Acusphere DEF 14A Definitive proxy

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Acusphere, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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April 30, 2007

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Acusphere, Inc. (the “Company”) to be held at 12:00 pm, local time, on Tuesday, June 26, 2007, at the offices of Goodwin Procter LLP, 24th Floor, 53 State Street, Exchange Place, Boston, Massachusetts 02109.

At this annual meeting, you will be asked to elect two Class I directors, each to serve for a three-year term, to approve the Company’s Amended and Restated 2005 Stock Option and Incentive Plan, pursuant to which an additional 5,000,000 shares of the Company’s common stock would be available for issuance, and to ratify Deloitte & Touche LLP as our independent registered public accounting firm for the current year. The Board of Directors unanimously recommends that you vote FOR these proposals.

Details regarding the matters to be acted upon at this meeting appear in the accompanying Proxy Statement. Please give this material your careful attention.

If you are a stockholder of record, please vote by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-prepaid envelope, whether or not you plan to attend the meeting. It is important that your shares be voted whether or not you attend the meeting in person. If you attend the meeting, you may vote in person even if you have previously returned your proxy card. Your prompt cooperation will be greatly appreciated.

Very truly yours,

Sherri C. Oberg
President and Chief Executive Officer

ACUSPHERE, INC.
500 Arsenal Street
Watertown, MA 02472
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 2007

To the Stockholders of Acusphere, Inc.:

The Annual Meeting of Stockholders of Acusphere, Inc., a Delaware corporation (the “Company”), will be held on Tuesday, June 26, 2007, at 12:00 pm, local time, at the offices of Goodwin Procter LLP, 24th Floor, 53 State Street, Exchange Place, Boston, Massachusetts 02109, for the following purposes:

1. To elect two Class I directors to the Company’s Board of Directors, each to serve for a term of three years or until her successor is elected and qualified;

2. To approve the Company’s Amended and Restated 2005 Stock Option and Incentive Plan, pursuant to which an additional 5,000,000 shares of the Company’s common stock would be available for issuance;

3. To ratify the appointment of the accounting firm of Deloitte & Touche LLP as our independent registered public accounting firm for the current year; and

4. To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.

Only stockholders of record at the close of business on April 27, 2007 are entitled to notice of and to vote at the meeting and at any adjournment or postponement thereof.

All stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to vote by completing, signing and dating the accompanying proxy card and returning it in the postage-prepaid envelope enclosed for that purpose, whether or not you plan to attend the meeting. If you attend the meeting, you may vote in person even if you have previously returned your proxy card.

By Order of the Board of Directors,

John F. Thero
Chief Financial Officer, Senior Vice President,
Finance and Administration,
Treasurer and Secretary

Watertown, MA
April 30, 2007

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.

ACUSPHERE, INC.
500 Arsenal Street
Watertown, MA 02472

PROXY STATEMENT

For the Annual Meeting of Stockholders
To Be Held on June 26, 2007

April 30, 2007

Proxies in the form enclosed with this Proxy Statement are solicited by the Board of Directors of Acusphere, Inc., a Delaware corporation (the “Company”), for use at the Annual Meeting of Stockholders to be held on Tuesday, June 26, 2007, at 12:00 pm, local time, at the offices of Goodwin Procter LLP, 24th Floor, 53 State Street, Exchange Place, Boston, Massachusetts 02109, or at any adjournments or postponements thereof (the “Meeting”). An Annual Report, containing financial statements for the fiscal year ended December 31, 2006, is being mailed together with this Proxy Statement to all stockholders entitled to vote at the Meeting. This Proxy Statement and the form of proxy were first mailed to stockholders on or about April 30, 2007.

The purpose of the Meeting is to elect two Class I directors, to approve the Company’s Amended and Restated 2005 Stock Option and Incentive Plan, pursuant to which an additional 5,000,000 shares of the Company’s common stock would be available for issuance, and to ratify the appointment of the Company’s independent registered public accounting firm. Only common stockholders of record at the close of business on April 27, 2007 (the “Record Date”) will be entitled to receive notice of and to vote at the Meeting. As of that date, 38,146,058 shares of common stock, $.01 par value per share, of the Company (the “Common Stock”) were issued and outstanding. The holders of Common Stock are entitled to one vote per share on any proposal presented at the Meeting. You may vote by completing, signing and dating the accompanying proxy card and returning it in the postage-prepaid envelope enclosed for that purpose, whether or not you plan to attend the meeting. If you attend the meeting, you may vote in person even if you have previously returned your proxy card. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. Proxies may be revoked by (1) filing with the Secretary of the Company, before the taking of the vote at the Meeting, a written notice of revocation bearing a later date than the proxy, (2) duly completing a later-dated proxy relating to the same shares and delivering it to the Secretary of the Company before the taking of the vote at the Meeting, or (3) attending the Meeting and voting in person (although attendance at the Meeting will not in and of itself constitute a revocation of a proxy). Any written notice of revocation or subsequent proxy should be sent so as to be delivered to Acusphere, Inc., 500 Arsenal Street, Watertown, Massachusetts 02472, Attention: Secretary, at or before the taking of the vote at the Meeting.

The representation in person or by proxy of at least a majority of the outstanding shares of Common Stock entitled to vote at the Meeting is necessary to constitute a quorum for the transaction of business. Votes withheld from any nominee, abstentions and broker “non-votes” are counted as present or represented for purposes of determining the presence or absence of a quorum for the Meeting. A “non-vote” occurs when a nominee holding shares for a beneficial owner votes on one proposal but does not vote on another proposal because, with respect to such other proposal, the nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

For Proposal 1, the election of Class I directors, the nominees receiving the highest number of affirmative votes of the shares present or represented and entitled to vote at the Meeting shall be elected as Class I directors. For Proposal 2, the approval of the Company’s Amended and Restated 2005 Stock Option and Incentive Plan, an affirmative vote of a majority of the shares present, in person or represented by proxy, and voting on such matter is required for approval. For Proposal 3, the ratification of the

appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the current year, an affirmative vote of a majority of the shares present, in person or represented by proxy, and voting on such matter is required for approval. An automated system administered by the Company’s transfer agent tabulates the votes. The vote on each matter submitted to stockholders is tabulated separately. Abstentions are included in the number of shares present or represented and voting on each matter. Broker “non-votes” are not considered voted for the particular matter and have the effect of reducing the number of affirmative votes required to achieve a majority for such matter by reducing the total number of shares from which the majority is calculated.

The persons named as attorneys-in-fact in the proxies, Howard Bernstein, M.D., Ph.D. and John F. Thero, were selected by the Board of Directors and are officers of the Company. All properly executed proxies returned in time to be counted at the Meeting will be voted by such persons at the Meeting. Where a choice has been specified on the proxy with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications. If no such specifications are indicated, such proxies will be voted FOR the election of the nominees to the Board of Directors, FOR approval of the Company’s Amended and Restated 2005 Stock Option and Incentive Plan and FOR ratification of the appointment of the independent registered public accounting firm.

Aside from the election of directors, approval of the Company’s Amended and Restated Stock Option and Incentive Plan and ratification of the appointment of the independent registered public accounting firm, the Board of Directors knows of no other matters to be presented at the Meeting. If any other matter should be presented at the Meeting upon which a vote properly may be taken, shares represented by all proxies received by the Board of Directors will be voted with respect thereto in accordance with the judgment of the persons named as attorneys-in-fact in the proxies.

PROPOSAL 1
ELECTION OF DIRECTORS

Nominees

The Company’s Board of Directors currently consists of six members. The Company’s By-laws divide the Board of Directors into three classes. One class is elected each year for a term of three years. The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated and recommended that Sherri C. Oberg and Sandra Fenwick each be elected to the Board of Directors as a Class I director, to hold office until the Annual Meeting of Stockholders to be held in the year 2010 and until her successor has been duly elected and qualified or until her earlier death, resignation or removal. Mses. Oberg and Fenwick are currently Class I directors whose terms expire at the Meeting and are nominees for re-election as directors of the Company. The Board of Directors is also composed of two Class II directors (Garen Bohlin and Derek Lemke-von Ammon), whose terms expire upon the election and qualification of directors at the Annual Meeting of Stockholders to be held in 2008, and two Class III directors (Frank Baldino, Jr. and Martyn Greenacre), whose terms expire upon the election and qualification of directors at the Annual Meeting of Stockholders to be held in 2009. Dr. Baldino serves as the Presiding Director of the Board of Directors.

The Board of Directors knows of no reason why the nominees would be unable or unwilling to serve, but if the nominees should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board of Directors may recommend in the place of such nominees. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE NOMINEES LISTED BELOW.

The following table sets forth the nominees to be elected at the Meeting and the continuing directors, and the year such nominee or director was first elected a director, the positions currently held by the nominee and each director with the Company, the year the nominees’ and each other director’s current term will expire and the current class of director of the nominees and each other director:

Nominee’s or Director’s Name and Year First Became a Director	Position(s) with the Company	Year Current Term Will Expire	Current Class of Director
Nominees for Class I Directors:
Sherri C. Oberg	President, Chief Executive	2007	I
1993	Officer and Director
Sandra Fenwick	Director	2007	I
2004
Continuing Directors:
Derek Lemke-von Ammon	Director	2008	II
2002
Garen Bohlin	Director	2008	II
2005
Frank Baldino, Jr., Ph.D.	Director and Presiding	2009	III
2001	Director
Martyn Greenacre	Director	2009	III
2001

OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the director nominees to be elected at the Meeting, the directors and the executive officers of the Company, their ages, and the positions currently held by each such person with the Company immediately prior to the Meeting.

Name	Age	Position
Sherri C. Oberg	47	President, Chief Executive Officer and Director
Howard Bernstein, M.D., Ph.D.	50	Executive Vice President, Research and Development
Dennis Bucceri	64	Senior Vice President, Regulatory Affairs
Michael R. Slater	60	Senior Vice President, Operations
John F. Thero	46	Senior Vice President, Finance and Administration, Chief Financial Officer, Treasurer and Secretary
Richard Walovitch, Ph.D.	52	Senior Vice President, Clinical Research
Frank Baldino, Jr., Ph.D.	54	Director and Presiding Director of the Board of Directors
Garen Bohlin	59	Director
Sandra Fenwick	56	Director
Martyn Greenacre	65	Director
Derek Lemke-von Ammon	49	Director

Dr. Baldino, Ms. Fenwick and Mr. Lemke-von Ammon are members of the Compensation Committee. Dr. Baldino is Chairperson of the Compensation Committee.

Mr. Bohlin, Ms. Fenwick and Mr. Greenacre are members of the Audit Committee. Mr. Bohlin is Chairperson of the Audit Committee.

Mr. Bohlin, Mr. Greenacre and Mr. Lemke-von Ammon are members of the Nominating and Corporate Governance Committee. Mr. Greenacre is Chairperson of the Nominating and Corporate Governance Committee.

Sherri C. Oberg, a co-founder of Acusphere, has served as President and Chief Executive Officer and one of the directors of the Company since its inception in 1993. Prior to joining the Company, Ms. Oberg was President and Chief Executive Officer of Neomorphics, Inc., a venture capital-backed company focused on tissue engineering, from 1991 to 1992. Prior to joining Neomorphics, she was a venture capitalist at Aegis Venture Funds from 1988 to 1991, and at Inco Venture Capital Management from 1986 to 1988. Ms. Oberg is a member of the Board of Overseers of the Tuck School of Business at Dartmouth College. Ms. Oberg holds a B.A. from Dartmouth College and an M.B.A. from the Tuck School of Business at Dartmouth.

Howard Bernstein, M.D., Ph.D. has served as Executive Vice President, Research and Development of the Company since February 2007, as Senior Vice President, Research and Development since January 2000 and as Vice President of Research and Development from 1994 to January 2000. Prior to joining the Company, Dr. Bernstein served as Vice President of Pharmaceutical Development at Alkermes, Inc. from 1992 to 1994 and as Vice President of Research at Enzytech Inc. from 1991 to 1992. Dr. Bernstein holds an M.D. from Harvard Medical School and a Ph.D. in Chemical Engineering from the Massachusetts Institute of Technology.

Dennis Bucceri has served as Senior Vice President, Regulatory Affairs since January 2007. Prior to joining the Company, Mr. Bucceri served as Vice President, Regulatory Affairs for the Therapeutics Group of Genzyme Corporation from 2000 to 2007. Mr. Bucceri served at Hoechst-Roussel for 20 years in roles of increasing responsibility including Vice President, Regulatory Affairs, and held senior-level regulatory roles at Serono Laboratories and Astra, USA. Mr. Bucceri began his career as a Commissioned Officer at the U.S. Food and Drug Administration.

Michael R. Slater has served as Senior Vice President, Operations of the Company since October 2001. Prior to joining the Company, Mr. Slater served as Vice President of Operations from April 1999 to June 2001, and as Vice President of Quality Systems and Regulatory Affairs from February 1998 to April 1999 at Anika Therapeutics, Inc. Mr. Slater served as an independent consultant to the biopharmaceutical industry from 1996 to 1998, as Executive Vice President, Development Operations for ImmuLogic Pharmaceutical Corporation from 1995 to 1996 and as Vice President of Regulatory Affairs at Biogen, Inc. from 1985 to 1995. Mr. Slater holds a B.Sc. in Information Science from the Metropolitan University of Leeds, England.

John F. Thero has served as Chief Financial Officer, Senior Vice President, Finance and Administration, Treasurer and Secretary of the Company since February 2003. Prior to joining the Company, Mr. Thero served as Senior Vice President Finance, Treasurer and Chief Financial Officer at Abiomed, Inc. from 1994 to January 2003. From 1992 to 1994, he was Chief Financial Officer and acting President for the restructuring of two venture-backed companies. From 1987 to 1992 he was employed in various capacities including Chief Financial Officer by Aries Technology, Inc. From 1983 to 1987 he was employed by the commercial audit division of Arthur Andersen & Co., during which time he became a Certified Public Accountant. Mr. Thero received a B.A. in Economics/Accounting from The College of the Holy Cross.

Richard Walovitch, Ph.D. has served as Senior Vice President, Clinical Research of the Company since November 2005 and as Vice President, Clinical Research from March 1997 to November 2005. Prior to joining Acusphere, Dr. Walovitch was Vice President of Pre-clinical and Clinical Research at Epix Medical Inc. (formerly Metasyn) from 1993 to 1997 and the International Project Clinician at DuPont Merck Pharmaceutical Company from 1988 to 1993. Dr. Walovitch holds a B.S. in Biology and a Ph.D. in Pharmacology from the University of Illinois.

Frank Baldino, Jr., Ph.D. has served as a director of the Company since April 2001 and as the Presiding Director since March 2005. Dr. Baldino is the founder of Cephalon, Inc., an integrated specialty biopharmaceutical company involved in the development of therapeutics for neurological disorders, sleep disorders and cancer. He has served as President, Chief Executive Officer and a Director of Cephalon since its inception in 1987 and is currently Chairman of the Board. Dr. Baldino holds adjunct academic appointments, including Adjunct Associate Professor of Pharmacology at Temple University School of Medicine, and Adjunct Associate Professor of Physiology and Biophysics and Adjunct Associate Professor of Neurology at Hahnemann University. Dr. Baldino is currently a director of Pharmacopeia, Inc. and NicOx S.A.

Garen Bohlin has served as a director of the Company since January 2005. Mr. Bohlin is the Chief Operating Officer for Sirtris Pharmaceuticals, Inc. in Cambridge, Massachusetts. From 1999 to 2005 Mr. Bohlin served as President and CEO of Syntonix Pharmaceuticals, Inc. Before 1999, Mr. Bohlin spent 14 years in executive management at Genetics Institute, most recently as Executive Vice President. Prior to Mr. Bohlin’s tenure at Genetics Institute, he was a partner at Arthur Andersen & Co., where he spent 13 years.

Sandra Fenwick has served as a director of the Company since September 2004. Ms. Fenwick is Chief Operating Officer Children’s Hospital in Boston, Massachusetts. Prior to joining Children’s Hospital in 1999, Ms. Fenwick was Senior Vice President of System Development for CareGroup, Inc. Before its merger with CareGroup, Ms. Fenwick served at Beth Israel Hospital for 20 years in various areas of increasing responsibility including Vice President and Deputy Director, Vice President of Clinical Services Planning and Development and Vice President of Network Development for Beth Israel Healthcare.

Martyn Greenacre has served as a director of the Company since July 2001. Mr. Greenacre served in various senior management positions at SmithKline Beecham from 1973 through 1992. From 1989 to 1992, as Chairman Europe, he was responsible for the strategic direction and operational management of pharmaceutical subsidiaries in Europe and for planning and executing European aspects of the merger between SmithKline Beckman and Beecham Pharmaceuticals. He has also served as Chief Executive Officer of two life sciences companies, Zynaxis Inc. from 1993 to 1997 and Delsys Pharmaceutical Corp. from 1997 to 2001. He is currently a director of Cephalon, Inc., Curis, Inc., Orchestra Therapeutics, Inc. (formerly Immune Response Corp.) and chairman of the board of directors of Beijing Med-Pharm Corporation.

Derek Lemke-von Ammon has served as a director of the Company since September 2002. Mr. Lemke-von Ammon is a General Partner at FTVentures. From 1998 to 2004 Mr. Lemke-von Ammon was Director of Private Equity, Managing Partner of Thomas Weisel Capital Partners and a member of the firm’s Executive Committee. From 1989 to 1998 Mr. Lemke-von Ammon was a Partner and Director of Private Equity for Montgomery Securities. Prior to joining Montgomery Securities, Mr. Lemke-von Ammon was a Vice President at Dain Bosworth Incorporated where he was employed from 1985 to 1989. He also worked as a corporate and securities attorney from 1983 to 1985 for Bogle & Gates in Seattle.

Executive officers of the Company are elected by the Board of Directors on an annual basis and serve until their successors have been duly elected and qualified. The officers listed above are all of the Company’s executive officers as of the date of this proxy statement. This list includes the Company’s Chief Executive Officer and the four most highly compensated executive officers from 2006. The Company has other functional officers who have titles of vice president but who are not deemed to be executive officers.

CORPORATE GOVERNANCE AND BOARD MATTERS

Board of Director Independence

The Board of Directors has determined that each of Dr. Baldino, Messrs. Bohlin, Greenacre and Lemke-von Ammon and Ms. Fenwick is independent within the meaning of the Company’s director independence standards and the director independence standards of The NASDAQ Stock Market LLC (“NASDAQ”) and the Securities and Exchange Commission (“SEC”) including Rule 10A-3(b)(1) under the Securities Act of 1934, as amended (the “Exchange Act”). Furthermore, the Board of Directors has determined that each member of each of the committees of the Board of Directors is independent within the meaning of the Company’s, NASDAQ’s and the SEC’s committee independence standards.

Executive Sessions of Independent Directors

Executive sessions of the independent directors are held several times a year following regularly scheduled in-person meetings of the Board of Directors. In 2006, 4 such executive sessions were held. Executive sessions do not include the employee director of the Company, and the Presiding Director of the Board of Directors is responsible for chairing the executive session.

Presiding Director of the Board of Directors

In 2004, the Board of Directors designated Dr. Baldino to serve as Presiding Director until his earlier resignation, replacement or removal. In this role Dr. Baldino’s primary responsibility is to preside over the executive sessions of the Board of Directors in which the employee director and other members of management of the Company do not participate. The Presiding Director also oversees the creation of an agenda for each meeting of the Board of Directors, seeks to ensure that topics at each meeting of the Board of Directors are effectively covered and acts as the principal liaison between the independent Directors and management of the Company.

Policies Regarding Director Nominations

Director Qualifications.

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for reviewing with the Board of Directors from time to time the appropriate qualities, skills and characteristics desired of members of the Board of Directors in the context of the needs of the business and current make-up of the Board of Directors. This assessment includes consideration of the following minimum qualifications that the Nominating and Corporate Governance Committee believes must be met by all directors:

· A director must have substantial or significant business or professional experience or an understanding of life sciences, finance, marketing, financial reporting, international business or other disciplines relevant to the business of the Company.

· A director must be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Board of Directors or of a committee of the Board of Directors.

In addition, the Nominating and Corporate Governance Committee will consider the following qualities and skills, among others, in its selection of director:

· Economic, technical, scientific, academic, financial, accounting, legal, marketing, or other expertise applicable to the business of the Company;

· Leadership or substantial achievement in the director’s particular field;

· Demonstrated ability to exercise sound business judgment;

· Integrity and high moral and ethical character;

· Potential to contribute to the diversity of viewpoints, backgrounds, or experiences of the Board of Directors as a whole;

· Capacity and desire to represent the balanced, best interests of the security holders as a whole and not primarily a special interest group or constituency;

· Ability to work well with others;

· High degree of interest in the business of the Company;

· Dedication to the success of the Company;

· Commitment to responsibilities of a director;

· International business or professional experience; and

· Operational experience, in particular for life-sciences companies or organizations.

Process for Identifying and Evaluating Director Nominees.

The Board of Directors is responsible for selecting its own members. The Board of Directors delegates the selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board of Directors, and of management, will be requested to take part in the process as appropriate.

Generally, the Nominating and Corporate Governance Committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisers, through the recommendations submitted by stockholders or through such other methods as the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. Once candidates have been identified, the Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may gather information about the candidates through interviews, detailed questionnaires regarding experience, background and independence, comprehensive background checks from a qualified company of the Company’s choosing, or any other means that the Nominating and Corporate Governance Committee deems to be helpful in the evaluation process. The Nominating and Corporate Governance Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board of Directors. There is no difference in the criteria used by the Nominating and Corporate Governance Committee to evaluate Director nominees, whether nominated by the Board of Directors or by a stockholder. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for the Board of Director’s approval as director nominees for election to the Board of Directors. The Nominating and Corporate Governance Committee also recommends candidates for the Board of Director’s appointment to the committees of the Board of Directors.

Procedures for Recommendation of Director Nominees by Stockholders.

The Nominating and Corporate Governance Committee will consider director candidates who are recommended by stockholders of the Company. Stockholders, in submitting recommendations to the Nominating and Corporate Governance Committee for director candidates, shall follow the following procedures:

The Nominating and Corporate Governance Committee must receive any such recommendation for nomination not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year’s annual meeting.

Such recommendation for nomination must be in writing and include the following:

· Name and address of the stockholder making the recommendation, as they appear on the Company’s books and records, and of such record holder’s beneficial owner;

· Number of shares of capital stock of the Company that are owned beneficially and held of record by such stockholder and such beneficial owner;

· Name of the individual recommended for consideration as a director nominee;

· All other information relating to the recommended candidate that would be required to be disclosed in solicitations of proxies for the election of directors or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including the recommended candidate’s written consent to being named in the proxy statement as a nominee and to serving as a Director if approved by the Board of Directors and elected;

· A written statement from the stockholder making the recommendation stating why such recommended candidate meets the Company’s criteria and would be able to fulfill the duties of a director; and

· A written statement from each of the stockholder and the candidate as to whether they consent to being identified in the Company’s proxy statement, assuming all other procedural and regulatory requirements are satisfied.

Nominations may be sent to the attention of the Secretary of the Company by U.S. mail or expedited delivery service to Acusphere, Inc., 500 Arsenal Street, Watertown, MA 02472, attn: Nominating and Corporate Governance Committee.

Once the Nominating and Corporate Governance Committee receives the nomination of a candidate and the candidate has complied with the minimum procedural requirements above, such candidacy will be evaluated in accordance with the minimum criteria set forth above and a recommendation with respect to such candidate will be delivered to the Board of Directors.

Stockholder Communications with the Board of Directors

The Board of Directors strives to provide to every security holder the ability to communicate with the Board of Directors, as a whole, and with individual directors on the Board of the Directors through an established process for security holder communication (as that term is defined by the rules of the SEC) (“security holder communication”) as follows:

For security holder communication directed to the Board of Directors as a whole, security holders may send such communication via the method listed below:

U.S. Mail or Expedited Delivery Service:
Acusphere, Inc.
500 Arsenal Street
Watertown, MA 02472
Attn: Board of Directors, c/o Secretary

For security holder communication directed to an individual director in his or her capacity as a member of the Board of Directors, security holders may send such communication to the attention of the individual director via the method listed below:

U.S. Mail or Expedited Delivery Service:
Acusphere, Inc.
500 Arsenal Street
Watertown, MA 02472
Attn: Name of Individual Director, c/o Secretary

The Company will forward by U.S. mail any such security holder communication to the Board of Directors as a whole, or to any individual director, as specified by the security holder.

Communications from an officer or director of the Company and proposals submitted by security holders to be included in the Company’s definitive proxy statement, pursuant to Rule 14a-8 of the Exchange Act, (and related communications) will not be viewed as a security holder communication. Communications from an employee or agent of the Company will be viewed as security holder communication only if such communications are made solely in such employee’s or agent’s capacity as a security holder.

Policy Regarding Director Attendance at Annual Meetings

It is the Company’s policy that a meeting of the Board of Directors be scheduled on the same day as the Company’s Annual Meeting of Stockholders and all directors are encouraged to attend the Annual Meeting of Stockholders. All members of the Company’s Board of Directors attended the Annual Meeting of Stockholders held in 2006.

Code of Business Conduct and Ethics

The Company has adopted a “code of ethics” as defined by regulations promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act and a “code of conduct” as defined by qualitative listing requirements promulgated by NASDAQ that apply to all of the Company’s directors, officers and employees, including the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the Code of Business Conduct and Ethics may also be obtained by any person, without charge, upon request directed to the Company’s Investor Relations department at: Acusphere, Inc., Attention: Investor Relations, 500 Arsenal Street, Watertown, MA 02472.

The Company intends to disclose amendments to or waivers (including implicit waivers) of any provision of the Code of Business Conduct and Ethics that apply to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on the Company’s web site available at http://www.acusphere.com or as otherwise required by applicable rules and regulations.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board of Directors

The business and affairs of the Company are managed under the direction of its Board of Directors. The Board of Directors met 4 times (including regularly scheduled and special meetings) during the fiscal year ended December 31, 2006 and took action by written consent 6 times. Each of the directors attended at least 75% of the aggregate of all meetings of the Board of Directors and of all committees on which he or she serves. During 2006, the independent directors met in executive session at regularly scheduled meetings.

Committees of the Board of Directors

The Board of Directors has standing Audit, Compensation and Nominating and Corporate Governance Committees. Each committee has a charter that has been approved by the Board of Directors. Each committee reviews the appropriateness of its charter at least annually.

Compensation Committee

The Compensation Committee currently consists of Dr. Baldino, Ms. Fenwick and Mr. Lemke-von Ammon. Dr. Baldino serves as the chairperson of the Compensation Committee. Dr. Baldino and Mr. Lemke-von Ammon served on the Compensation Committee throughout 2006 and Ms. Fenwick joined the Committee in March 2006. The Board of Directors has determined that each member of the Compensation Committee is independent within the meaning of the Company’s and NASDAQ’s director independence standards.

The Compensation Committee reviews and evaluates the compensation and benefits of all executive officers of the Company, including the Company’s Chief Executive Officer, reviews and approves general policy matters relating to compensation and benefits of employees of the Company’s compensation and benefit strategies and policies of the Company and administers the Company’s incentive compensation and benefits plans relating to executive officers of the Company, including the Company’s 1994 Stock Plan, the 2003 Stock Option and Incentive Plan, the 2003 Employee Stock Purchase Plan and the 2005 Stock Option and Incentive Plan. The role of the Compensation Committee is described in greater detail under the section entitled “Compensation Discussion and Analysis” on page 17.

The Compensation Committee met five times during the fiscal year ended December 31, 2006, including one such meeting via teleconference.

The Compensation Committee operates under a written charter adopted by the Board of Directors. The Compensation Committee Charter is not posted on our website, but a current copy is attached to this Proxy Statement as Annex A, and may be accessed via the SEC Filings section of our website.

Audit Committee

The Company has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee currently consists of Messrs. Bohlin and Greenacre and Ms. Fenwick. Mr. Bohlin serves as chairperson of the Audit Committee. Messrs Bohlin and Greenacre and Ms. Fenwick served on the Audit Committee throughout 2006. The Board of Directors has also determined that each member of the Audit Committee is independent within the meaning of the Company’s and NASDAQ’s director independence standards and the SEC’s heightened director independence standards for audit committee members, including Rule 10A-3(b)(1) under the Exchange Act. The Company has determined that each of the members of the Audit Committee is financially sophisticated and is able to read and understand consolidated financial statements and that Mr. Bohlin is an “audit committee financial expert” as defined in recently adopted SEC rules. Stockholders should

understand that this designation is a disclosure requirement of the SEC related to Mr. Bohlin’s experience and understanding with respect to certain accounting and auditing matters. The designation does not impose upon Mr. Bohlin any duties, obligations or liability that are greater than are generally imposed on him as a member of the Audit Committee and the Board of Directors, and his designation as audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board of Directors.

The Audit Committee:

· Makes recommendations to the Board of Directors regarding the selection of the Company’s independent registered public accounting firm;

· Reviews the independence of such independent registered public accounting firm;

· Reviews the results and scope of the audit and other services provided by the independent registered public accounting firm;

· Reviews the professional fees payable to the independent registered public accounting firm;

· Serves as the Qualified Legal Compliance Committee of the Company in accordance with Section 307 of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder;

· Recommends, establishes and monitors procedures designed to facilitate (a) the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters and (b) the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters; and

· Reviews and evaluates the Company’s internal accounting procedures and controls.

Deloitte & Touche LLP currently serves as the Company’s independent registered public accounting firm. The Audit Committee met 7 times during the fiscal year ended December 31, 2006, including 3 meetings via teleconference.

The Audit Committee operates under a written charter adopted by the Board of Directors. The Audit Committee Charter is not available on our website, but a current copy is attached to this Proxy Statement as Annex B.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee currently consists of Messrs. Bohlin, Greenacre and Lemke-von Ammon. Mr. Greenacre serves as chairperson of the Nominating and Corporate Governance Committee. Messrs. Bohlin and Greenacre served on the Compensation Committee throughout 2006 and Mr. Lemke-von Ammon joined the Committee in June 2006. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the Company’s, NASDAQ’s and the SEC’s director independence standards. The Nominating and Corporate Governance Committee reviews and makes recommendations to the Board of Directors regarding board composition and structure, criteria for board membership and policies relating to the recruitment of board members, assists in identifying and evaluating candidates to be potential new members of the board and oversees the development of policies and processes regarding principles of corporate governance. As described above in the section entitled “Policies Regarding Director Nominations,” the Nominating and Corporate Governance Committee will consider nominees recommended by stockholders. The Nominating and Corporate Governance Committee met 4 times during the fiscal year ended December 31, 2006.

The Nominating and Corporate Governance Committee operates under a written charter adopted by the Board of Directors. The Nominating and Corporate Governance Committee Charter is not available on our website, but a current copy is attached to this Proxy Statement as Annex C.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee currently consists of Dr. Baldino, Ms. Fenwick and Mr. Lemke-von Ammon. Dr. Baldino serves as chairperson of the Compensation Committee. Dr. Baldino and Mr. Lemke-von Ammon served on the Compensation Committee throughout 2006 and Ms. Fenwick joined the Committee in March 2006. No person who served as a member of the Compensation Committee was, at any time during the past fiscal year, an officer or employee of the Company or any of its subsidiaries, formerly an officer of the Company or any of its subsidiaries or had any relationship with the Company requiring disclosure herein under SEC rules.

During the last year, no executive officer of the Company served as (i) a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Compensation Committee of the Company; (ii) a director of any other entity, one of whose executive officers served on the Compensation Committee of the Company; or (iii) a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of the Company’s Common Stock as of the Record Date: (i) by each person who is known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock; (ii) by each director or nominee of the Company; (iii) by each Named Executive Officer of the Company (as defined below under “Compensation and Other Information Concerning Directors and Officers”); and (iv) by all directors and Named Executive Officers of the Company as a group. Unless otherwise indicated below, each person listed below maintains a business address in the care of Acusphere, Inc., 500 Arsenal Street, Watertown, MA 02472 and has sole voting and investment power with respect to all shares of Common Stock owned.

Name of Beneficial Owner	Shares Beneficially Owned(1)		Percentage of Shares Beneficially Owned(2)
Quaker Capital Management Corporation(3)		3,349,325		8.6	%
401 Wood Street, Suite 1300
Pittsburgh, PA 15222
Bank of America Corporation(4)		2,922,950		7.6
Bank of America Corporate Center
100 North Tyron Street, Floor 25
Charlotte, North Carolina 28255
Endowment Capital Group LLC(5)		2,829,559		7.2
1105 N. Market Street, 15th Floor
Wilmington, DE 19801
Meditor Group Ltd.(6)		2,733,606		7.2
79 Front Street
Hamilton, Bermuda
Deutsche Bank AG(7)		2,096,021		5.5
Taunusanlage 12
D-60325 Frankfurt Germany
The Baupost Group, L.L.C.(8)		2,016,098		5.3
10 St. James Avenue, Suite 2000
Boston, Massachusetts 02116
Peter David Boone(9)		2,121,932		5.5
5 Park Place Villas
London, United Kingdom W2 1SP
Sherri C. Oberg(10)		737,435		1.9
Howard Bernstein, M.D., Ph.D.(11)		330,142		*
John F. Thero(12)		215,692		*
Michael R. Slater(13)		121,088		*
Frank Baldino, Jr., Ph.D.(14)		120,963		*
Martyn Greenacre(15)		91,742		*
Richard Walovitch, Ph.D.(16)		105,654		*
Sandra Fenwick(17)		66,104		*
Derek Lemke-von Ammon(18)		65,963		*
Garen Bohlin(19)		65,103		*
All executive officers, directors and nominees as a group(20) (10 persons)		1,919,886		4.8	%

* Represents less than 1% of the outstanding Common Stock

(1) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Pursuant to the rules of the SEC, the number of shares of Common Stock deemed outstanding includes shares issuable pursuant to options held by the respective person or group that may be exercised within 60 days of the Record Date.

(2) Applicable percentage of ownership as of the Record Date is based upon 38,146,058 shares of Common Stock outstanding.

(3) With respect to information relating to Quaker Capital Management Corporation (“Quaker”), the Company has relied, in part, on information supplied by such entity on Amendment 2 to Schedule 13G filed with the SEC on December 31, 2006. Represents 2,686,762 shares of Common Stock owned by various investment advisory clients of Quaker and 4,000 shares of Common Stock held by employees of Quaker. Includes 408,163 shares of Common Stock issuable upon conversion of the Company’s Preferred Stock.

(4) With respect to information relating to Bank of America Corporation (“Bank of America”), the Company has relied, in part, on information supplied by such entity on a Schedule 13G filed with the SEC on December 31, 2006. Bank of America Ventures (“Ventures”) has sole voting and investment power with respect to 1,375,975 shares of Common Stock. Bank of America, N.A. (“BANA”) has sole voting and investment power with respect to 149,474 shares of Common Stock and shared voting and investment power with respect to 2,245,473 shares. NB Holdings Corporation (“Holdings”) has shared voting and investment power with respect to 2,582,090 shares. Bank of America has shared voting and investment power with respect to 2,902,966 shares. BancBoston Ventures, Inc. has sole voting and investment power with respect to 292,554 shares. Each of Columbia Management Group LLC has shared voting and investment power with respect to the 576,555 shares over which Columbia Management Advisors LLC has sole voting and investment power. Bank of America Investment Corporation has sole voting and investment power over 152,883 shares of Common Stock. Bank of America Capital Advisors has direct sole voting and investment power over 187,143 shares. BANA owns all of the outstanding equity interest in Ventures. Holdings owns all of the outstanding equity interests in BANA. Bank of America owns all of the outstanding equity interests in Holdings.

(5) With respect to information relating to Endowment Capital Group LLC (“Endowment Capital”), the Company has relied, in part, on information supplied by such person on Amendment 1 to Schedule 13G filed with the SEC on April 19, 2006. Endowment Capital, L.P. and Long Drive, L.P. (collectively, the “Limited Partnerships”) own in the aggregate 1,624,942 shares of Common Stock. Endowment Capital is the sole general partner of each of the Limited Partnerships. Mr. Philip Timon is the sole managing member of Endowment Capital. As a result, Mr. Timon possesses the sole power to vote and the sole power to direct the disposition of the Shares held by the Limited Partnerships and may be deemed to have beneficial ownership of the shares.

(6) With respect to information relating to Meditor Group Ltd., the Company has relied, in part, on information supplied by such person on a Schedule 13G filed with the SEC on April 27, 2007.

(7) With respect to information relating to Deutsche Bank AG, the Company has relied, in part, on information supplied by such person on a Schedule 13G filed with the SEC on December 29, 2006.

(8) With respect to information relating to The Baupost Group, L.L.C. (“Baupost”), the Company has relied, in part, on information supplied by such person on Amendment 2 to Schedule 13G filed with the SEC on March 31, 2007. SAK Corporation is the manager of Baupost, and Seth A. Klarman, as the sole director of SAK Corporation, may be deemed to have beneficial ownership of the shares of Common Stock held by Baupost.

(9) With respect to information relating to Peter David Boone, the Company has relied, in part, on information supplied by such person on a Schedule 13G filed with the SEC on February 15, 2006.

Represents 1,830,388 shares of Common Stock and 291,544 shares of Common Stock issuable upon conversion of 40,000 shares of the Company’s 6½% convertible exchangeable preferred stock.

(10) Includes 579,736 shares issuable to Ms. Oberg upon exercise of stock options. Also includes 43,700 shares held by the AMO Irrevocable Trust—2000 and 43,700 shares held by the EAO Irrevocable Trust—2000, for the benefit of Ms. Oberg’s two children, respectively, 3,334 shares held by Lambert R. Oberg and Jean P. Oberg, the in-laws of Ms. Oberg, and 3,334 shares held by Mary C. Carroll and A. David Carroll, the parents of Ms. Oberg. Ms. Oberg disclaims beneficial ownership of these shares.

(11) Includes 277,895 shares issuable to Dr. Bernstein upon exercise of stock options.

(12) Includes 194,188 shares issuable to Mr. Thero upon exercise of stock options.

(13) Includes 119,420 shares issuable to Mr. Slater upon exercise of stock options.

(14) Includes 12,667 shares of restricted Common Stock and includes 91,575 shares issuable to Dr. Baldino upon exercise of stock options. Dr. Baldino’s address is c/o Cephalon, Inc., 145 Brandywine Parkway, West Chester, PA 19380.

(15) Includes 12,667 shares of restricted Common Stock and includes 79,075 shares issuable to Mr. Greenacre upon exercise of stock options. c/o Acusphere, Inc. 500 Arsenal Street, Watertown, MA 02472.

(16) Includes 85,987 shares issuable to Dr. Walovitch upon exercise of stock options.

(17) Includes 57,187 shares issuable to Ms. Fenwick upon exercise of stock options. Ms. Fenwick’s address is c/o Children’s Hospital, 300 Longwood Avenue, Boston, MA 02115.

(18) Includes 48,749 shares issuable to Mr. Lemke-von Ammon upon exercise of stock options. Mr. Lemke-von Ammon’s address is c/o FT Ventures, 555 California Street, Suite 2900, San Francisco, CA 94104.

(19) Includes 65,103 shares issuable to Mr. Bohlin upon exercise of stock options. Mr. Bohlin’s address is c/o Sirtris Pharmaceuticals, 790 Memorial Drive, Cambridge, MA 02139.

(20) Includes an aggregate of 1,598,915 shares issuable upon exercise of stock options.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION DISCUSSION AND ANALYSIS

Executive Compensation

This Compensation Discussion and Analysis (CD&A) provides a narrative overview of Acusphere’s executive compensation philosophy, programs and policies. It is intended to highlight for investors significant information relating to our executive compensation programs and includes analysis on the compensation earned by our named executive officers, as detailed in the executive compensation tables. Our named executive officers include individuals who served as our chief executive officer, chief financial officer, as well as our other three most highly compensated executive officers of the Company, who served in such capacities during the 2006 fiscal year.

Overview

The primary objective of the compensation committee of our board of directors is to develop and implement compensation policies and plans that ensure the attraction and retention of key management personnel, the motivation of management to achieve our corporate goals and strategies, and the alignment of the interests of management with the long-term interests of our stockholders. To achieve these objectives, the compensation committee has maintained, and expects to further implement, compensation plans that tie a substantial portion of the executive’s overall compensation to our research, clinical, regulatory and operational performance.

We develop our compensation plans by utilizing publicly available compensation data and subscription compensation survey data for national and regional companies in the pharmaceutical and biotechnology industry. We believe that the practices of this group of companies provide us with appropriate compensation benchmarks, because these companies have similar organizational structures and tend to compete with us for executives and other employees. For benchmarking executive compensation, we typically review the compensation data we have collected from the complete group of companies, as well as a subset of the data from those companies that have a similar number of employees as our company. We have also engaged experienced consultants to help us analyze these data and to compare our compensation programs with the practices of the companies represented in the compensation data we review. The compensation committee reviews all components of compensation for named executive officers. The compensation committee also, in accordance with its charter, among other responsibilities, administers incentive compensation plan and reviews and makes recommendations to company management on company-wide compensation programs and practices.

Through our pay-for-performance compensation philosophy, we endeavor to provide compensation opportunities that:

· attract, motivate and retain individuals of superior ability and managerial talent critical to our long-term success;

· align executives’ interests with our corporate strategies, business objectives and the long-term interests of our shareholders; and

· create incentives to achieve key strategic performance measures.

Our performance-driven compensation policy consists of the following four components:

· base salary;

· incentive compensation;

· long-term incentive awards; and

· severance agreements.

In order to attract executives capable of creating and managing corporate growth, the compensation committee reviews compensation data for comparable positions in similarly-size companies, reviews the compensation of qualified candidates in their current positions and evaluates the level of total compensation which it believes is necessary to attract the best candidates to join the Company while giving consideration to the short and long term goals of the position and the relative level of such compensation to other executive officers at the Company. In order to retain and motivate experienced executives, the compensation committee targets total compensation, for experienced executives who achieve a high percentage of their goals, at approximately the seventy-fifth percentile for comparable positions in similarly-size companies represented in the compensation data we review. Actual compensation levels for such executives can be set above or below this target level based upon the level of experience and performance of each executive. The Company seeks to grow and become a leading specialty pharmaceutical company that develops and commercializes new drugs and improves the formulation of existing drugs. In order to accomplish this objective, we expect our executives to perform at high levels. Executives who do not perform at, or above, the high levels we expect are targeted for compensation at lower levels and may be reassigned or dismissed. Performance compensation is linked to specific, measurable corporate and individual goals. We use short-term compensation (base salaries and annual cash incentive awards) and long-term incentive awards to achieve our goal of driving long-term growth. We believe that long-term growth and value will be derived from setting challenging goals and creating clear incentives for achieving such goals. We believe that achievement of these goals is aligned with the long-term interests of our shareholders. We recognize in a company such as ours, which is seeking to develop potential new products, that there are numerous risks and uncertainties and that goals periodically need to be adjusted to reflect changes in circumstances and to encourage management to find effective ways to overcome unanticipated or otherwise new challenges.

Each calendar year, an annual operating plan, including definition of key goals, is proposed by management. The board of directors reviews and approves the annual operating plan. Near the beginning of each calendar year, the compensation committee approves corporate goals for incentive purposes which goals are based on the annual operating plan. Corporate goals target the achievement of specific research, clinical, regulatory and operational milestones. Individual goals, which also are set near the beginning of each year and approved for named executive officers by the compensation committee, focus on contributions which facilitate the achievement of the corporate goals.

In prior years, general criteria for evaluating the corporate performance have included measures such as product development and clinical trial milestones. Individual performance goals include completion of certain projects and achievement of targets in support of corporate goals, by area of responsibility. These include specific inter- and intra- department projects and timely achievement of milestones within those projects, adherence to budget and performance targets, and on-time, high-quality execution of recurring department responsibilities.

Base Salary

Base salaries, the fixed regular component of executive compensation, for each of our executive officers, including the chief executive officer, is used to recognize the experience, skills, knowledge and responsibilities required of the executive officers in their roles, and are generally set within a range of salaries that we believe are paid to peers with comparable qualifications, experience, responsibilities and performance at similarly situated companies. In setting compensation levels, the compensation committee takes into account such factors as (i) past corporate level performance and expectations of future performance, (ii) individual performance and experience, (iii) base salary levels among a competitive peer group, (iv) the general and industry-specific business environment and (v) individual performance. The chief executive officer reviews and evaluates the performance of each executive officer, which is factored into the salary reviews. The compensation committee does not assign relative weights or rankings to these

factors, but instead makes a determination based upon the consideration of all of these factors as well as the progress made with respect to our corporate short-, medium- and long-term goals and strategies, as established by our board of directors. Generally, salary decisions for the management are made near the beginning of each calendar year. The compensation committee may adjust annual base salaries of employees if individual performance is at or above pre-established performance expectations. Fiscal year 2006 base salaries were determined by the compensation committee after considering these factors.

Our compensation plans are developed by utilizing publicly available compensation data and subscription compensation survey data for national and regional companies in the pharmaceutical and biotechnology industry, in particular we utilize compensation data provided by the AON Consulting/Radford Survey.

We believe that the practices of this group of companies provide us with appropriate compensation benchmarks, because these companies have similar organizational structures and tend to compete with us for executives and other employees. For benchmarking executive compensation, we typically review the compensation data we have collected from the complete group of companies, as well as a subset of the data from companies with numbers of employees and market capitalizations similar to our profile. With respect to 2006 compensation, we in late 2005 and early 2006 reviewed companies with similar-sized companies with market capitalizations greater than $60.0 million and less than $400.0 million, in particular Antigenics, Curis Pharmaceuticals, Epix Pharmaceuticals and Immunogen. Companies in this group can change rapidly. We annually reassess the relevance of the peer group and make changes when judged appropriate. We have also engaged a consultant, Mercer Human Resource Consulting, to help us evaluate peer companies for compensation purposes, analyze applicable compensation data and determine appropriate compensation levels for our chief executive officer.

We strongly believe in attracting and retaining the best talent among our senior executive management team. Therefore, the compensation committee benchmarks annual cash compensation, as well as long-term performance compensation, at approximately the seventy-fifth percentile for executive officers performing similar job functions at companies in our peer group, adjusted to reflect relative company size and performance. The compensation committee may approve total compensation packages for senior executive management that vary, lower or higher, from the peer group based on several principal factors, including level of overall experience, tenure with Acusphere and performance ratings over several years. Overall, the compensation committee believes that our compensation programs, as structured, are within the market range of our peer group, based on survey information reviewed each year.

The salaries of our named executive officers are reviewed on an annual basis, as well as at the time of promotion or other changes in responsibilities.

Non-Equity Incentive Compensation

Incentive compensation is administered pursuant to our management incentive plan and is intended to reward individual performance during the year and can therefore be highly variable from year to year. Incentive compensation for our senior management is designed to focus on realistic but challenging research, clinical, regulatory and operational goals, encourage senior management to work as a team to advance our corporate goals, provide a short-term cash incentive for executive officers to achieve goals above and beyond predetermined corporate objectives and attract and retain high quality senior management. The amount of incentive compensation depends on the level of achievement of the stated corporate and individual performance goals, with a target bonus generally set as a percentage of base salary. In its discretion, the compensation committee may, however, award bonus payments to our executive officers above or below the amounts specified in our management incentive plan.

The corporate goals under our management incentive plan are established by our compensation committee in consultation with our chief executive officer, after approval of our operating plan by the

board of directors. The individual goals for our chief executive officer are the same as the corporate goals. The individual goals of other executive officers, and all other members of management who report to the chief executive officer, are determined from an iterative process which involves senior management, the chief executive officer and the compensation committee. For any executive officer to be eligible for a bonus, the compensation committee must determine that at least 80% of predetermined corporate objectives have been achieved. Incentive bonus opportunities will thus increase or decrease in unison with our corporate results. The target bonus under the management incentive plan was 50% of base salary for Ms. Oberg, our president and chief executive officer, and 30% to 40% for each of the other named executive officers. The compensation committee has discretion in assessing individual performance and compensation and can, at its discretion, provide incremental awards to executive officers. In summary, this element of executive compensation is earned on the basis of corporate success in executing the company’s operating plan and on the basis of individual success in supporting that process. In 2006, our corporate goals were designed to foster and reward progress with respect to:

· advancing our Phase III clinical trials for Imagify (30% weighting) through RAMP-1 and RAMP-2 results that support an NDA as achieved by obtaining generally positive RAMP-1 results and completing enrollment in RAMP-2. The goal, as originally established, had sought for RAMP-2 results to be released in 2006. Information that became available during 2006 from the result of the RAMP-1 trial convinced the board of directors and compensation committee that, while RAMP-2 results could have been unblinded and released in 2006, the long-term interests of the Company would be better served by modifying the corporate goal to allow for steps to be taken to increase the likelihood of RAMP-2 achieving non-inferior sensitivity for Imagify-enhanced cardiac stress ultrasound compared to nuclear stress. These steps include the creation and implementation in 2006 of a revised blinded reader training program.

· ensuring that we have sufficient capital to run our business (30% weighting) as achieved by closing multiple equity and debt financing transactions in 2006;

· preparing for Imagify NDA submission (20% weighting) as achieved by manufacturing test batches of Imagify at commercial scale in our commercial manufacturing facility and completing milestones, in particular completing installation qualifications and operational qualifications, related to the qualification of that facility under the FDA’s current good manufacturing practices;

· securing intellectual property rights strategic to our business (10% weighting), specifically by completing license agreements for certain ultrasound-related intellectual property with each of GE Healthcare, a division of General Electric Company, and Bracco International BV; and

· advancing our product development pipeline beyond Imagify (10% weighting) as partially achieved through prioritization of HDDS formulations and plans for further HDDS development.

For fiscal year 2006, the individual goals of our executive officers whose goals were not the corporate goals were designed to support the corporate goals, including key corporate objectives, such as goals related to strategic planning, and achievement of specific research, clinical, regulatory, operational and financial performance. Awards for 2006 were based on a written comparison of the actual performance of the executive officer against his or her predetermined performance objectives.

For 2006, our compensation committee determined that more than 80% of our corporate goals had been achieved. Fiscal 2006 bonuses were awarded in February 2007 and paid in cash. Bonus achievement was estimated throughout 2006 and, based on such estimates, accrued quarterly in the consolidated financial statements.

The primary focus of the Company during 2006 was directed towards the development of Imagify. There are numerous risks and uncertainties associated with advancing a product through Phase 3 clinical trials and preparing for an NDA. In setting and evaluating the performance of the Company and named

executive officers, the compensation committee looks at performance against specific goals but also evaluates how they adapt to and overcome unexpected challenges. We recognize that such decisions can cause short-term delays in program development but we believe that the overall benefit of such decisions outweigh the short term costs and that management should be rewarded for taking difficult actions which are believed to be in the long-term interest of the Company’s shareholders.

Long-term Incentive Compensation

We believe that equity ownership aligns the interests of executive officers with those of our shareholders. The compensation committee generally grants options that become exercisable over a four year period as a means of encouraging retention among executive officers and to promote corporate level success. The compensation committee awards named executive officer stock options with exercise prices equal to the market price of the common stock on the date of grant. As a result, executive officers will benefit from these stock option grants only to the extent that the price of our common stock increases and our shareholders have also benefited. Each stock option granted vests over a defined schedule, typically four years, and must be exercised within a defined period of time, typically ten years from the date of grant. Historically, the compensation committee has utilized stock options to provide executive officers with long-term incentive compensation because it believes that stock options best achieved the intended goal of motivating executive officers and aligning their interest with our shareholders. However, the compensation committee periodically evaluates other methods of providing long-term incentive compensation and is not restricted to only using stock options and may elect to use other methods as circumstances change.

The compensation committee grants to named executive officers stock option awards at the time they commence employment or are promoted, as well as on an annual basis, consistent with the number of options granted to peers within and outside the industry at similar levels of seniority. Stock options granted on an annual basis as part of the company’s performance and compensation review process are granted with per share exercise prices equal to the closing market price for the Company’s stock on the date of grant. The date of grant is the date of the first meeting each year of the compensation committee the date of which meeting is established in advance. Based upon review of publicly available compensation data and subscription compensation survey data for regional and national companies in the pharmaceutical and biotechnology industry, the compensation committee views that equity incentive awards, whether in the form of stock options or other methods, is a necessary component of the Company’s overall compensation program in order to competitively attract, retain and motivate experienced executives.

When establishing stock option grant levels, the compensation committee considers general corporate performance, individual performance, the chief executive officer’s recommendations (for executive officers other than the chief executive officer), level of seniority and experience, existing levels of stock ownership, previous grants of stock options, vesting schedules of outstanding options and the current stock price. The compensation committee believes that equity grants in the form of stock options help align the interests of the named executive officers with those of the shareholders and provide each named executive officer with a significant incentive to manage Acusphere from the perspective of an owner with an equity stake in the business. The compensation committee views granting options as a retention device and therefore also reviews the status of vesting and number of vested and unvested options at the time of grant. The compensation committee evaluates grants of stock options on an individual basis for each of the Company’s named executive officers. The compensation committee recognizes that the aggregate level of stock options held by the Company’s named executive officers as a percentage of total shares outstanding has declined as a group over recent years, and may continue to decline as the Company grows. The compensation committee does not target specific ownership levels for this group but rather seeks to ensure that the incentive provided to each named executive officer is competitive with peers and motivating to the individual. Guidelines for the number of stock options and restricted stock awards granted to each named executive officer are determined by the compensation committee based upon several factors, including the

named executive officer’s level of responsibility, performance and the value of the stock option at the time of grant. As a benchmark for levels of stock option grants, the compensation committee typically aims for the mean level of annual option grants for similar positions at our peer group companies, adjusted using the above factors and taking into consideration such equivalency factors as our number of shares outstanding and market capitalization, compared to the peer group companies.

In addition, the compensation committee may make performance-based awards from time-to-time, as it deems appropriate. In making such performance-based awards, the compensation committee considers individual contributions to our financial, operational and strategic objectives.

Equity Grant Policy

In March 2007, we adopted an equity grant policy in order to make the grant process more efficient in connection with new hires to ensure that our equity granting practices continue to be maintained in compliance with our equity plans and policies and with all applicable laws, and to specifically prevent the backdating of any equity grant, or the manipulation of the timing of equity grants with the public release of material information with the intent of benefiting a grantee under an equity award. Under this newly adopted policy, all grants will continue to be made at fair market value and calculated based on our closing market price on the grant date. The equity grant policy will further provide that we will only grant equity awards on a regularly scheduled basis, as follows:

· grants made in conjunction with the hiring of a new employee or the promotion of an existing employee will be made on the 15th day of the month following the hire date or the promotion date, or on the next trading day, if the 15th is not a trading day, provided however that if the grant is made in conjunction with the hiring of a new named executive officer or the promotion of an existing employee to a position in which he/she is a named executive officer, the grant will be made on the 15th of the month following the latter of the hire date or the promotion date and, in both cases, the date on which the compensation committee or board of directors approves such option grant provided that if the 15th is not a trading day the grant will be made on the next trading day;

· grants made to existing employees other than in connection with a promotion or under a predefined performance plan will be made, if at all, on an annual basis and will be made effective on the date of a meeting of the Company’s compensation committee which meeting will be the first meeting of the compensation committee for the year and held on a date established in advance, with notice given to Committee members, in accordance the compensation committee charter; and

· grants, if any, made to employees which are exceptions to this policy must be approved by the Board of Directors.

Grants under this policy may be made by the compensation committee or a subcommittee established by the compensation committee provided that the subcommittee not be given authority to grant any options to named executive officers.

Severance and Change in Control

We consider it in the best interests of our shareholders to foster the continuous at-will employment of key management personnel and to prevent their departure. In order to provide the key members of management with an incentive to continue their respective at-will employment and to maximize corporate value for the benefit of our shareholders, we entered into executive employment agreements with each of the named executive officers. Under the terms of these agreements, and subject to the terms and conditions contained therein, the named executive officers are entitled to receive compensation and benefits in the event they are terminated other than for cause, death or disability, including in connection with a “change of control.”

Our employment agreements do not provide any compensation to our named executive employees if such named executive employee elects to terminate employment with the company without request for such termination by the company. Our employment agreements entitle our named executive officer, provided that such officer has achieved certain minimum service requirements with the Company, to compensation if he or she is terminated by the Company without cause. Under such circumstance, severance payments include: a cash payment equal to six times his or her monthly base salary plus payment equal to the product of his or her base monthly salary times the number of full years such executive officer has been employed by us. Additionally, our named executive officers will receive, at our expense, certain benefits, including health, dental and life insurance, for 18 months following the date of termination.

In the event that, during the 12-month period following a change of control or the period that begins six months prior to the first public comment by us regarding such change of control and ends upon a change of control, we terminate any of the named executive officers, other than for cause, death, or disability, or any of the named executive officers terminates his or her employment for “good reason,” such named executive officer is entitled to receive (i) a lump sum payment equal to 6 times his or her monthly base salary, (ii) a lump sum payment equal to the product of his or her monthly base salary times the greater of the number of full years such senior executive had been employed by us or six, (iii) a lump sum payment equal to his or her target bonus for the year in which the change of control occurs, pro rated to cover the portion of the year elapsed plus such pro rated amount to cover six months plus the greater of one month for each full year each named executive officer had been employed by us or six months. Additionally, the named executive officers will receive, at our expense, certain benefits, including health, dental and life insurance, for 18 months following the date of termination.

Unless at that time the named executive officer elects to forgo the following, upon a change of control, all stock options and other stock-based awards granted to each of the named executive officer will immediately accelerate and become fully exercisable as of the effective date of the change of control.

In the event any severance payment or benefit to the executive under the employment agreement is considered an “excess parachute payment” and subject to an excise tax under the Internal Revenue Code or is otherwise subject to tax that the employee would not normally be subject to as an employee of the Company, the named executive officers are entitled to a “gross-up payment” that, on an after-tax basis, is equal to the taxes imposed on such payment or benefit.

The level of severance payments was determined by evaluating executive employment agreements with comparative publicly-traded biotech and pharmaceutical companies. The terms of the severance benefit under the employment agreement is intended to ensure that the executive focuses his or her attention on Company management, including a willingness to undertake a reasonable degree of business risk in an effort to create shareholder value.

Other Compensation

We maintain broad-based benefits and perquisites that are provided to all employees, including health insurance, life and disability insurance, dental insurance, and a 401(k) plan. In particular circumstances, we also utilize cash signing bonuses and relocation assistance when certain executive officers and senior non-executives join us. Whether either, or both, a signing bonus or relocation assistance are paid and the amounts thereof are determined on a case-by-case basis under the specific hiring circumstances. For example, we will consider paying amounts to compensate for amounts forfeited by an executive upon terminating prior employment, to assist with relocation expenses, and/or to create additional incentive for an executive to join us in a position where there is high market demand.

Common Share Ownership Requirements

We seek to weight our compensation scheme to ownership of our common shares. We believe that broad-based stock ownership by our employees (including the named executive officers) enhances its ability to deliver superior shareholder returns by increasing the alignment between the interests of our employees and our shareholders. The goal of the stock option program is to engage all of our named executive officers as partners in Acusphere’s success and help us realize the maximum gain from its strategy. We do not have a formal requirement for share ownership by any group of employees.

Tax Deductibility of Compensation

Within its performance-based compensation program, we aim to compensate our named executive officers in a manner that is tax-effective for us from a corporate tax perspective. Section 162(m) of the Internal Revenue Code restricts the ability of publicly held companies to take a federal income tax deduction for compensation paid to certain of their executive officers to the extent that compensation exceeds $1.0 million per covered officer in any fiscal year. However, this limitation does not apply to compensation that is performance-based.

The non-performance based compensation paid in cash to our executive officers for the 2006 fiscal year did not exceed the $1.0 million limit per officer, and the compensation committee does not anticipate that the non-performance based compensation to be paid in cash to our executive officers for fiscal 2007 will exceed that limit.

Conclusion

Our compensation policies are designed to retain and motivate our senior executive officers and to ultimately reward them for outstanding performance, with particular emphasis placed on the achievement of our research, clinical, regulatory and operational performance while also seeking to align the long-term interests of our management with those of our stockholders. We believe our compensation strategy is appropriate for a company at our stage of development and as compared to other biotech and pharmaceutical companies with similar market capitalizations.

Summary Compensation

The following table sets forth summary information concerning the compensation paid or earned services rendered to us in all capacities during the fiscal years ended December 31, 2006 by our chief executive officer, chief financial officer and each of the other three most highly compensated persons serving as our executive officers during fiscal year 2006. We refer to these individuals as our named executive officers.

Summary Compensation Table(1)

Name and Principal Position	Year	Salary ($)	Bonus ($)(1)		Stock Awards ($)		Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
Sherri C. Oberg	2006	420,799		—		—	142,119		200,000		3,030	765,948
President and Chief Executive Officer
John F. Thero	2006	280,000		—		—	174,687		112,000		3,030	569,717
Senior Vice President and Chief Financial Officer
Howard Bernstein, M.D., Ph.D.	2006	299,000		—		—	76,038		100,000		3,030	478,068
Executive Vice President of Research and Development
Michael R. Slater	2006	241,000		—		—	36,147		47,000		3,030	327,177
Senior Vice President of Operations
Richard Walovitch, Ph.D.	2006	260,000		—		—	5,027		70,200		3,030	338,257
Senior Vice President of Clinical Research

(1) Columns disclosing compensation under the headings “Bonus,” “Stock Awards” and “Change In Pension Value And Nonqualified Deferred Compensation Earnings” are not included because no compensation in any of these categories was paid to our named executive officers in 2006. Amounts which would have appeared in the column under the heading “Bonus” would include non-equity guaranteed or discretionary bonus, hiring bonuses and relocation bonuses. Bonuses awarded under the Company’s 2006 Management Incentive Plan are reflected in the column entitled “Non-Equity Incentive Plan Compensation.”

(2) Represents stock-based compensation expense for fiscal 2006 for stock option awards to purchase shares of our common stock granted in 2006 to each of Ms. Oberg, Mr. Thero, Dr. Bernstein and Mr. Slater. Stock-based compensation expense for each award was calculated in accordance with SFAS No. 123(R) and is being amortized over the vesting period of the related award. The amount reflected in this table excludes the estimate of forfeitures applied by us under SFAS No. 123(R) when recognizing stock-based compensation expense for financial statement reporting purposes in fiscal 2006. There were no actual forfeitures recorded during fiscal 2006 related to and of these awards. For information regarding the assumptions made by us in determining the valuation of these awards, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock-Based Compensation” in our 2006 Annual Report on Form 10-K. No stock options were granted to Dr. Walovitch in fiscal 2006 as he was granted 50,000 shares upon his promotion in December 2005. All stock option awards granted to each of Ms. Oberg, Mr. Thero, Dr. Bernstein, Mr. Slater and Dr. Walovitch prior to 2006 were accounted for in accordance with APB Opinion No. 25 and were granted at exercise prices equal to fair value on the date of grant, with the exception of stock options granted in 2003 which for accounting purposes were granted at prices below fair value on the date of grant. Accordingly, no 2006 stock-based compensation expense is reflected above for awards granted prior to 2006 with exception of the 2003 awards for which $49,040, $132,408, $36,780, $12,260 and $5,027 are included for Ms. Oberg, Mr. Thero, Dr. Bernstein, Mr. Slater and Dr. Walovitch, respectively, representing the proportional value of such 2003 awards which vested during 2006. The balance of the amounts listed above represent stock-based compensation expense recognized in connection with stock option awards granted in 2006 to purchase shares of our common stock at an exercise price of $5.84 per share, granted on February 1, 2006. The option awards are subject to monthly vesting ratably over

48 months. At December 31, 2006, there was approximately $0.6 million of unamortized stock-based compensation expense related to these 2005 stock option awards, excluding our estimate of forfeitures, which amount will be amortized over the remaining vesting period of the awards.

(3) Represents cash incentive awards earned for 2006 and payable in 2007. These cash incentive awards were authorized under our 2006 Management Incentive Compensation Plan and approved by the compensation committee in February 2007 for each of Ms. Oberg, Mr. Thero, Mr. Bernstein, Mr. Slater and Mr. Walovitch, respectively. The awards are described in more detail above in the section entitled “Non Equity Incentive Compensation.”

(4) Represents 401(k) matching contributions of $2,500 per person and premiums for group term life insurance of $530 per person. Excludes medical insurance, disability insurance and certain other benefits received by the named executive officers that are available generally to all of our employees and certain perquisites and other personal benefits received by the named executive officers which benefits do not exceed $10,000 per person in the aggregate.

The 2006 salaries and non-equity incentive compensation awards identified in the preceding table are not subject to any condition of future performance or employment.

Grants of Plan-Based Awards

The following table sets forth information concerning the stock option grants made to each of the named executive officers during the fiscal year ended December 31, 2006 pursuant to our 2003 Stock Option and Incentive Plan and 2005 Stock Option and Incentive Plan. We have never granted any stock appreciation rights.

Grants of Plan-Based Awards

Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)				Estimated Future Payouts Under Equity Incentive Plan Awards(2)				Exercise or Base Price of Option Awards ($/Sh)(3)		Grant Date Fair Value of Stock and Option Awards ($)(4)
		Threshold ($)(5)		Maximum ($)(6)		Threshold (#)		Maximum (#)
Sherri C. Oberg	2/1/06		—		210,400		—		170,000		5.84	396,049
President and Chief Executive Officer
John F. Thero	2/1/06		—		112,000		—		70,000		5.84	163,079
Senior Vice President and Chief Financial Officer
Howard Bernstein, M.D., Ph.D.	2/1/06		—		119,600		—		65,000		5.84	151,431
Executive Vice President of Research and Development
Michael R. Slater	2/1/06		—		96,400		—		40,000		5.84	93,188
Senior Vice President of Operations
Richard Walovitch, Ph.D.	2/1/06		—		104,000		—		—		—	—
Senior Vice President of Clinical Research(7)

(1) Represents target bonuses potentially available to our named executive officers under the 2006 Management Incentive Compensation Plan. See the section entitled “Non Equity Incentive Compensation” for actual bonuses earned by our named executive officers in 2006.

(2) Represents option awards to purchase shares of our common stock granted in 2006 to each of Ms. Oberg, Mr. Thero, Dr. Bernstein and Mr. Slater, which are subject to monthly vesting ratably over 48 months. Such shares will become fully vested upon termination under a change of control. No incentive plan existed during 2006 under which named executive officers were entitled to earn specific maximum or threshold amounts of equity-based incentive awards. All stock option grants made to named executive officers are made at the discretion of the compensation committee.

(3) Represents the closing price of our common stock quoted by the NASDAQ Global Market on February 1, 2006.

(4) The grant date fair value of stock option awards were calculated using the fair value of our common stock on February 1, 2006, the date of grant, multiplied by the total number of stock option awards granted. For information on the determination of the per share grant date fair value for these awards, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock-Based Compensation”.

(5) Represents the minimum amount payable under the 2006 Management Incentive Compensation Plan, assuming the required 80% corporate goal achievement minimum was achieved in order to be eligible for a payment under the Plan. There was no minimum required threshold for individual performance levels in 2006.

(6) Represents the level of cash award named executive officers could have earned for 2006 if they achieved all of their individual performance goals. The compensation committee can, if it believes it is justified, elect to award amounts above this level.

(7) No stock options were granted to Mr. Walovitch in fiscal 2006 as he was granted 50,000 shares upon his promotion in December 2005.

See Compensation Discussion and Analysis above for complete description of the targets for payment of annual incentives, as well as performance criteria on which such payments were based. The Compensation Discussion and Analysis also describes the option grants.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information on all stock options held by our named executive officers as of December 31, 2006. All outstanding equity awards are in the form of stock options quantified in the following table based upon the number of shares of common stock underlying the stock options. Certain of our named executive officers own shares of our common stock, the following table does not include such shares.

Outstanding Equity Awards at Fiscal Year-End(1)(2)

Option Awards

	Number of Securities Underlying Unexercised Options (# Exercisable)		Number of Securities Underlying Unexercised Options (# Unexercisable)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price			Option Expiration Date
Sherri C. Oberg		3,116		—		—		$	1.80		11/19/07
President and		2,778		—		—		$	1.98		12/7/08
Chief Executive Officer		1,011		—		—		$	5.70		12/4/10
		2,605		—		—		$	7.20		3/3/11
		25,000		—		—		$	7.20		4/3/11
		44,280		—		—		$	7.20		9/24/11
		6,881		—		—		$	0.84		7/16/12
		113,419		—		—		$	0.84		09/10/12
		32,640		694		—		$	0.84		2/4/13
		99,561		22,976		—		$	13.02		8/30/13
		58,333		21,667		—		$	9.60		3/9/14
		69,958		76,042		—		$	6.13		1/30/15
		38,958		131,042		—		$	5.84		2/13/16
Howard Bernstein, M.D.		6,231		—		—		$	1.80		11/19/07
Ph.D, Executive Vice		3,116		—		—		$	1.80		11/19/07
President of Research &		4,167		—		—		$	1.98		12/7/08
Development		4,167		—		—		$	1.98		3/27/10
		7,891		—		—		$	1.98		3/27/10
		6,226		—		—		$	7.20		3/3/11
		21,660		—		—		$	7.20		9/24/11
		8,334		—		—		$	7.20		2/5/12
		59,834		—		—		$	0.84		7/16/12
		24,479		521		—		$	0.84		2/4/13
		35,081		8,096		—		$	13.02		8/30/13
		25,521		9,479		—		$	9.60		2/15/14
		23,958		26,042		—		$	6.13		1/30/15
		14,896		50,104		—		$	5.84		1/30/16
John F. Thero		67,083		2,917		—		$	0.84		2/4/13
Senior Vice President and		9,231		2,130		—		$	13.02		8/30/13
Chief Financial Officer		43,750		16,250		—		$	9.60		2/15/14
		23,958		26,042		—		$	6.13		1/30/15
		16,042		53,958		—		$	5.84		1/30/16
Michael R. Slater		25,000		—		—		$	7.20		11/11/11
Senior Vice President		8,334		—		—		$	7.20		2/5/12
of Operations		17,500		—		—		$	0.84		7/16/12
		8,160		174		—		$	0.84		2/4/13
		12,408		2,863		—		$	13.02		8/30/13
		14,583		5,417		—		$	9.60		2/15/14
		9,583		10,417		—		$	6.13		1/30/15
		9,167		30,833		—		$	6.13		1/30/16
Richard Walovitch, Ph.D.		16,667		—		—		$	1.26		4/7/07
Senior Vice President		3,116		—		—		$	1.80		5/19/08
of Clinical Research		1,667		—		—		$	1.98		6/27/09
		850		—		—		$	1.98		3/27/10
		2,038		—		—		$	7.20		3/3/11
		5,849		—		—		$	7.20		9/24/11
		1,811		—		—		$	7.20		2/5/12
		11,763		—		—		$	0.84		7/16/12
		3,346		71		—		$	0.84		2/4/13
		13,125		4,875		—		$	9.60		2/15/14
		11,979		13,021		—		$	5.57		2/20/15
		12,500		37,500		—		$	4.92		12/6/15

(1) There are no stock awards outstanding for any of the named executive officers. All of the above amounts reflect option awards.

(2) The shares underlying each unvested option grant to our named executive officers are subject to monthly vesting. Such options vest ratably over 48 months. Each such option may accelerate and become fully vested upon a change of control as defined in the employment agreements of each named executive officer.

Option Exercises and Stock Vested During Fiscal Year 2006

Option Exercises and Stock Vested

The following table provides information on stock option exercises during 2006 by our named executive officers:

	Option Awards(1)
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)
Sherri C. Oberg		2,756		16,784
President and Chief Executive Officer
John F. Thero		—		—
Senior Vice President and Chief Financial Officer
Howard Bernstein,		—		—
M.D., Ph.D. Executive Vice President of Research & Development
Michael R. Slater		—		—
Senior Vice President of Operations
Richard Walovitch, Ph.D.		—		—
Senior Vice President of Clinical Research

(1) Aside from stock options, there were no stock awards or other forms of equity compensation made or outstanding for our named executive officers in 2006.

Pension Benefits

We do not have any qualified or non-qualified defined benefit plans.

Non-Qualified Deferred Compensation

We do not have any non-qualified defined contribution plans or other deferred compensation plans.

Employment Agreements and Severance Benefits

Potential Payments Upon Termination or Change of Control

We consider it in the best interests of our shareholders to foster the continuous at-will employment of key management personnel and to prevent their departure. In order to provide the key members of management with an incentive to continue their respective at-will employment and to maximize corporate value for the benefit of our shareholders, we entered into executive employment agreements with our named executive officers. Under the terms of these agreements, and subject to the terms and conditions contained therein, our named executive officers are entitled to receive compensation and benefits in the event they are terminated other than for cause, death or disability, including in connection with a “change of control.”

Under these agreements, a “change of control” means (i) a sale by Acusphere of all or substantially all of its business or assets or (ii) a reorganization, merger or consolidation of Acusphere whereby the stockholders of the outstanding voting stock of Acusphere immediately prior to the transaction hold less than a majority of votes of the outstanding stock of the entity surviving such transaction, or (iii) the

transfer, in a single transaction or series of transactions, of a majority of the outstanding voting stock of Acusphere to a single purchaser or group of related purchasers, or (iv) individuals who, as of the date of the agreement, constitute Acusphere’s board of directors cease for any reason to constitute at least a majority of the board, provided that any individual becoming a director subsequent to the date of the agreement whose election, or nomination for election by Acusphere’s shareholders, was approved by a vote of at least a majority of the directors then comprising the board shall be considered as though such individual were a member of the board, but excluding, for the purpose, any such individual whose initial assumption of office is in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the board; or (v) the board determines that a change of control has occurred.

Our employment agreements do not provide any compensation to our named executive employees if such named executive employee elects to terminate employment with the company without request for such termination by the company. Our employment agreements entitle our named executive officer, provided that such officer has achieved certain minimum service requirements with the company, to compensation if he or she is terminated by the company without cause. Under such circumstance, severance payments include: a cash payment equal to six times his or her monthly base salary plus payment equal to the product of his or her base monthly salary times the number of full years such executive officer has been employed by us. Additionally, our named executive officers will receive, at our expense, certain benefits, including health, dental and life insurance, for 18 months following the date of termination.

Under these agreements, “cause” means one or more of the following reasons: (i) the substantial and continuing failure or refusal of the named executive officer, after written notice thereof, to reasonably attempt to perform his or her job duties and responsibilities (other than failure or refusal resulting from incapacity due to physical disability or mental illness) which failure or refusal is committed in bad faith and is not in the best interest of Acusphere; (ii) gross negligence, willful misconduct or material breach of fiduciary duty to Acusphere; (iii) the willful commission of an act of embezzlement, misappropriation or fraud; (iv) deliberate and willful disregard of the written rules or policies of Acusphere which results in a material and substantial loss, damage or injury to Acusphere; (v) the unauthorized, deliberate and willful disclosure of any material confidential, proprietary and/or trade secret information of Acusphere or its customers which disclosure is committed in bad faith and is not in the best interest of Acusphere; (vi) the willful and deliberate commission of an act which induces any customer, supplier, employee or consultant to adversely and substantially amend or terminate their relationship with Acusphere which act is committed in bad faith and is not in the best interest of Acusphere; or (vii) the conviction of, or plea of nolo contendere by the named executive officer, to a crime involving a felony of moral turpitude.

In the event that, during the 12-month period following a change of control or the period that begins six months prior to the first public comment by us regarding the change of control and ends upon a change of control, we terminate any of the named executive officers, other than for cause, death, or disability, or any of the Officers terminates his or her employment for “good reason,” such officer is entitled to receive (i) a lump sum payment equal to 6 times his or her monthly base salary, (ii) a lump sum payment equal to the product of his or her monthly base salary times the greater of the number of full years such officer had been employed by us or six, (iii) a lump sum payment equal to his or her target bonus for the year in which the change of control occurs, pro rated to cover the portion of the year elapsed plus such pro rated amount to cover six months plus the greater of one month for each full year each named executive officer had been employed by us or six months.

Under these agreements, “good reason” means (i) a reduction in the named executive officer’s then-current annual base salary or bonus opportunity or benefits (other than in connection with a salary adjustment generally applicable to similarly situated employees); (ii) any failure to offer the named executive officer the same level of benefits offered to similarly situated employees; (iii) a significant diminution in the named executive officer’s duties, title, office, staff or responsibilities; (iv) the relocation of the named executive officer’s primary business location to a location that increases the named executive officer’s commute by more than thirty miles compared to the commute of the named executive officer to the named executive officer’s then-current primary business location; (v) the failure to pay the named executive officer any portion of his or her current base salary, bonus or benefits within twenty days of the date such compensation is due, based upon the payment terms currently in effect; or (vi) the failure of the named executive officer to obtain a reasonably satisfactory agreement from any successor to assume and agree to perform the agreement.

Additionally, following change in control, our named executive officers will receive, at our expense, certain benefits, including health, dental and life insurance, for 18 months following the date of termination.

Unless at that time our named executive officers elects to forgo the following, upon a change of control, all stock options and other stock-based awards granted to each of our named executive officers will immediately accelerate and become fully exercisable as of the effective date of the change of control.

The amount of compensation payable to each named executive officer in each situation is listed in the tables below, assuming a change of control on, and/or their employment was terminated on December 31, 2006.

The following table described the potential payments upon a change of control for Sherri C. Oberg, our President and Chief Executive Officer.

Payments and Benefits	Voluntary Termination		Involuntary Not for Cause Termination		Involuntary or Good Reason Termination (Change of Control)		Death or Permanent Disability
Cash Severance(1)		—		631,199		631,199		—
Pro Rata Target Bonus(2)		—		—		315,599		—
Stock Options(3)		—		—		1,111		1,111
Health Care Benefits(4)		—		34,714		34,714		—
Accrued Vacation Pay		—		—		—		—
Other Perquisites(5)		—		15,000		15,000		—
Tax Gross-Up(6)		—		—		344,683		—
Total		—		680,913		1,342,306		1,111

(1) For involuntary not for cause termination, cash severance includes 6 months base pay plus one additional month for every year of service. For termination as a result of a change in control, cash

severance includes 6 months base pay plus the greater of (i) one additional month for every year of service or (ii) six months.

(2) For involuntary not for cause termination the named executive officer (“NEO”) is not entitled to a bonus. For termination as a result of a change in control, bonus includes 6 months of the NEO’s annual target prorated to the date of the change in control, plus the greater of (i) one additional month for every year of service or (ii) six months.

(3) For termination after or in connection with a Change in Control, or the death or permanent disability of the NEO, all unvested stock options held by the NEO vest immediately. For stock options, the dollar value is calculated for “in-the-money” options by multiplying the number of accelerated options by the difference between the grant price of the option and the closing stock price of the Company’s common stock of $2.44 on December 29, 2006.

(4) Under the Executive Employment Agreement, medical and dental coverage is provided to the NEO and his/her spouse and dependents for up to 18 months after termination. Life and disability coverage is also provide to the NEO for up to 18 months after termination.