Immuron Ltd — Management Reports 2012

Oct 17, 2012

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COMPANY UPDATE

Throughout 2012 we have made significant strides in our commercialisation and product development strategy. Following a number of significant agreements that were announced during the year, we approach the launch of Travelan in additional countries while experiencing very strong sales growth in Australia. Based on discussions and regulatory processes currently underway, we believe that sales will increase exponentially.

Our NASH clinical development program continues to be a focus in light of our discussions with multinational pharmaceutical companies, the encouraging results that have been generated to date and the significant market potential presented by IMM-124E.

The appointment of new Directors reflects our strategy to ensure we have world class expertise in both biotechnology and global commercialisation across the company. Our CEO Joe Baini, drawing on his pharmaceutical industry expertise and networks, has aligned Immuron’s regulatory, production, quality assurance and scientific expertise with our product development, export and increasing production needs. With our strong business development, sales and licensing focus, the Immuron team now has the appropriate people to deliver on the company’s strategic goals.

Travelan – Expanded Territories

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Testimonial 5[th] October 2012

Hi, I have just returned from a trip to China. One evening, our group of 32 were taken to a Peking duck dinner. Of the 32, 24 became ill and 4 had to go to hospital. I had no illness at all. Thank you for a wonderful product, which I will recommend to any fellow travellers. I am sure that the other people on my China tour will use Travelan in future! A Smith (NSW)

One of Immuron’s key strategies is the globalisation of Travelan. During the last 12 months Immuron successfully executed 4 Travelan commercialisation agreements for several territories. We are very proud of this achievement, particularly given the low number of new biotechnology deals completed by Australian companies over the last decade. As our new partners prepare to launch Travelan, starting with Canada in the first quarter of 2013, our confidence continues to grow that Immuron will generate significant revenues commencing in the short to mid-term.

Paladin Labs: Travelan Partner for Canada, Latin America and Sub-Saharan Africa. Paladin is a leading specialty pharmaceutical company with a strong presence in the OTC market. In May 2012, Paladin successfully submitted Travelan for regulatory approval with Health Canada. Approval is anticipated towards the end of this calendar year, with launch planned for the end of the first quarter 2013. South Africa also remains on track for launch in late 2013.

Nycomed: Travelan Partner for Australia and New Zealand. Following Nycomed’s recent acquisition by Takeda, a global pharmaceutical company based in Japan, the A/NZ marketing campaign has been further enhanced. The key promotional message is “ Stop it before it starts ” and “ Don’t let diarrhea ruin your trip ”. Both messages highlight the most distinguishing feature of Travelan – that it is the only preventative available. As brand awareness builds, there is increasing recognition and usage by consumers travelling to high risk destinations such as the Middle East, Bali, India, Central America and South America. Consumers are being educated to consider prevention as well as treatment. The marketing campaign has resulted in very positive growth in sales, and a platform for Nycomed Takeda to build on.

IntegraMed Asia: Travelan Partner for Thailand, Hong Kong, Cambodia, Vietnam and Laos. With traveller’s diarrhoea endemic in these heavily visited destinations, IntegraMed Asia provides an additional valuable step in Immuron’s strategy to build global sales. The process for regulatory approval has commenced and it is anticipated that approval could be received by the end of 2012, with launch in the first quarter 2013.

Ziwell Medial: Travelan Partner for Singapore, Malaysia and Brunei. Traveller’s diarrhoea is endemic in these countries, and with Ziwell’s established distribution network across these territories, we are confident that they will build a strong presence for Travelan.

Harvest & Health: Travelan Partner for China and Taiwan. This region collectively receives more than 60 million visitors annually, representing the 3[rd] largest international travellers’ destination in the world. Our agreement includes a one-time milestone payment payable to Immuron on launch of the product in each country – launch is anticipated to be in late 2013 in Taiwan following the mandatory registration process with the local regulatory authorities. Analysis is underway to confirm the timing for registration and launch in China.

Revenue in Australia has increased in volume by more than 100% over the past year. The commercial agreements for the additional territories are expected to significantly increase the company’s current revenue, commencing in 2013. Immuron continues to engage in discussions with companies in the United States, Europe and Japan and is in late stage negotiations in some territories.

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Product Development

NASH/FATTY LIVER: IMM-124E Program

Designed to address the massive unmet medical need that impacts approx 33% of adults in the USA (~60M people) with fatty liver, and the estimated 25M Americans that are expected to suffer from NASH by 2025.

Following the FDA approval of an IND submission for the Phase IIb clinical trial (announced in January this year), Immuron has been engaged in discussions and gained genuine interest from a number of multinational companies. The consistent message we have received is that the results look very promising especially given Immuron’s unique mechanism of action, and the alluring high safety profile. The common theme has been to request for additional data before making a substantial financial commitment. Immuron is currently looking at options for funding a small additional Phase II clinical trial to supplement the information generated to date.

Influenza: IMM-255 Program with the University of Melbourne

In August Immuron announced that its IMM-255 influenza candidate was being tested against the current California 7 influenza strain, popularly known as Swine Flu. Previous studies, using other influenza strains have shown encouraging results towards developing a product that not only treats, but also potentially prevents influenza. Results from the new study are expected towards the end of 2012, and if positive, will guide the design of the first human trial, and strengthen our commercial prospects in the global influenza markets.

Clostridium difficile: IMM-529 Program with Monash University

Clostridium difficile (C.diff) is a bacteria normally found in people’s intestines. Under certain circumstances C.diff can multiply to levels at which the toxins it produces cause diarrhoea and very severe, and in some cases life threatening inflammation of the bowel. C. diff infection accounts for considerable increases in the length of hospital stays and more than US$3.2 billion in health care costs each year in the US.

We recently announced that IMM-529 had demonstrated positive pre-clinical results. Following a lethal dose of C.diff, mice that received IMM-529 were fully able to survive infection (100%), indicating that our product provided protection from C.diff-induced toxins. This very exciting result indicates the potential to develop an effective product for a large unmet need. Studies are now being initiated to validate the first results.

OUR NON-EXECUTIVE DIRECTORS

Dr Roger Aston, Chairman

Dr Elane Zelcer, Deputy Chairman

Elane is an experienced and effective business leader in the biotechnology sector. She has CEO and board experience in start-up and multinational biotech, medical device & diagnostics, and agricultural companies and research organisations. She has successfully driven organisations with the need for change or start-up strategies. Elane is a Case Manager with the Federal Government’s Commercialisation Australia program.

Roger is an experienced director and chair with valuable knowledge and strong networks in the pharmaceutical and biotech industries. With his background in product development, manufacturing, FDA and EU product registration, clinical trials, fund raising and commercialisation, he brings a wealth of experience that will assist Immuron to deliver on its product development strategies.

Dr Stewart Washer

Mr Daniel Pollock

Stewart has 20+ years senior executive and Board experience in medical device, drug development and agrifood companies, including negotiating successful commercial partnerships and license agreements. He is Chairman of iSonea Limited, and Investment Director with Octa Phillip Bioscience Managers who manage Australian and UK life-science funds. His experience in this sector is particularly valuable at this stage of the company’s growth.

Daniel is an internationally experienced lawyer with significant commercial expertise in new market entries into overseas markets, distribution agreements and corporate start-ups. His broad experience with local and global businesses, a long time involvement with international public corporations and corporate governance, and his strong understanding of rapidly growing technology based businesses, will contribute to Immuron’s future growth.

Immuron Limited

Level 1, 18 Kavanagh Street Southbank VIC 3006

Tel: +61 (0)3 8637 1107 www.immuron.com