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Executives

Christina Donaghy – Corporate Communications Manager

Michael N. Chang, Ph.D. – President & CEO

John D. Prunty, C.P.A. – Chief Financial Officer & Vice President, Finance

Tessie M. Che, Ph.D. – Chief Operating Officer & Senior Vice Pres., Corporate Affairs

Affairs

Kevin P. Poulos – Chief Commercial Officer

Analysts

Adam Cutler – Canaccord Adams

Joe Aguilera – BioRevolution Capital

Optimer Pharmaceuticals, Inc. (OPTR) Q4 2007 Earnings Call March 26, 2008 1:30 PM ET

Operator

Good day ladies and gentlemen, thank you for standing by, and welcome to the Optimer Pharmaceuticals fourth quarter and year end 2007 conference call. (Operator Instructions) I’d now like to turn the call over to Chrissie Donaghy, Corporate Communications Manager of Optimer Pharmaceuticals. Please go ahead, ma’am.

Christina Donaghy

Thank you. Good afternoon and welcome to Optimer’s year end conference call. Earlier today we released financial results for the fourth quarter and year ended December 31st, 2007. If you have not received this news release or if you would like to be added to the company distribution list, please visit the investor relations section of our website at www.optimerpharma.com.

Please note that this conference call will include forward looking statements regarding future events and the future financial performance of Optimer, including expected cash requirements for 2008, anticipated clinical development timelines for our two lead product candidates, planned commercialization, marketing and partnering efforts, and projected incidents of Clostridium difficile infections, or CDI. Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those projected in the forward looking statements. Examples of such risks and uncertainties include the cost of clinical development and the possibility of unfavorable clinical trial results.

For a full discussion of these risks and uncertainties, please review Optimer’s annual report on Form 10K and subsequent quarterly reports on Form 10Q, as filed with the US Securities and Exchange Commission. Furthermore, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, March 26, 2008. Optimer undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. This conference call is also being webcast and will be archived on our website for 30 days after today.

I would now like to turn the call over to Michael Chang, President and CEO of Optimer Pharmaceuticals. Michael?

Michael N. Chang, Ph.D.

Thank you, Chrissie. And thanks to our participants for joining us today.

As many of you know, Optimer was founded to develop and commercialize new anti-infective products to treat diseases with unmet needs. Infectious disease is a major public health issue, both in hospital and in the community. For example, the problems with current therapies for CDI include limited efficacy, high recurrence rate, adverse side effects, and inconvenient dosing. Therefore, we believe there is a need for new drugs. Later, during this call, I will update you on our two Phase III product candidates, OPT-80 and Prulifloxacin.

During today’s call, our Chief Financial Officer, John Prunty, will review our fourth quarter and full year 2007 financials. Following his remarks, I will provide an update on our business. We will then open the call to your questions.

Now I will turn it over to John.

John D. Prunty, C.P.A.

Thanks, Michael. I’ll provide a financial review of the company for the fourth quarter and full year for 2007 and provide guidance on our expected 2008 cash burn. We reported a net loss allocable to common stock holders for the three months ended December 31st, 2007, of $7 million or .27 cents per common share, as compared to a net loss of $4 million for the same period in the prior year. We reported a net loss for the 12 months ended December 31st, 2007 of $46.1 million, or $2.12 per common share, as compared to a net loss of $12.2 million for the same period in 2006. Overall, we used $41 million in cash for operations during 2007, which included a $20 million payment to Par Pharmaceutical.

R&D expenses in the fourth quarter of 2007 were $5.6 million compared to $3.1 million in the fourth quarter of 2006. R&D expenses for the year ended December 31st, 2007 and 2006, were $41.6 million and $10.5 million respectively.

The increase in net loss of $33.9 million and the increase in our R&D expenses of $31.1 million, was due primarily to the $20 million payment to Par to reacquire the North American rights to OPT-80, as well as the advancement of our OPT-80 and Prulifloxacin clinical trials.

Marketing expenses for the year end of December 31st, 2007, were $2 million with no such expenses in 2006. The marketing expenses were a result of marketing personnel and prelaunch activities, which include medical education, scientific conferences, and public relations services.

G&A expenses for the year ended December 31st, 2007, were $5.3 million, compared to $3.5 million in 2006. The increase of $1.8 million for the year ended December 31st, 2007, compared to the same period in 2006, was due to increased expenses to support our public company infrastructure, which included higher legal insurance and compensation expenses, including a $265,000 increase in stock compensation expense from the prior year. As you know, we completed our initial public offering in February 2007, raising $49 million, and in October, we completed a private placement raising $36 million.

As of December 31st, 2007, we held cash, cash equivalents, and short term investments of $58.8 million. We currently expect to use cash for approximately $34 million to $38 million for our operating activities in 2008 based on our current operating plans and the estimated cost of clinical trials. Thus, we expect to end 2008 with over $20 million in cash, which assumes no additional funds from partnering.

With that I will now turn the call over to Michael Chang for review of the key strategic developments in the year, as well as an update on OPT-80 and Prulifloxacin.

Michael N. Chang, Ph.D.

Thank you, John. I’d like to begin by saying that 2007 was a successful year for Optimer and a year of important changes as we achieve many of our goals in our mission to develop and commercialize Optimer’s exciting anti-infective pipeline.

We began 2007 with a successful IPO on the NASDAQ, raising $49 million to fund our business objectives. In March, the Data Safety Monitoring Board recommended that we transition OPT-80 from Phase IIB into Phase III for the treatment of CDI. We also initiated a second Phase III trial in Europe and North America. Also, in 2007, we regained the North American rights to OPT-80 from Par Pharmaceutical. Now that we have worldwide rights to OPT-80 and US rights to Prulifloxacin, we intend to build a hospital-based sales force to market both products in the United States, and OPT-80 in Canada as well. In the event we get favorable Phase III data, we’ll find a partner for OPT-80 commercialization outside North America.

At last year’s ICAAC meeting, we gained insight into the efficacy of metronidazole and vancomycin through Genzyme’s Phase III study of Tolevamer. This was the largest well controlled trial ever conducted with metronidazole and vancomycin as comparators. We believe the results of this study confirm the limitations of metronidazole and vancomycin, which included high failure rate and high recurrences.

Finally, as John mentioned, we completed $36 million private placement in the fourth quarter. This will allow the company to further advance the development of OPT-80 and Prulifloxacin programs while maintaining a strong cash position.

Now that brings us into 2008, a pivotal year for the company. One of the most important goals is to secure data from the first Phase III trial for both product candidates. The two Phase III trials for OPT-80 continue to advance. The first trial is now over 85% enrolled. We expect to complete enrollment within the next few months. Factors contributing to this include: we are no longer competing with Genzyme Tolevamer trial for site and patients; we are in the flu season when broad spectrum antibiotic use increases; we have seen a seasonal increase in enrollment rates over the past few months; and we have also increased our educational outreach to physicians, nurses, and other hospital staff at the trial sites.

Enrollment in our second trial has been slower than we expected and it’s currently running about six months behind our first trial. We now project complete enrollment and will report data for the second trial in the first half of 2009. We are implementing enrollment strategies learned so far and we expect that positive news on the first trial will help boost enrollment in the second trial.

Another key development in this program includes an oral suspension formulation, which complements the existing tablet form of OPT-80. This formulation will be used with intensive care and elderly patients who cannot swallow pills. We plan to file an IND for potential label expansion.

We also recently received a $1 million grant from the National Institute of Allergy and Infectious Diseases, a division of NIH. We plan to use this grant for studies related to OPT-80 Phase III trials. And finally, we submitted a patent to the US Patent Office describing the unique polymorphic form of OPT-80. We anticipate that this application will be allowed and issued in 2008.

We believe that OPT-80 is poised for commercial success. If approved, OPT-80 will address the problem of existing treatment by accelerating time to clinical cure, reducing the rate of recurrence, and decreasing daily dose requirements. OPT-80 is a first in class macrocyclic antiinfective, which provides a narrow spectrum of activity that is bactericidal against clostridia. It has shown no cross resistance with other antiinfectives. Because of its minimal systemic absorption, OPT-80 remains in the gut, which reduces risk of side effects. Additionally, OPT-80 provides convenient twice a day dosing, which can improve patient compliance.

Increased awareness and improved methods of detection, coupled with increased severity of CDI due to the epidemic NAP-1 strain, are driving the need for new antiinfectives like OPT-80. In additional, the age group of 65 and over is growing rapidly. This group is most susceptible to CDI.

In our prelaunch activities Optimer provided an educational grant in 2007 to world renowned infectious disease societies, such as IDSA and ECCMID to educate the healthcare community at scientific symposia on CDI. Optimer plans to continue this at the 2008 ECCMID meeting by hosting a symposium entitled “CDAD: Current Treatment and Challenges”. This is co-chaired by Professor John Bartlett from Johns Hopkins University School of Medicine and Carl Eric Nord from the Karolinska Institute in Sweden, both world renowned experts in CDI.

Now let me talk about Prulifloxacin for gastroenteritis. Our Prulifloxacin development program is also progressing. The first Phase III trial is fully enrolled and we look forward to presenting top line data in the next few months. We continue to enroll patients in the second trial, which is being conducted in India and Mexico. We expect to complete this trial in the second half of 2008. The limitations of currently available antibiotics for treatment of gastroenteritis include bacterial resistance and full compliances with Bactrim; dosing duration inconveniences with Cipro; and limited bacterial coverage with Cifloxin. We believe Prulifloxacin provides unique attributes versus available treatment options, such as bactericidal activity against the broad range of gastroenteritis bacteria, low side effects demonstrated in over 2 million patients treated worldwide, and once a day dosing for three days, which can improve patient compliance. If approved, I believe Prulifloxacin will be the only short course antibiotic available for treatment of gastroenteritis.

In closing, 2008 is a pivotal year for Optimer, as we expect to report initial data from our two Phase III programs. We are focusing on completing enrollment of our clinical studies. We are implementing programs to boost recruitment for those studies and we are paving the way for NDA filing and commercialization. Optimer is well positioned for success with our OPT-80 and Prulifloxacin programs. That concludes our formal comments for today. In addition to John Prunty and myself, Tessie Che, our Chief Operating Officer, and Kevin Poulos, our Chief Commercial Officer, are here with us today and available for any questions.

Operator, we are now ready to open the call for questions.

Question-and-Answer Session

Operator

Thank you, sir. (Operator instructions). We will take our first question from Adam Cutler with Canaccord Adams.

Adam Cutler – Canaccord Adams

Hi, thanks for taking the question. I’m wondering on OPT-80 if you can give us a sense of, in terms of enrollment, what percentage of the patients have NAP-1, the NAP-1 strain, and how that compares to your expectations in designing the study.

Michael N. Chang, Ph.D.

We are tracking our clinical study, Phase III clinical study, we have not reported this. However, based on last ICAAC meeting and Genzyme trial, we knew that there was approximately over 30%, slightly over 30%, of NAP-1 patients. And we have also seen that in our Phase IIA trial. And we expect to see about the same, or maybe slightly more, than that in our own trials when we finish analysis of this data.

Adam Cutler – Canaccord Adams

Okay, and then obviously the studies are still blinded, but is there anything you can tell us about the cure rate that you’ve seen so far on a blinded basis and how that compares to what you would have expected for vancomycin alone?

Michael N. Chang, Ph.D.

The data is still blinded and we are still analyzing or compiling data, so I can really not comment on that, but we do not expect any surprises.

Adam Cutler – Canaccord Adams

Okay. Thanks a lot.

Operator

Thank you. (Operator instructions). It does appear we have a follow-up question from Adam Cutler.

Adam Cutler – Canaccord Adams

Hi, thanks. Just a quick question on partnership discussions. As you mentioned you’ll wait until you see how the data looks from the first Phase III study from OPT-80. Can you sort of characterize the level of partnership discussions you’ve had to date for ex-US partnerships and do you think that there is an outcome of that first Phase III study that kind of makes the drug particularly partnerable, if you will, after that initial data?

Michael N. Chang, Ph.D.

Yes, I will have Kevin, our Chief Commercial Officer, to answer these questions for you.

Kevin P. Poulos

Yes, our strategy for partnering is, as you outlined, to wait for our first pivotal 003 trial to demonstrate the proof of concept of safety and efficacy. We have been in contact in negotiation, but we’ve decided to wait until data to make a formalized decision on partnering. But the caliber of partner we are looking at would fulfill our partnering needs such as an ex-North American reach that has strong antiinfectives and proven experience in marketing commercialization. So then once we receive results for our 003, be expecting to have more discussions going forward.

Adam Cutler – Canaccord Adams

Great, and actually just one other question. Given the shift in timing based on the enrollment of OPT-80, how do you view your plans in terms of building your commercial infrastructure given, I imagine, that initially the plan was to launch both of your products pretty close together and be able to have some synergy in the launch of your sales force? Does the shift in timing of OPT-80 change your plans there?

Michael N. Chang, Ph.D.

Yes, I’ll let Kevin answer this as well.

Kevin P. Poulos

The shift in timing of commercialization and build-up will be obviously dependent on the data as we get closer in terms of submitting our NDA. We feel that we can quickly ramp up the infrastructure that we will need, so obviously we want to make sure that we want to maximize our timing, but also minimize our investment risks. So we will time it as closely as possible to market. But our strategy, since we’re very focused on the area of high unmet needs and hospitalized infections, such as CDI and gastroenteritis, we believe we can build a very high level efficient sales force in the hospital setting in a short period of time to get as close to launch as possible without outlaying a lot of investment.

Adam Cutler – Canaccord Adams

Okay, great. Thanks for taking the questions.

Operator

Thank you. Moving on with our next question, Joe Aguilera with BioRevolution Capital.

Joe Aguilera – BioRevolution Capital

Good quarter, just one question, one of them was answered already. John, on the share account, is it 27.7 million now, or is it 26.3? What’s the correct share count?

John D. Prunty, C.P.A.

Right now we have 27.9 million shares outstanding. We also have 1.6 million options outstanding. So fully diluted, we’d be at 29.5 million shares.

Joe Aguilera – BioRevolution Capital

And Michael, the earliest data on the first trial would be out when? In the next several months on the OPT-80?

Michael N. Chang, Ph.D.

We plan to present the complete data in ECCA and we will give top line data as soon as we have it.

Joe Aguilera – BioRevolution Capital

Right. Okay, good. Thank you guys, good quarter.

Michael N. Chang, Ph.D.

Thank you.

Operator

(Operator instructions). And it does appear we have no further questions at this time. I would like to turn the call back over to Michael Chang for any other further comments or closing remarks.

Michael N. Chang, Ph.D.

Thank you. John and I thank you again for your time this afternoon and for your continued support. We are committed to bringing innovative, antiinfective products to patients and look forward to our progress this year. Thank you very much.

Operator

Thank you. Ladies and gentlemen, that does conclude today’s teleconference. We would like to thank everyone for their participation in today's call. Have a great rest of your day.

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