Immuron Ltd — Management Reports 2011

May 31, 2011

SHAREHOLDER UPDATE JUNE 2011

Dear Shareholder,

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MESSAGE FROM THE CHAIRMAN – PROFESSOR COLIN CHAPMAN

It was with great pleasure that Immuron welcomed Joe Baini as its new Chief Executive Officer in January this year. Joe is an experienced executive with more than 20 years in the pharmaceutical industry, including significant experience in product commercialisation through partnering by way of licensing arrangements and marketing and sales partnerships. Most notably, he was the General Manager of Gilead Sciences Australia, New Zealand and Asia, one of the largest biopharmaceutical companies in the world. Under his leadership, Gilead’s revenue grew almost 10 fold in a five year time span. Prior to his time at Gilead, Joe was Marketing Director for Bayer Australia and also held senior commercial management positions at Pharmacia & Upjohn and Merck Sharp & Dohme.

One of the many value propositions that Joe brings to Immuron is his intricate knowledge of the pharmaceutical industry and how to most effectively engage with the larger companies. So, as Immuron continues to work on the global commercialization of Travelan[® ] and other products in the pipeline, for influenza and NASH in particular, Joe’s knowledge and experience is certainly going to be extremely valuable.

Improved commercialisation of Travelan continues to be a major focus of the company, and it is already providing cash foundations for future growth.

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER –JOE BAINI

Late last year I started working with the team at Immuron as an external consultant, advising on strategy and possible future opportunities. In this role, I quickly recognised the considerable opportunities presented by this impressive organisation’s technology. Therefore, without overstating it, when offered the opportunity to join Immuron I jumped at the chance to make my own mark on Immuron’s future.

So why do I feel this way about the Company?

There are two key elements within Immuron’s platform technology and pipeline that set it apart from all other biotechnology companies involved in drug discovery and development.

First, Immuron currently has a product in market, Travelan, which can generate significant revenues and profits in the short and medium term. This will allow Immuron to be cash positive sooner rather than later and lays the foundation for commercialising other programs. To date Travelan has been launched in Australia, and presents a tantalising opportunity in many overseas countries. Nycomed Australia’s success in expanding the Australian market highlights the scalable potential for Travelan. So it is now time to put this into action. We are now engaged with several possible partners for a significant number of territories across the world to crystallize this potential. Be assured that this is a major and immediate focus for our company. Most other drug development companies do not have a product in the market generating ongoing revenues and this is the key to establishing Immuron’s success for the future.

Second, Travelan’s validated safety profile reflects on Immuron’s other products. Since all of Immuron’s products emanate from a common technology platform all of Immuron’s products share the same high safety profile. This is a significant advantage since it allows us to both accelerate the development and commercialization of our pipeline products and to develop products at a substantially lesser cost than is typical in the biopharmaceutical industry.

Immuron’s current development focus centres on two products, both of which have considerable potential. These are the programs for treating non-alcoholic steatohepatitis (NASH), with IMM-124E, which is in Phase 2 clinical testing, and a program for preventing and treating influenza, with IMM 255, which is at the preclinical stage.

Immuron may have on its hands what will become the first approved treatment for NASH, which is a rapidly growing health dilemma in the world. When left untreated, it can lead to life threatening liver cirrhosis. This

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opportunity is well recognized by many large pharmaceutical companies interested in solving this unmet medical need, as well as key clinicians working in liver and metabolic associated diseases. We will provide shareholders with a more detailed update on this important program as we progress towards an FDA approved Phase 2b clinical trial.

The influenza program has the potential to revolutionise the management of influenza as an easily accessed oral preventative. Immuron now plans to consolidate its early findings in ferrets and progress the program to human trials for formulation and dosing purposes. Again, due to the safety profile associated with our platform technology, we anticipate being able to compress future timelines in progressing IMM 255 through to the clinic.

To add to the two key advantages mentioned above, another significant advantage that Immuron enjoys is its strong and close association with both the Hadassah Medical Center in Israel and the University of Melbourne. Immuron remains in the enviable position of being able to call upon the scientific expertise within these worldclass institutions for its research and development requirements.

My team’s vision and immediate focus is as follows:

1. Expand the global commercialisation of Travelan.

2. Licence the development and commercialisation of our NASH product to a major pharmaceutical company; and

3. Commence human trials for the prevention of influenza virus infection.

Joe Baini.

KEY EVENTS: A ROAD MAP OF DEVELOPMENT

The table below sets out Immuron’s intended time table for the commercialization and development of its products. These are estimated and may change as a result of a number of reasons including circumstances outside of our control.

Program	Event	Timing
NASH	Pre-IND~~1~~meeting	H2 2011
	Begin recruiting for Phase2b trial	H2 2011
Influenza	Animaltrials	H2 2011
	Formulation of human delivery dose	H2 2011
	Humans trials: Phase1	H2 2011
Travelan commercialisation	Consolidate Australian market (Nycomed)	Ongoing
	US market (MEDA)	Order and deliver 1~~st~~batch H2 2011
	Negotiate other markets	Asia, Europe, Latin America and Middle East underway
Pre-clinical work	C. difficile mouse experimentation	Ongoing
	HIV microbicide antibody development	Ongoing
	Research in relation to chronic inflammatory diseases	Ongoing

1 IND stands for Investigational New Drug. In this context a Pre-IND meeting precedes the filing of an IND submission and is an opportunity for a company to discuss with the FDA its planned clinical trials.

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NASH: “THE EPIDEMIC OF THE 21[ST] CENTURY”

The development of our NASH product candidate is a high priority within the company as we prepare to engage with regulatory authorities.

The Company continues to prepare its regulatory submissions for the Food and Drug Administration (FDA) in the USA to gain approval to commence the Phase 2B clinical trial for the treatment of NASH. We anticipate commencing the trial in 2011, subject to FDA approval. This work is the progression of the positive Phase 1/2a results which were presented at the American Association for Study of Liver Diseases in Boston in November last year.

In view of the high safety profile of IMM 124E and the unmet medical need status of the NASH (see further below), the company is taking the approach that its NASH therapeutic

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candidate should and could be on the market in 3 to 4 years time - this is considered to be a very quick clinical time line. By adopting this approach, we are seeking to provide to patients an imminent medical solution that does not exist today. Assuming successful interaction with the FDA and success in generating clinical and other scientific data, Immuron faces the prospect of generating very significant revenue in a time frame that is considered very fast in the development of pharmaceuticals.

The next stage of the Company’s NASH product development process is to attend the already scheduled PreIND meeting with the FDA.

The process of interaction with the FDA before the trial starts is to ensure that the trial design is acceptable, focuses on the correct markers to measure, and incorporates all the criteria required for a dossier to be filed later as part of applying for official registration of the final product.

The process of trial development, assessment and approval will continue through H2 2011 with active recruiting planned to start in later this year. More specific information and aspects of the trial design will be communicated to shareholders as the process with the FDA continues to its conclusion over the coming months.

The Principal Investigator of this trial will be Professor Arun Sanyal of Commonwealth University, Virginia who, as the immediate past President of the American Association of Study of Liver Diseases, is an internationally recognised leader in clinical research into liver diseases. He is a world renowned expert in the study of treatments for NASH.

What is NASH?

• NASH is a chronic inflammatory disorder of the liver, also known as fatty liver disease and is considered to be one of the diseases of Metabolic Syndrome.

• It is associated with insulin resistance (type 2 diabetes), excessive amounts of triglycerides (hyperlipidemia), other fats inside liver cells (hepatic steatosis) and abnormal liver function.

• NASH is one of the most common liver diseases in the western world. It affects 5% of the lean population, 20% of the obese population and 50% of morbidly obese people.

• NASH can be severe and lead to cirrhosis, where the liver is permanently damaged and no longer able to function properly. Liver transplantation is the only option currently available for late stage NASH.

Why is NASH important to Immuron’s future?

• NASH is a large and unmet market with high growth potential, representing a specialised opportunity of blockbuster proportions.

• NASH has been targeted by many large drug companies in the past with little success. Immuron’s Phase 1/2a trial showed that IMM124E was affecting the course of the disease, not just the end liver damage.

• Hepatologists commonly see NASH as one the last frontiers in their practice. It is very difficult to treat: there are no currently approved drugs. Even so, the market is large with off-label drug usage being estimated at US$1.8 billion, and expected growth to US$3.5 billion by 2015.

• NASH ranks as one of the leading causes of cirrhosis in the USA, after hepatitis C and alcoholic liver disease. One in five patients who have NASH for more than 10 years advance to liver cirrhosis, and approximately 10% of NASH patients die due to liver-related problems.

• Due to the high prevalence of diabetes, obesity and hyperlipidemia worldwide, the incidence of NASH is likely to rise. It is estimated that 25 million Americans will be suffering NASH by 2025 with no currently approved treatment options.

• Immuron’s forthcoming trials seek to put a NASH product on track for later partnering and further development. The work needed to achieve this is complex but the end commercial benefits are likely to be good for the company.

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Immuron’s IMM 124-E for the treatment of NASH was recently featured on the Channel Seven news. A link to this broadcast can be found on the Immuron’s homepage: www.immuron.com

INFLUENZA: POTENTIAL TO REVOLUTIONISE PREVENTION & TREATMENT

Immuron’s influenza program

In an announcement to the ASX on 17 March we indicated that the results of the initial ferret trials were very effective in identifying the protection action of Immuron’s antibodies against infection by the H1N1 human virus.

Following the above positive results additional ferret trials have been approved by the Board for completion in H2 2011.During this period the company will also prepare for the first clinical trials in humans.

The product to be developed for use in trials could be developed as one of two formulations; either a nasal spray or as a lozenge formulation. The lozenge formulation will be suitable for use in the first human clinical trials. Hadassah Medical Center’s Ethics approval has already been granted for a Phase I human clinical trial, and the concurrent development of the lozenge formulation will streamline the remaining development time before entering clinical trials. Both oral and nasal formulations of Immuron’s specific antibody product are already protected by patent in Australia and are pending in other territories.

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The influenza market is characterised by preventative vaccines and a small number of anti-viral medications for treatment once the infection is established. Immuron’s influenza program has the potential to revolutionise the management of influenza prevention and treatment as the world’s first OTC (Over-the-counter) therapeutic. Immuron’s approach is unique because it is developing anti-influenza antibodies for oral delivery. This approach is different from the use of conventional vaccines. Based on data generated to date, these antibodies seem to provide good protection against the influenza infection.

Two mechanisms of action appear to be in play;

• 1) the use of the passive immune system, and

• 2) an increase in the body’s immune response against the virus through a cell-mediated immune response.

If these findings are sustained in our pending animal and clinical trials, it would represent a “world first” method of influenza prevention. This also opens the door for research to discover whether this approach could be used in other infectious diseases.

Another benefit of Immuron’s approach lies in the nature of its polyclonal antibodies which appear to be more effective than other approaches in preventing the spread of influenza associated with quickly evolving strains of the virus. This means that Immuron’s product could potentially be used for any strain of influenza, again representing a large commercial and sustainable opportunity. Immuron has already demonstrated its ability to generate large amounts of dairy-derived polyclonal influenza-specific antibodies, which to date have shown activity for both the prevention and treatment of influenza in animal disease models.

Apart from the benefit to individual patients this approach could benefit populations as well. An easily accessible, preventative therapy could be used to control infections in the face of epidemics, decreasing the spread of infection around the population as a whole.

Immuron believes that the development of the influenza product, IMM 255, can be expedited due to the safety profile associated with the company’s platform technology.

A significant advantage of IMM 255 is that it is expected to be suitable for use in children, who may be too young to receive conventional vaccinations, and in the elderly population who frequently do not respond well to vaccinations.

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Influenza – A Global Problem

In temperate climates, influenza outbreaks occur mainly in the winter season. Since the northern and southern hemispheres have winter at different times of the year, there are actually two different influenza seasons each year.

Typically, in a year's normal two influenza seasons (northern and southern hemispheres), there are between three and five million cases of severe illness and up to 500,000 deaths worldwide. Although the incidence of influenza can vary widely between years, between 30,000 and 50,000 deaths and more than 200,000 hospitalizations are directly associated with influenza every year in the United States. Globally the death toll is 20-30 times higher than the deaths in the US.

The World Bank has estimated that an influenza pandemic could incur costs of USD $800 billion per year or more which is equivalent to 2% of the global gross domestic product (GDP).

COMMERCIALIZATION UPDATE Travelan Expansion

Travelan Expansion

Nycomed Pty Ltd, the distributor of Travelan in Australia, has forecast an increase of 50% in sales for the 2011 calendar year compared to sales in 2010 following its successful relaunch into the Australian market. The early success achieved by Nycomed in expanding the Australian market gives us great confidence in its revenue potential and our strategy to commercialise the product globally. Nycomed Australia is very active in supporting the product with approximately 40 of their sales team supporting its sale to pharmacies, doctors and hospitals.

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The partnership with Nycomed Australia has developed into a close one with much interaction taking place concerning the development of sales materials and product training. Extensions of the Travelan product concept are currently under development with Nycomed.

Our USA distribution partner (MEDA Pharmaceuticals) is planning to launch Travelan later this year initially through e-commerce and selected travel clinics. This will be followed by a ramp up of marketing into major pharmacies in 2012.

Immuron is in advanced discussions with a number of other parties regarding marketing and distribution rights for Travelan in other large markets. We anticipate that the first of these new partnerships will see exports from Australia to significant markets in 2012, with further markets coming on stream in 2013.

EV71

Immuron recently concluded a licensing deal with Melbourne-based NP Health for the exclusive supply of Immuron’s enterovirus 71 (EV71) polyclonal antibodies for topical and other external applications. EV71 is notable for its role in epidemics of severe neurological diseases in children and hand, foot and mouth disease (HFMD). The agreement with NP Health allows for commercialisation of the EV71 technology globally as a component of an antibacterial hand cream. This agreement allows Immuron to generate revenue from a product that is currently not a focus for Immuron.

PRE-CLINICAL WORK

HIV Update

Work continues with the University of Melbourne on Immuron’s HIV microbicide. Recent research studies, presented at the 18th Conference on Retroviruses and Opportunistic Infections in Boston, demonstrate that Immuron’s antibody preparations have powerful and broad neutralising efficacy against many clades (strains) of HIV. The abstract can be found at www.retroconference.org/2011/Abstracts/41538.htm

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Immuron's antibodies specifically bind to the CD4 binding site used by HIV viruses and enter cells in the body. The HIV virus CD4 binding site is the portion of the HIV virus that attaches to a host's white blood cells, thereby enabling the HIV virus to enter a host's white blood cells. By specifically binding to that site, Immuron's antibodies prevent the HIV virus from entering the host's white blood cells. The CD4 site, unlike most HIV antigens, is preserved across all HIV strains and therefore is an important target for protection against HIV infection.

These results represent important new findings that partly explain the remarkably broad neutralisation efficacy of Immuron's antibodies. The findings indicate Immuron's antibodies bind and neutralise a significant number of strains of HIV infections tested to date.

The concept of this early stage research is to develop a safe and effective microbicide for prevention of transmission of HIV during intercourse. The next phase of development will include animal models of prevention of HIV transmission. There is interest from parties in out-licensing this technology even in early stage.

Clostridium difficile Update

Immuron’s product for Clostridium difficile, which is a life threatening form of enteritis commonly acquired in hospitals, continues to progress in conjunction with Monash University. This early stage project has increased in profile since the discovery of the high-virulence strain of C. difficile in Australia last year, making it easier for us to work up antibody sets for testing.

PUBLICATIONS

Immuron has recently published several papers at conferences and in peer reviewed journals. These are a reflection of the ongoing research being dedicated to the Company’s key products and to an increase in the commercial use of the findings of the company. The full publications are available electronically on the recently updated website: www.immuron.com

IMMURON’S NEWSLETTER TO GO ELECTRONIC

In this age of electronic mail, Immuron’s Board and Management have decided that all future Shareholder Newsletters will be forwarded to shareholders by electronic mail.

There are several reasons for this decision, including shareholder feedback, cost saving and the efficient use of resources.

All future newsletters will be published on our website, www.immuron.com and emailed to shareholders that have registered their email address with our share registrar, Computershare Limited. If you have not already elected to receive all shareholder communications electronically, and wish to do so, please go online to - https://www au.computershare.com/investor and update your details under the “Update my Details” tag, communications option, and add in your current email address. Please note that in order to do this you will need to have your Security Holder Reference Number (SRN) which commences with the letter “I”, or your Holder Identification Number (HIN) which begins with the letter “X”. Either of these numbers appears on your holding certificate.

If you need to contact Computershare in respect of recording your email address they can be contacted on 1300 850 505.

CONTACT US We welcome your feedback on this newsletter and would like to encourage you to let us know what you think and ask any further questions. Please email us at info@immuron.com with your suggestions and questions.

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Immuron Limited

Level 1, 39 Leveson Street North Melbourne 6 VIC 3051 Tel: +61 (0)3 8637 1107 www.immuron.com