEAN countries, with the right to sublicense, the Company’s patent and know-how related to the Company’s macrolide and ketolide antibacterial program.  As partial consideration for granting Cempra the licenses, the Company obtained equity of Cempra and the Company assigned no value to such equity.  The Company may receive milestone payments as product candidates are developed and/or co-developed by Cempra, in addition to milestone payments based on certain sublicense revenue.  The aggregate potential amount of such milestone payments is not capped and, based in part on the number of products developed under the agreement, may exceed $24.5 million. The Company has assessed milestones under the revised authoritative guidance for research and development milestones and determined that the preclinical milestone payments, as defined in the agreement, meet the definition of a milestone as they are 1) events that can only be achieved in part on the Company’s past performance or upon the occurrence of a specific outcome resulting from the Company’s performance, 2) there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and 3) they result in additional payments being due to the Company. Clinical development and commercial milestone payments, however, currently do not meet this criteria as their achievement is solely based on the performance of Cempra. To date the Company has recognized $500,000 in payments from this collaboration. 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.

In February 2012, Cempra completed an initial public offering at which time the Company’s equity interest in Cempra was converted to 125,646 shares of common stock.  The Company considers its equity interest in Cempra as available-for-sale.  See Note 3 for further discussion.

Optimer Biotechnology, Inc.

In October 2009, the Company entered into certain transactions involving OBI, its then wholly-owned subsidiary, to provide funding for the development of two of its 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, its 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.

Memorial Sloan-Kettering Cancer Center (“MSKCC”)

In July 2002, the Company entered into a license agreement with 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 the Company, 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 (“TSRI”)

In July 1999, the Company acquired exclusive, worldwide rights to its OPopS technology from 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 the Company’s 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 OPT-88 which, after further evaluation, OBI decided not to pursue. In February 2011, OBI and TSRI agreed to terminate the agreement 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, the Company’s 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 remaining 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 three remaining TSRI agreements is approximately $11.1 million.

Revenues from Research Grants

The Company has one active grant from the National Institute of Allergy and Infectious Diseases. This $3.0 million grant was awarded in September 2007 for three years and was subsequently extended to August 2012. 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 March 31, 2012 and 2011, the Company recognized revenues related to research grants of $2,106, and $111,639, respectively.

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Subsequent Event

3 Months Ended

Mar. 31, 2012

Subsequent Event

Subsequent Event

9.     Subsequent Event

In April 2012, the Company issued 286,260 shares of common stock to AFOS, LLC as consideration for the engagement of an affiliate of AFOS to provide certain services to the Company and the affiliate’s obligation to provide such services.  The shares are subject to various lock-up periods during which AFOS may not transfer such shares, except under certain exceptions.

In April 2012 the Company announced the termination of each of Mr. Prunty and Dr. Shue, the removal of Dr. Chang as the Chairman of its Board of Directors and the Company’s request that Dr. Chang resign his directorship at the Company.  Dr. Chang’s removal as Chairman resulted from the Board of Directors’ views as to his actions in his capacity as Optimer’s representative on the Board of Directors of OBI as well as his failure to identify and effectively manage compliance, record keeping and conflict of interest issues in connection with OBI’s grant to Dr. Chang of 1.5 million shares of OBI.  The terminations of Mr. Prunty and Dr. Shue were related to the belief of the Company’s Board of Directors that both individuals failed to follow proper procedures when they became aware of potential issues related to the issuance of the OBI shares to Dr. Chang.  The Company has disclosed the matter to the relevant U.S. authorities and is cooperating with those authorities in reviewing the matter.  While the full facts are not yet known to the Company and are the subject of its own investigation, these events could potentially result in lawsuits being filed against the Company and certain of its employees and directors or the Company and its employees and directors could be the subject of governmental investigations or enforcement proceedings.

On May 9, 2012, at the Company’s Annual Stockholders’ meeting, its stockholders approved the Company’s 2012 Equity Incentive plan and the increase of its authorized shares from 75,000,000 shares to 150,000,000 shares.

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Consolidated Statements of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating activities
Net income (loss)	$ (11,200,798)	$ 44,842,065
Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities:
Depreciation and amortization	173,477	86,044
Stock based compensation	3,105,344	2,178,424
Issuance of common stock for consulting services and other		2,378,039
Deferred rent	(2,895)	(6,899)
Gain on deconsolidation of OBI	(23,782,229)
Loss related to equity method investment	485,969
Changes in operating assets and liabilities:
Trade accounts receivable, net	1,215,527
Accounts receivable, other	(1,419,904)	(1,601,177)
Inventory	(1,921,946)
Prepaids expenses and other current assets	(1,489,211)	(512,002)
Other assets	(102,122)	(283,667)
Accounts payable and accrued expenses	7,193,323	3,602,314
Net cash provided by (used in) in operating activities	(27,745,465)	50,683,141
Investing activities
Purchases of short-term investments		(22,886,865)
Sales or maturity of short-term investments	20,707,127	12,000,000
Purchases of property and equipment	(1,228,979)	(252,341)
Reduction of cash due to deconsolidation of OBI	(4,010,680)
Proceeds from sale of OBI common stock	2,027,109
Net cash provided by (used in) by investing activities	17,494,577	(11,139,206)
Financing activities
Proceeds from sale of common stock	289,030	80,010,481
Net cash provided by financing activities	289,030	80,010,481
Effect of exchange rate changes on cash and cash equivalents	406,746	271,462
Net increase (decrease) in cash and cash equivalents	(9,555,112)	119,825,878
Cash and cash equivalents at beginning of period	31,787,512	19,861,924
Cash and cash equivalents at end of period	$ 22,232,400	$ 139,687,802

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Investment in OBI

3 Months Ended

Mar. 31, 2012

Investment in OBI

Investment in OBI

5.Investment in OBI

Gain on deconsolidation of OBI

In February 2012, OBI issued 36 million newly-issued shares of its common stock resulting in gross proceeds of approximately 540 million New Taiwan dollars (approximately $18.3 million based on then-current exchange rates).  The Company did not participate in the February 2012 financing.  In March 2012, the Company sold 1.5 million shares of its equity interest in OBI.  These transactions reduced the Company’s ownership interest in OBI from a majority interest to a 43% interest and triggered consideration regarding whether or not to continue consolidating OBI as well as an evaluation to consider whether OBI was a VIE.  As a result of its evaluation, the Company determined that OBI was not a VIE and that Optimer no longer had voting control or other forms of  control over the operations and decision making of OBI. As a result of this evaluation, the Company deconsolidated OBI as of February 7, 2012 and derecognized the OBI assets, liabilities, and noncontrolling interest from its financial statements. Management applied deconsolidation accounting guidance, which included analyzing Optimer’s investment in OBI at February 7, 2012 to determine the fair value on the date of deconsolidation and the related gain or loss upon deconsolidation. Based on a preliminary valuation, management determined that the fair value of Optimer’s investment in OBI at February 7, 2012 was $29,699,865.  This fair value is based primarily on OBI’s financing transaction in February 2012 in which shares of common stock were sold at approximately $0.51 per share (based on then-current exchange rates).   As a significant portion of the additional investment in OBI was made by outside investors in an arms-length transaction, management has determined that this price per share approximated fair market value as of February 7, 2012. In this transaction OBI sold common shares in which all shares have the same rights and preferences as existing shareholders.

For the quarter ended March 31, 2012, the gain attributed to the deconsolidation of OBI was $23.8 million. Currently and during the period ended March 31, 2012, Optimer provides consulting, legal,  purchasing and other services to OBI. At this time there is no written contract or agreement for services between OBI and Optimer, who at March 31, 2012 are deemed to be related parties.

As of the date of deconsolidation, February 7, 2012, the Company will account for its investment in OBI under the equity method. The investment is subsequently adjusted for Optimer’s share in the equity in net loss and cash contributions and distributions. In addition, we record adjustments to reflect the amortization of basis differences attributable to the fair values in excess of net book values of identified tangible and intangible assets.  Based on a preliminary valuation, the fair value in excess of book value can be attributed to in process research and development related to the License and Collaboration Agreement for DIFICID and the Intellectual Property Assignment and License Agreement related to OPT-822/821 (see Note 8). For the period post deconsolidation, our equity method investment in OBI has been reduced by $.5 million to reflect our share in their losses during that period.  Any difference between the carrying amount of the investment on our balance sheet and the underlying equity in net assets is evaluated for impairment at each reporting period. As of March 31, 2012, our investment in OBI was $29.2 million.