Immuron Ltd — Management Reports 2009

Jun 14, 2009

==> picture [192 x 41] intentionally omitted <==

15 June 2009

The Manager The Company Announcement Office Australian Stock Exchange Sydney NSW

Dear Sir Shareholder Update

Attached is a Shareholder Update indicating the progress that the Company has achieved during the past six months together with an indication of its research and development programme for the coming twelve months.

Yours faithfully

==> picture [172 x 102] intentionally omitted <==

Graeme Stevens Company Secretary

ABN 80 063 114 045 Level 1, 39 Leveson Street North Melbourne VIC 3051 AUSTRALIA

Tel (61) 3 9018 4880 Fax (61) 3 9018 4881

www.immuron.com

15June 2009.

Dear Shareholder

Shareholder update June 2009

You will have recently received a notice of an Extraordinary General Meeting of shareholders to be held on 9 July 2009. The main item on the agenda for that meeting is seeking your approval to issue shares to Hadasit Medical Research & Development Limited (Hadasit) for the acquisition of certain intellectual property.

Whilst this link with Hadasit is very exciting for the future of Immuron, there have also been made a number of significant advances in the company’s other research projects. This shareholder update provides an outline of Immuron’s achievements during the past six months together with an outline of research and development programmes over the coming 12 months.

All of Immuron’s research programmes utilise the hyper-immune colostrum products developed by the company over a number of years to enable the main active part of the preparation, antibodies, to be tailored for a range of target diseases. Utilising these targeted antibodies, our current research programmes are as follows:

• Prevention and treatment of influenza, in conjunction with the University of Melbourne.

• Treatment of the Metabolic Syndrome, in conjunction with the Hadassah Medical Organisation.

• Treatment of HIV, in conjunction with the Case Western Reserve University, Cleveland USA and, University of New South Wales.

• Treatment of mucositis and ulcerative colitis, in conjunction with Sourasky Medical Centre, Tel Aviv.

The table set out below provides an indicative timetable for Immuron’s current R & D programmes, differentiating between preclinical programmes and clinical trials. The estimated net expenditure of $1,395,000 for the year ended 30 June 2010 includes anticipated grant monies to be received.

	anticipated grantmonies to bereceived.
	Year to June 2010	Q1	Q2	Q3	Q4
	Preclinical Hadasit - Metabolic Syndrome - Hepatoma University of Melbourne - influenza	X X X	X X X	X X X	X X X X 220
	Clinical trials HIV - Cleveland - Australia Sourasky Medical Centre - mucositis - ulcerative colitis Hadasit - diabetes - Hepatoma	X X X X	X X X X X	X X X
	Estimated Net R & D Expenditure($’000)	900	165	110

1

Hadassah Medical Centre .

Whilst the acquisition of the Intellectual Property (IP) is conditional upon receiving shareholder approval, Hadassah Medical Centre in Jerusalem have been testing several hyper-immune colostrum preparations prepared by Immuron in laboratory animal models for two major disease indications. This work has provided proof-ofprinciple evidence for the oral immunotherapy program at Hadassah which has lead to the business proposal now under development with Hadasit, Hadassah Medical Centre’s commercialisation arm. The oral immunotherapy program uses a system of oral presentation of antibodies to influence the regulatory T cell populations so that these important cells respond better to diseases which have an autoimmune and/or chronic inflammatory component.

In an accepted laboratory animal model for Metabolic Syndrome - a common group of human diseases linked by insulin resistance, such as diabetes type 2 and nonalcoholic steato-hepatopathy [fatty liver]) - oral treatment with Immuron’s hyperimmune colostrum significantly improved key markers of these diseases. It is interesting to note that the purified antibody preparation did not work as effectively as preparations that included other molecules naturally present in hyper-immune colostrum. These results have been reviewed and summarised by a Biocomm[2] report to Immuron’s board, a copy of which is available at www.immuron.com.

Further proof-of-principle work using the Hadassah technology and Immuron’s hyper-immune colostrum has been performed targeting the treatment of hepatomas, malignant tumours which often follow hepatitis B virus infections in humans. The aim of the work is to decrease tumour growth and to actually shrink it in size. Initial work in a laboratory animal model has been promising, and the results will be published jointly by Immuron and by Prof Yaron Ilan and his team as full results become available.

HIV

Immuron is currently conducting phase 2 trials for the use of hyper-immune colostrum containing antibodies to lipopolysaccharide (LPS) as an adjunct in the treatment of people with AIDS. The reason for using this particular hyper-immune colostrum stems from recent international findings about the role of the gut associated lymphoid tissue (GALT) in reducing the number of CD4 lymphocytes, thus increasing the risk of a person infected with HIV going on to develop clinical AIDS.

The two scientific groups, one in Australia and the other in the USA, are working with populations of HIV positive people at different stages of their disease. Both groups are exploring if Immuron’s hyper immune colostrum can decrease the overactivation of the gut immune response by decreasing the triggers of the innate immune system, such as LPS, along with an increased healing capacity of the gut mucosa associated with intrinsic factors in hyper-immune colostrum. The linking concept for the two groups is that with less non-specific over-activation the anti-viral drugs will be more effective and there will be less chance of drug resistance developing.

In Australia it is a phase 2 trial referred to as The Coral Study, and involves the National Centre in HIV Epidemiology and Clinical Research at the University of New

2

South Wales. Twenty one sites around Australia are participating in the trial. The maximum number of patients in this trial will be 72 and Immuron has been advised that 65% of that number have been recruited as at the date of this announcement. The Coral Study centres on measuring the effect on CD4+T cell outcomes of raltegravir intensification of combination antiretroviral therapy (cART) with or without hyperimmune colostrum to reduce immune activation in HIV-1infected individuals.

In the USA it is also a phase 2 trial. This trial is to be conducted by the Centre for AIDS Research at the Case Western Reserve University in Cleveland. The protocols for this trial have been approved and Immuron understands that recruiting of 10 patients is underway. The trial centres on the use of hyper-immune colostrum to decrease the translocation of gut-derived microbial products: no antiviral drugs are to be used.

Immuron anticipates that the results of both trials will be received in the March 2010 quarter.

If successful in either or both of the phase 2 trials, Immuron’s hyper-immune colostrum is well placed for quick commercialisation as a medical food for long term use by HIV positive patients under medical care.

Influenza

Immuron’s research into developing an antibody for the prevention of influenza is being conducted in conjunction with the University of Melbourne using an appropriate laboratory animal model infected with a strain of the H1N1 virus.

The first results were reported at the Australasian Society for Immunology’s annual meeting in December 2008. These showed the effectiveness of Immuron’s antibody and antibody fragment preparations in treating laboratory animals with ongoing infections with influenza. The antibodies and antibody fragments were delivered into the nasal cavities of the laboratory animals and were able to stop virus multiplication in the respiratory tract, thus stopping progress of clinical disease.

Further research conducted recently has focussed on the role of Immuron’s antibodies in preventing influenza, also in laboratory animals. Good protection from infection for a period of up to seven days has been achieved. Full results of this research are soon to be submitted for publication. The University of Melbourne has been awarded a research grant amounting to $500,000 from the Australian Research Council Linkage Project to accelerate their joint research with Immuron on this project, and this will allow research to extend to other laboratory animal models and to enable the concept to be tested against current human influenza strains, including the most recent H1N1 swine flu.

Mucositis

A phase 2 trial for the treatment of mucositis is underway at the Sourasky Medical Centre in Tel Aviv. This trial is using hyper-immune colostrum prepared by Immuron to control inflammatory responses in the gastro-intestinal tract, particularly the inflammation which often follows cancer treatment. Completion of this trial is expected in mid 2010, and is being undertaken with the assistance of a grant received by Immuron under the Victorian Government’s Vistec scheme.

3

If the trial is successful, Immuron’s hyper-immune colostrum could be marketed as a medical food in the USA, in a market with little competition and with an estimated value of US$900 million per annum. Potential partners for such a product have already been identified and briefed, and further talks will proceed once the results of the clinical trial are known.

Ulcerative Colitis (IBD)

This will show an expansion of the claims for a product that is already commercialised (Travelan) and would open new market opportunities in wider gut health applications. This is likely to be part of the dietary supplement or complementary medicine market.

Commercial products

Immuron is unusual for a biotech company in that it is generating revenues from the commercialisation of its first hyper immune product, Travelan. Aside from showing that products from Immuron’s technology can be commercialised the product is also generating a positive cash flow to the Company. Whilst Immuron’s revenue from Travelan sales in Australia this financial year will be similar to those of the previous year, it is expected that newly-developed export markets for the sale of hyper-immune colostrum for use in Travelan products manufactured overseas will boost income considerably. The initial export market is the USA where Immuron’s hyper-immune colostrum has been sold to Alaven Pharmaceuticals who manufacture and distribute the Travelan caplets within the United States. Importantly, Alaven’s hyper-immune colostrum requirements for the coming financial year will be met from Immuron’s current inventories.

Immuron is currently negotiating with third parties for the distribution of Travelan within Australia and overseas, so enhancing market share and reach, and the Company will provide details to shareholders once distribution arrangements are finalised

In preparation for the commercialisation of products into the Medical Foods category, particularly in the USA, Immuron convened an independent expert panel that reviewed the Company’s platform of hyper-immune colostrums. This expert panel agreed that hyper-immune colostrums met the definition of Generally Regarded as Safe (GRAS) under FDA regulations. This classification will be very important because it will greatly assist the future commercialisation of the products for HIV and mucositis, along with products which may be developed as a result of the Hadassah collaboration.

Funding

Immuron is planning to raise sufficient funding to meet the projected R & D expenditure of $1,395,000, as indicated earlier, along with some additional funds to meet the Company’s normal corporate working capital requirements and to fund new R & D projects.

The funding will be obtained by the issue of shares to professional and sophisticated investors, together with a Share Purchase Plan (SPP) to be offered to all shareholders.

4

The details of the SPP will be announced during the week commencing 15 June and each shareholder will be able to invest up to a maximum of $5,000 to acquire additional shares in Immuron.

Management

As announced to the ASX on 29 May 2009, I have assuming the role of Executive Chairman until the Company appoints a new Chief Executive Officer.

If any shareholder wishes to discuss any of the details of this shareholder update you can contact either myself or the Company’s R & D General Manager, Dr Grant Rawlin, on 03 9018 4880.

==> picture [134 x 81] intentionally omitted <==

Professor Colin Chapman Executive Chairman

5