Immuron Ltd — Regulatory Filings 2003

Aug 20, 2003

August 21st 2003

Company Announcement Office Australian Stock Exchange Ltd 4^th Floor, 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam

Please find herewith Anadis Newsletter for distribution to the market immediately.

Yours Sincerely,

Anadis Limited C. Graham Managing Director & CEO

ANADIS forges strategic business alliance with Tatura Milk Industries

Tatura Milk Industries (TMI) is a large milk processor based in the Goulburn Valley in Victoria. TMI, whose factory is shown at right, processes about half a billion litres of milk each year from more than 400 dairy farms into products such as skim milk powders, high fat cheese and butter.

TMI has a philosophy of being innovative to keep ahead of the big dairy commodity producers. Because of this philosophy TMI can regularly pay the best returns to its loval producer base of any dairy processor in Australia.

To keep ahead of the game TMI is positioning itself to become a specialist

producer of high value dairy derived products. TMI is looking to Anadis to give it the edge.

What is the agreement between the companies?

• TMI provides Anadis with access to its supplier base and access to large scale production systems. This will be needed as programs. such as Travelan and EV71 hit the field.

• TMI is resourcing the collection and processing of a pilot run of high grade bovine colostrum powder in Spring 2003. This pilot

ANADIS and TMI have revolutionised the collection of high value, bigh quality colostrum

batch involves 4000 cattle in normal and hyperimmune programs.

$\bullet$ TMI provides a conduit to a large customer base.

· Anadis will act with TMI's markets in mind to

identify and develop new product opportunities. • Anadis will act as a link

to the scientific community and funding bodies as TMI strengthens its presence in high technology products.

· Anadis will add its intellectual property development expertise to protect jointly developed products.

• Anadis and TMI are sharing profits from these new products.

So what is progress so far?

The first joint project is commercial scale collection and processing of first milking colostrum (plain and hyperimmune).

Working together the scientific and field staff of the companies and with valuable input from TMI farmers, the group have revolutionised the means of collecting high value, high quality colostrum.

The Tatura/Anadis Colostrum Harvesting System (TACHS) has altered the economics of small volume specialty products collection substantially.

For the first time the top quality colostrum can be easily collected by farmers and frozen within hours of production.

The collection system is based on a module that plugs into a normal milking machine. The colostrum is collected into a sterile bag which is then frozen on farm ready for pick up.

What are the advantages?

Ease of use

The current practices of the farmers are not substantially changed by using this system. The module and the system has been developed with farmers in mind and is easy to tailor to individual farm practices.

Only the first milking of colostrum is taken so there is plenty left to feed to calves.

Economics

Colostrum can be collected from all stages of the calving period.

Systems that relied on milk vats could only operate at peak calving times as outside this time there was not enough product to make tanker pick-up viable. Therefore a lower animals could not be collected from.

This is not an issue for the new system. This is particularly important for hyperimmune programs - 1999

Continued on page 3 $\mathcal{L}_{\text{eff}}$

FOR THE STATE ANADIS Encerovirus-71 procude development

Research funding from Taiwan has been received and a manufacturing agreement has already been agreed for a major nutraceutical based on antibodies against Enterovirus 71. Enterovirus 71 causes regular outbreaks of polio-like disease in children in South East Asia. The successful ~ development of this colostrum based antibody product is important for the. population of Taiwan and for Anadis. ta (Tako

Anadis is in the pleasant. but unusual position that bids for distribution .
agreements are already. being negotiated before the product is even finished.

The product development is a complex task but is tracking well. Early this year scientists from the Developmental Centre of Biotechnology, Taiwan came to Australia to plan the project in the two countries.

Dr Young Sun Lin and Dr lim Shen spent a gruelling week of planning in Melbourne and Tanira with Anadis scientists

The teams in the twocountnes are in weekly contact to co-ordinate development work.

AVADIS is developing a nutraceutical based on antibodies against Enterovirus 71, which causes frequent outbreaks of a fatal polio-like disease in children in Southeast Asia

the various aspects of the

The project is designed to operate several lines of development in parallel 10.011

development

So where

tine.

are we'

To make

in cattle

antibodies

we need a

vaccine to:

give them.

a virus is

one thing

the right

but growing

Crowing

virus by a method that can be successfully scaled up to

GMP manufacture and then can be registered as suitable for use in Australian cattle is quite another. The vaccine production work is designed. to do this.

We have now learnt to grow, concentrate and quantify the virus and are now working on methods to kill and formulate the Enterovirus 71 virus in a way that is compatible with commercial production of cattle vaccine.

Our first prototype vaccines will be going into .
rabbits in Melbourne next .
month. The next step is .
cattle.

Several methods of presentation to shield the antibody within a final product have been investigated and we are awaiting information from the final Taiwanese. distributors on what the market wants. Efficacy assays have

been developed in Taiwan. Anadis scientists have also developed other in vivo tests as an additional system. Quick production line

assays for quality control are in the pipeline and must be ready for large scale production.

Collection systems are under development this season in cooperation with Tatura Milk Industries and their famiers

Although this season we are collecting several tonnes of plain colostrum and hyperimmune colostrum, we see this as a pilot. program for the futurewhen Taiwanese projections require significant quantities of product from hyperimmunised cattle.

ANADIS UMITED ACTIONS

4 Capital Link Drive Campbellield WASHA KUSTANA SOM Phone (61+3) 9358 6388 Fax (61+3) 9358 6399 www.aracis.com.au

Australian Government supports SI.5 million ANADIS Bioshield and gastritis research

Anadis has won two .
Australian Government research grants from AusIndustry, the Australian Government's innovation support agency, with total project support of more than $$775,000.$ ...

The true value of these grants goes beyond the dollar investment. The process of funding requires applicants to submit a detailed business proposal. not merely a research grant application,

There is extensive discipline involved in being considered for an

. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .

Ausindustry grant, in terms of scientific rigour and strategies to address commercialisation prospects and plans. That means AusIndustry grants are not simply given out. Selection is a highly competitive process. with fewer than a thirdof all applications being successful. Over the past year the Anadis science team has applied for two Ausindustry grants . . . and has won both grants. The first is an Ausfndustry Biotechnology Innovation

Grant' to investigate the application of Anadis's Bioshield technologies in protecting delicate beneficial bacteria and proteins in hostile environments. A second grant comes from the Auslndustry 'Start' program. This grant aims to commercialise an antibodybased nutraceutical product. against Helicobacter pylori (the cause of gastric ulcers and gastric cancers). We firmly believe the granting system is particularly important to the solid development of

the biotechnology industry, since it requires the demonstration of business acumen — not just good : scientific ideas. The Anadis team has found much can be learned from the months of thought. discussion and planning involved in writing a submission. The end bonns is that

the budget of the research projects are effectively doubled by the top-up from Australian Government innovation funds.

ANADIS forges strategic business alliance with Tatura Milk Industries

from page 1

where the animals are vaccinated with special vaccines.

The system works economically for small farms (150 cows) as well as large farms (600 cows) allowing more of the producer base to take part. As each bag is sealed and frozen an expensive milk

tanker is not required for pick-up - a refrigerated van will suffice so there is no pick-up fee charged.

Patented collection technology is at the heart of the TACHS advantage

A provisional patent has been lodged to protect the harvesting system from use by other parties without a licence.

Quality

Instead of sitting in a chilled vat for up to several days the product is frozen within hours on farm and remains

stable until processing. The bioactive molecules are preserved. Each cow's product is

separate and can be tracked back by an individual identifying number, One "bad apple" no longer contaminates a whole vat of product.

An integrated sampling pouch is part of the system so quality testing can be carried out before bulking of product at the factory. Good quality product can be stock piled frozen and processed when convenient so best use can be made of TMI's large scale manufacturing facilities. Product that is not suitable for human consumption can be returned to the farm for use on calves.

The bottom line

The savings in collection and processing costs can be handed back to the farmer. Set up costs are small and we expect returns to the farmer to be considerable.

The system allows us to clearly differentiate our. product from other high volume colostrum products $-$ this means we command a significant premium price. for the product. We are aiming to make this profitable for both us and the farmers so we can collect highest quality colostrum year after year.

The TACHS system can also be used to collect other high value milk fractions from selected cows.

One thing we have learnt is that a good idea is just a good idea until it is translated into action and becomes a new product. Anadis not just about cute science $-$ it is about taking its technologies to make production profitable. Sometimes a high tech vaccine may be needed to. transform the way we do things $-$ but sometimes it will be intelligent design of

a bucket.

www.anadis.com.au

Anadis Profile

Roman Zwolenski Director (Non Executive)

Roman Zwolenski joined the Anadis Board in September last year and brings with him more than 30 years' business experience in the biomedical/biotechnology commercial sector. After completing a Science

degree (Biochemistry & Microbiology majors) from the University of New South Wales, Roman joined the Australian subsidiary of an American scientific instruments company. His job was to sell products to hospitals

and research institutes throughout Australia. He says, "I

immediately knew that the commercial side of science was where I^* wanted to be." Over the following 16 vears Roman's career with multinational. healthcare . corporations moved him. his wife and their three

boys from stints living in Sydney, Melbourne, London and in Basel, Switzerland, In Basel he was head of global marketing for a division of Hoffman-La

Roche.

Upon returning home to Australia in 1001. Roman continued to work in the Biomedical industry as .
·a consultant to several Australian start-ups and for six years as managing

director and Chief Executive Officer of Oueensland based AGEN Limited.

According to Roman, "Working for multinationals was good training and of course you travel in style but that does not have the sheer buzz and satisfaction of being part of taking Australian scientific ingenuity into products for world markets." Roman has been a Fellow. of the institute of Company Directors since 1995. As well as being a member of the Board ~ of Anadis, he is a nonexecutive Director of several other Australian Biotech companies. All and the companies. $\backsim$ He and his wife live $\backsim$ in Newport, Sydney, and sailing beyond Pittwater is one of their dreams.

Antibodies are proteins. that fight off diseasesespecially intections diseases by gluing themselves to invading organisms, activating mechanisms that rid the body of the disease agents.

Antibodies are produced when the body is exposed. to foreign substances called antigens, often found on viruses and bacterfa Antibodies belong to a specialised group of bioactive proteins called inmunoglobulins (lgs) and are present in serum and in fluids such as milk . . . and colostrum

The most prevalent class of immunoglobulm in all species of animals is let. lgGs are shaped like a capital Y, with the active binding sites at the ends of the top arms of the Y: the body learns' how to recognise antigens and produces antibodies that

fit precisely that antigenstopping it binding to cell walls and thus turning off its ability to produce intection.

Because the immune system remembers the distinctive shape of an antigen it has encountered. in the past, it's able to produce large amounts of antibodies when it sees the same antigen again. The response will decrease over time - but If the body is challenged again, the immune system responds even more strongly, in a process called hyperimmunisation. Antibodies can be harvested and used

in passive immunity treatments. This is the basis of Anadis's first hyperminune product against Traveller's Diarrhoea. How does Anadis harvest antibodies? By using bovine (cows') colostrum.

a precursor of milk that contains very high levels of natural antibodies.

During the development of the embryo, the unborn animal's immune system is not sufficiently developed to ward off potentially harmful microbes.

Fortunately the foetus. is protected from harmful environmental factors because harmful agents normally cannot pass the placental barrier. At birth, the newborn animal lacks antibodies and is susceptible to infection from invading organisms.

To affectate this potentially lethal situation a fascinating phenomenon known as passive immunisation has evolved.

Maternal blood contains a full complement of antibodies to the antigens. to which the mother has been exposed duting her lifetime. A human mother is able to passively intiminise. her voung in the uterus. by passing antibodies. through the placenta, Inanimals where maternal antibodies do not pass the placental barrier (cattle) pigs and sheep) the young are passively immunised immediately after birth by way of colostrum; maternal antibodies present in the colostrum are absorbed directly through the gut in the first few days after birth. Cows are an ideal source.

of natural antibodies, and the convenience of bovine colostrum makes cows an ideal source of natural antibodies.

The composition of hovine colostrum changes quickly to that of milk. The very first frilking contains 40 per cent of all colostral IgG - which is why Anadis targets just the first uniking. All the rest goes to the calves!