Immuron Ltd — Regulatory Filings 2009

Apr 19, 2009

IMMUr@N

20 March 2009

The Manager The Company Announcement Office Australian Stock Exchange Limited Sydney NSW

Dear Sir

Agreement with Hadasit Medical Research Services & Development Limited (Hadasit)

Attached is an announcement in respect of an agreement for the acquisition of a novel Oral Immune Modulation technology from Hadasit.

We also attach a report prepared by Bicomm^{2 for} the Company which summarizes the scientific and economic foundation of the intellectual property acquired.

Yours faithfully

Graeme Stevens Company Secretary Immuron Limited

ABN 80 063 114 045 AUSTRALIA Level 1, 39 Leveson Street North Melbourne VIC 3051 Tel (61) 3 9018 4880 Fax (61) 3 9018 4881

USA The Empire State Building 350 Fifth Avenue 59th Floor New York, N.Y. 10118 Tel 646 402 5289 Fax 646 390 3238

www.immuron.com www.travelan.com

IMMUr@N

Immuron To Acquire Intellectual Property from Hadassah Medical Center and Collaborate in Clinical Trials

NEW YORK and MELBOURNE, April 17, 2009. Immuron, a biopharmaceutical company, today announced an agreement to acquire a novel Oral Immune Modulation technology from Hadasit, the commercialization arm of Hadassah Medical Center in Israel.

The combination of oral immune modulation with Immuron's existing oral protein and antibody technology could yield a convenient, all- natural, side effect free approach to address serious diseases which have multi-billion dollars markets, including Metabolic Syndrome, Hepatitis C and Type II Diabetes.

Hadassah Medical Center scientists have demonstrated that their oral immune modulation approach, used in combination with Immuron's own dairy derived antibodies and other proteins, can directly affect the activity level of regulatory T cells, a type of immune cell known to have profound effects in controlling the inflammation in many diseases. This novel approach has shown positive effects in several validated animal models of human disease, including type II diabetes and metabolic syndrome.

Immuron will focus its initial clinical development effort with this platform technology on three major diseases having inadequate medical therapy now: Metabolic Syndrome, chronic Hepatitis C (HCV) and Liver Cancer (hepatoma). These conditions represent major pharmaceutical market targets in industrial and developing countries, and can have severe consequences for patients.

Immuron intends to initiate clinical trials for metabolic syndrome and HCV shortly after the acquisition. Given that the products are intended to be marketed as a Medical Food in the United States (and under similar classifications in other countries), it is expected that Immuron can introduce commercial products for some indications shortly after such trials, potentially within 2-3 years.

The new platform technology will also provide an additional layer of patent protection to strengthen the existing Immuron pipeline products (which target Traveller's Diarrhea, HIV/AIDS immune depletion, Mucositis and Influenza).

The Metabolic Syndrome is defined as a combination of abdominal obesity, hyperlipidemia and insulin resistance. Insulin resistance is associated with a constellation of common clinical conditions, including type II diabetes, obesity, hypertension, and hypertriglyceridemia. It is estimated that up to 25% of the western population have manifestations of this disorder. An analysis by Medco Heath solutions claimed that the average yearly US pharmacy cost of treating adult patients with metabolic syndrome exceeds \$4,000 - more than four times the average annual drug spend for all other patients. With more than 45M Americans affected by metabolic syndrome the target market is large.

Non-alcoholic steatohepatitis (NASH) is one stage on the spectrum of non-alcoholic fatty liver disease. It is estimated that 8.6 million obese adult Americans may have NASH and about 30.1 million may have the milder steatosis. No effective medical therapy is currently available for patients with non-alcoholic fatty liver disease. There is considerable overlap between NASH and metabolic syndrome at the immunological level allowing Immuron research to address both clinical targets.

Hepatitis C virus (HCV) infection affects about 2-3% of the world's population (170m people) and in the USA alone between 3-4m people have chronic HCV infection. Patients with chronic HCV infection are at high risk for developing cirrhosis of the liver, end stage liver disease, or cancer. There are emerging immunological linkages between Hepatitis C and type II diabetes.

In addition to the acquired Intellectual Property, Hadasit will provide discounted clinical and lab services to Immuron, providing Immuron with efficiencies in its cost structure for human clinical trials. In return, Hadasit shall be issued 19,99% of Immuron's equity at the time of the approval of the transaction by Immuron's shareholders, as well as royalty on selected Immuron products. A special shareholders meeting will be called during the month of May to approve this share allocation.

As part of its due diligence, Immuron commissioned Biocomm Squared (Biocomm²), to assess the scientific and economic foundation of Hadasit's Intellectual Property (IP). The full report has been lodged at ASX as an attachment to this announcement and is available on the Immuron web site http://www.immuron.com

Professor Yaron Ilan from Hadassah Medical Center, a recognized world expert on oral immune modulation, will become the Chief Medical Officer of Immuron. Prof. Ilan will continue to serve simultaneously as the Director of the Department of Medicine A and the Deputy Dean of the Hebrew University-Hadassah Faculty of Medicine.

Dr. Zeil Rosenberg, CEO of Immuron, noted " This transaction marks a turning point for Immuron in its quest to lay a firm scientific foundation for its own technology to address large unmet medical needs"

Dr. Rafi Hofstein, CEO of Hadasit noted " Hadasit is happy that its discoveries can move so quickly into commercial partnership. Our world class clinical experts are ready and able to get the high quality clinical data needed to bring this biotechnology innovation to patients."

Dr. Oren Fuerst, Head of Business Development at Immuron noted "The Hadassit technology provides Immuron with the ability to address several of the largest markets in the healthcare sector- Metabolic Syndrome, Diabetes, HCV and HIV. This transaction can generate large value for shareholders and helps position the company for profitable commercial partnerships with large pharmaceutical and consumer health companies."

About Immuron

Immuron Limited (www.immuron.com) (IMC.AX; OTCQX: IMROY) is a biopharmaceutical company focused on oral immunotherapy using dairy-derived health products. Immuron's antigen-primed antibody manufacturing technology enables it to rapidly develop polyclonal antibody and other protein-based oral therapies to a range of important infectious and immune- mediated diseases, including Metabolic syndrome, Influenza, cancer therapy-related GI tract Mucositis, and HIV/AIDS related immune activation.

About Hadasit

Hadasit (www.hadasit.co.il), the Technology Transfer Company of Hadassah Medical Organization (HMO) in Jerusalem, Israel, promotes and commercializes HMO's continuously generated intellectual property (IP) and R&D capabilities. IP generated by HMO has already gained global recognition due to Hadasit's successful enterprising of Hadassah's biomedical technology, including novel therapeutics, diagnostics and devices.

$\widehat{\mathsf{B}}$ iocomm²

Hadassah Immune Response Technology- (HIRT)

Prepared by Biocomm² March 2009

Disclaimer

This report was prepared for Immuron under Biocomm² standard terms and conditions, and is not to be relied upon by any other party.

Introduction - commission and purpose

Immuron has requested Biocomm Squared (Biocomm²) to summarize the scientific and economic foundation of the Intellectual Property (IP) to be acquired from Hadasit by Immuron (hereafter-HIRT), as specified in a US provisional Patent (23477/US/07 Prov), entitled "Immunomodulating compositions for the treatment of immune-mediated disorders" and the PCT application (23477-WO-07), and further described in a draft scientific manuscript entitled "Promotion of adipose tissue and stromal Vasculaturederived FoxP3 regulatory cells and decreased TH17 cells by oral administration of antigen-specific antibodies". Discussions with Immuron scientists and management, company presentations, and the website, www.immuron.com, provided additional information for this summary. The focus of this document is on the main 2 first applications of the IP, namely in Metabolic Syndrome and a subset of patients affected by Nonalcoholic steatohepatitis (NASH), as well as Hepatitis C virus (HCV) infection.

Biocomm² was requested to outline the current and pipeline therapies for these diseases and to summarize the potential advantages and economic potential of the IP against these existing therapies for these indications.

Biocomm² is a life science consulting business based in Melbourne, Australia (www.biocommsquared.com.au). Its principals have extensive scientific and commercial experience across many therapeutic areas, including the immune and inflammatory diseases.

Short summary

Immuron can make new medicines from the first milk (colostrum) produced by cows, for the treatment of several important chronic diseases. The active medicine is purified from the colostrum in a simple process and can be made into a tablet for oral administration. Unlike many classical drugs, Immuron's treatments should be considered to be natural products and benefit from an established clinical record and safety profile.

Hadasit has devised methods that allow Immuron to target specific diseases by vaccinating cows with materials that are associated with the diseases. Hadasit

has shown that its HIRT technology when applied to Immuron's existing technologies can affect the level of activity of T regulatory cells, a type of immune cell that can have profound effects in controlling the level of inflammation in many diseases. By modulating these regulatory T cells, Hadasit has shown positive effects in several animal models of human disease.

While the HIRT technology can have many applications, Immuron has focussed on two major diseases for its initial clinical targets; metabolic syndrome/NASH and HCV. These are both very common in the major pharmaceutical markets, as well as in emerging economies, and can have severe consequences for patients. Immuron intends to enter clinical trials for both metabolic syndrome/ NASH following the acquisition, as well as to conclude animal studies in HCV, to be followed by a clinical study. Given that the products are intended to be marketed as medical food, it is expected that Immuron can introduce commercial products for both indications shortly after such trials, potentially within 2-3 years.

According to the FDA; "A medical food is prescribed by a physician when a patient has special nutrient needs in order to manage a disease or health condition, and the patient is under the physician's ongoing care. The label must clearly state that the product is intended to be used to manage a specific medical disorder or condition. An example of a medical food is a food for use by persons with phenylketonuria, i.e., foods formulated to be free of the amino acid phenylalanine. Medical foods are not meant to be used by the general public and may not be available in stores or supermarkets. Medical foods are not those foods included within a healthy diet intended to decrease the risk of disease, such as reduced-fat foods or low-sodium foods, nor are they weight loss products."

HCV: HCV infection causes hepatitis cirrhosis and liver cancer. 3-4m people, or 2% of the population in most western world countries, are infected with HCV.

The Metabolic Syndrome: is defined as a combination of abdominal obesity, hyperlipidemia and Insulin resistance. Insulin resistance is associated with a constellation of common clinical conditions, including type 2 diabetes, obesity, hypertension, and hypertriglyceridemia. Together, such conditions (which have insulin resistance as their common denominator) are considered to represent Syndrome X. Several studies of patients with Non-alcoholic Fatty Liver Disease (NAFLD), as diagnosed by radiological methods, have documented the association with obesity, diabetes, and the presence of high insulin levels. It is therefore generally accepted that NAFLD represents an extension of the clinical spectrum of Syndrome X. It is estimated that up to 25% of the western population have manifestations of this disorder.

Non-alcoholic steatohepatitis (NASH) is one stage on the spectrum of nonalcoholic fatty liver disease that ranges from simple steatosis (fatty liver) to steatohepatitis, advanced fibrosis, and end-stage cirrhosis. NASH affects about 3 percent of the lean population (those weighing less than 110 percent of their ideal body weight), 19 percent of the obese population, and almost half of morbidly obese people. It is estimated that 8.6 million obese adult Americans may have NASH and about 30.1 million may have the milder steatosis. NASH has the potential to progress to fibrosis, and cirrhosis. These patients are also at high risk for the development of live cancer. No effective medical therapy is currently available for patients with non-alcoholic fatty liver disease.

According to the CDC, the prevalence of obesity in the US, in adults 20 years and older, increased about 1% per year over the period 1997 to 2002. Type 2 diabetes affects 9% of the western world population. Diabetes is increasing at a faster rate. It is reasonable to assume a 1% increase in total market potential over the next 10 years.

Current treatments can be costly, not uniformly effective, are often given as injections and can have significant side effects, leaving a significant market opportunity for new safe and effective oral products.

Other Applications: It has recently been shown that chronic inflammation is a key part of the underlying pathology of both metabolic syndrome and HCV, and this provides a strong rationale for treatment with Immuron's products. Hadasit had shown that HIRT can correct many of the metabolic problems in diabetic animals, can reduce the liver pathology in models of liver inflammation and may reduce tumour size in models of liver cancer.

From a scientific and technical point of view, Immuron would appear to have a very good case to advance HIRT into clinical testing and commercialization. From a commercial perspective it has chosen disease endpoints that are both common and with severe consequences. The market is already large, in both indications, for drugs and therapies that have limited efficacy and there is still a significant unmet medical need. If it is successful in protecting its intellectual property and clinical trials show safety and efficacy similar to those already seen in animals, Immuron should be able to develop new medicines that will find clinical and commercial utility in the treatment of these major diseases.

The HIRT also has potential to be used in other very common disorders in which the immune system plays a role.

• Cancer: Liver; colon; prostate; melanoma
• Immune mediated diseases: IBD; Multiple Sclerosis; SLE; Asthma; Arthritis:
• Infectious diseases: HBV; HIV; Influenza; C. Diff. Influenza; E. Coli; Rotavirus

The Technology and its Scientific Foundations

The HIRT technology Immuron is acquiring relates to immunomodulatory compositions comprising mammalian colostrum-derived immunoglobulin preparation and optionally further colostrums, milk or milk product component/s for treating immune-related disorders.

Combining the pre-existing Immuron technology with HIRT takes advantage of several important biological processes and discoveries:

$\bullet$ The immune modulating properties of biologically active mediators in colostrum

• $\bullet$ The widespread consumption of milk and milk products by people worldwide
• $\bullet$ The ability to immunize cows to secrete specific antibodies in the colostrum
• Induction of increased T regulatory cells following oral administration of colostrum targeted to disease associated tissues via the specific antibodies that are in the colostrum
• The ability of T regulatory cells and colostrum mediators to down- $\bullet$ regulate inflammatory responses without overt immunosuppression
• $\bullet$ The recently recognized role of inflammation in driving pathology in many chronic diseases such as metabolic syndrome/non-alcoholic steatohepatitis and hepatitis C virus infection as well as in other common inflammatory disorders, infections, and cancers.

Colostrum is the milk produced in the first few days after birth and contains very high levels of nutrients as well as immunoglobulins (antibodies) and other immunologically active and anti-infective molecules that are dramatically lower or absent in "normal" milk. Outside of nutrition, the normal function of colostrum is thought to be to provide an immediate supply of antibodies and other antimicrobial mediators from the mother to the infant to protect it from infections before its own immune system develops.

Milk and milk products are consumed in most developed countries and are clearly safe and well tolerated. Lactose intolerance is an issue for more than 10% of the US population and can be much higher in other ethic groups. In most people this is not a significant problem when small volumes of milk or dairy products are consumed. Immuron has addressed this issue through its purification process that removes 80% of the lactose in its products e.g. Travelan which may provide an answer to most, however not all, patients with lactose intoleracne.

Immunizing cows with specific antigens during pregnancy can produce a colostrum that is enriched for antibodies that are specific for the antigens and that also contains potent adjuvants.

Immuron has previously used this approach to immunize cows with bacteria to generate a colostrum that is enriched with antibodies that neutralise the bacteria and can be used to treat infections in people e.g. in its Travelan product for prevention of traveller's diarrhoea. In using HIRT, Immuron and Hadasit have immunized cows with other antigens eg Insulin, so that their colostrum now contains high levels of antibodies against the immunized antigen eg the insulin.

In experiments performed with its collaborators at Hadassah Hebrew University Medical Center (Hadasit is the university commercialization unit that owns the HIRT IP) it was shown that oral preparations of colostrum from cows immunized with insulin stimulated the production of T regulatory cells in an organ-specific manner in mice. In the experiments reported, they use cell surface markers detected by FACS analysis, to quantify T regulatory cells in several tissues from C57BL/6 Ob/Ob mice. These mice are commonly used as an animal model of the metabolic syndrome and display most of its clinical features including obesity,

fatty liver, liver damage, inflammation, insulin resistance and impaired glucose tolerance.

Mice treated with colostrum enriched with insulin antibodies showed a significantly increased proportion of T regulatory cells in their visceral fat pads, particularly associated with the blood vessels in the fat tissue. This effect was also seen, but to a lesser extent, with a preparation of insulin-antibodies purified away from the whole colostrum, suggesting that colostrum mediators are needed to boost the effect seen with the antibodies alone. A control preparation of colostrum from animals immunized with E. coli bacteria caused little change in T regulatory cells in the visceral fat.

Of even more interest than changes in cell numbers and distribution are the practical consequences of this on the disease process. T regulatory cells are known to be involved in preventing the immune system from attacking the body's own tissues (autoimmune inflammation) and in limiting the extent of normal protective inflammatory processes. Many human diseases result either from autoimmune attack on specific tissues e.g. the joints in rheumatoid arthritis or the brain and spinal cord in multiple sclerosis; or from persistent infection e.g. in hepatitis as well as inflammatory bowel disorders including Crohns and ulcerative colitis. In recent years it has also become clear that in many diseases, with no obvious autoimmune or infectious involvement, that chronic inflammation may be a key feature of pathology e.g. the metabolic syndrome, atherosclerosis, several malignant disorders and infectious diseases and even Alzheimer disease.

In Metabolic Syndrome, the visceral fat and liver play active roles in releasing inflammatory mediators that contribute to the ongoing systemic inflammation that can result in insulin resistance and escalating tissue dysfunction and damage. The promotion of T regulatory cells by insulin-antibody enriched colostrum in tissues such as fat would be expected to break into the inflammatory process and could lead to long term benefit.

In the mouse model described above, treatment with colostrum containing insulin antibodies significantly improved glucose intolerance, decreased fasting insulin and glucose levels in serum, decreased triglycerides in the liver and reduced markers of liver injury (see figure 1 below).

Antibodies purified from the colostrum were less effective than the whole preparation again suggesting a beneficial contribution of the colostrum mediators or adjuvants. Limited dose comparisons suggest that it will be important to titrate the product to optimize responses in the clinic.

Overall the HIRT technology has strong scientific credentials, offering the ability to influence the behaviour of a critically important regulatory cell population using orally-delivered materials derived from a dairy product. HIRT has therefore the potential to significantly expand the commercial potential addressable by Immuron's existing technology, as well as to significantly fortify its IP position in its existing indications. The evidence obtained to date is supportive of achieving efficacy in metabolic disease/NASH as well as HCV infection with expectation of an excellent safety profile in humans.

Biocomm²

Figure 1. A comparison of the effects of Colostrum enriched with antiinsulin antibodies against anti-insulin antibodies purified from colostrum in a mouse model of metabolic syndrome

C57BL/6 Ob/Ob mice develop features of metabolic syndrome including diabetes, as well as a fatty, inflamed liver. Control animals (black bars) had elevated insulin (A) and impaired glucose tolerance (B) (markers of diabetes), had fatty livers (C) and showed elevated levels of liver enzymes (D) (markers of NASH). Mice treated for 25 days with either the purified anti-insulin antibodies (mauve bars) or the colostrum enriched with anti-insulin antibodies (green bars) showed improvements in each of the markers of disease, although the colostrum preparation clearly had the greatest effect in this experiment

Background to disease targets

Metabolic Syndrome/NASH:

According to the American Heart Association the metabolic syndrome is characterized by a group of metabolic risk factors in one person. They include:

• Central obesity (excessive fat tissue in and around the abdomen)
• Atherogenic dyslipidemia (blood fat disorders mainly high $\bullet$ triglycerides and low HDL cholesterol - that foster plaque build-ups in artery walls)

• Insulin resistance or glucose intolerance (the body can't properly use $\bullet$ insulin or blood sugar)

• Raised blood pressure (130/85 mmHg or higher) $\bullet$

• Proinflammatory state (e.g., elevated high-sensitivity C-reactive protein in the blood)

NASH, according to the American Liver Foundation, is a condition in which fat accumulates in the liver accompanied by inflammation and damage. There is a very considerable overlap between metabolic syndrome and NASH.

The consequences of Metabolic syndrome include Type 2 diabetes, Stroke, Heart Attack, and Renal Failure. Patients with NASH have hepatitis and can progress to cirrhosis and liver failure and develop cancer.

Current Treatment Modalities:

Non-pharmacological treatment for Metabolic Syndrome is directed at achieving weight loss through diet or lap band surgery and increasing physical activity. Pharmaceutical intervention is aimed at treating the individual risk factors by improving: weight loss (either with appetite suppressants or reducing lipid absorption e.g. Xenical/Alli), lipid lowering (using statins eg Lipitor), decreasing blood pressure (eg ACE inhibitors, Beta Blockers, Diuretics, Calcium channel Blockers), preventing blood clots (eg aspirin) and improving insulin resistance/glucose levels (eg glitazones and sulfonylureas and biguanides).

There are no approved therapies for NASH, but for those patients that have features of metabolic syndrome similar approaches to those above are used but with no proven efficacy.

The recognition that inflammation is a key feature of the underlying pathology of Metabolic syndrome and NASH has not yet resulted in the approval of new drugs. Newer drug approaches tend to focus on improved versions of existing drugs, combination products of existing drugs or on new targets that affect the classic risk factors. However, a few organizations have started early stage clinical studies using known anti-inflammatory drugs in metabolic syndrome and type 2 diabetes. The Non-steroidal anti-inflammatory Salsalate used in treating inflammatory bowel disorder, has been shown to improve glucose and lipid levels in small trials in type 2 Diabetics and in Metabolic syndrome patients. The anti-TNF biological Remicaide used in Rheumatoid arthritis has also shown some positive effects on insulin sensitivity. The Anti-Interleukin-1 biological Anakinra has shown some benefits in Type 2 diabetics, and an anti-Interleukin 1 monoclonal antibody Xoma 052 is in early trials for Type 2 diabetes. In addition, Insoluble (1,3),(1,6)-beta-D-glucan from bakers yeast, which has antiinflammatory properties is also being tested in patients with Metabolic syndrome. These drugs either have limited efficacy, are very expensive, must be given by injection, or have significant side effects. None are shown to enhance the T regulatory pathways.

There is also some evidence that statins and Thiazolidinediones may have antiinflammatory effects in addition to their primary lipid lowering and anti-diabetic actions, which may contribute to their clinical benefits in treating metabolic syndrome.

HCV infection- Hepatitis C:

Hepatitis C virus is spread mainly through blood-borne routes, with limited sexual and maternal transfer. About 2-3% of the world's population (170m) people) are infected with HCV, and in the USA alone between 3-4m people have chronic HCV infection. Initial symptoms can be mild but develop to include fever, joint pain and fatigue with 20% of infected people progressing to cirrhosis and liver cancer. Interestingly up to a third of HCV patients also have symptoms of Type 2 diabetes, which is thought to be driven by the chronic production of inflammatory mediators, such as TNF, by the infected liver. Patients with chronic HCV infection are at high risk for developing cirrhosis of the liver, end stage liver disease, or cancer.

Current Treatment Modalities:

There is currently no Vaccine for the prevention or treatment of HCV infection (unlike Hepatitis A and Hepatitis B). The standard of care is to use the oral antiviral Ribavarin in combination with the injectable biological Interferon alpha (IFN). Roche and Schering Plough both market pegylated forms of Interferon that gives a longer plasma half-life than unmodified Interferons. Interferon alpha is thought to work by inducing anti-viral responses in liver cells but may also act to limit inflammatory mediator production.

Up to 55% of patients who manage to complete the 48 week treatment cycle with Ribavarin and PEG-IFN show a sustained reduction in HCV as measured by RNA levels. Side effects of Ribavarin include hemolysis of red blood cells and anemia as well as birth defects, and Interferon can have flu like symptoms neuropsychiatric effects, can trigger autoimmunity, and suppress bone marrow. Although some of these are manageable, many can be severe.

A large proportion of the patients cannot tolerate the therapies due to severe side effects.

Most experimental treatments are focussed on development of new antiviral compounds that attack key enzymes such as helicase, proteases and RNA polymerase. There is limited activity targeting the immune/inflammatory response in HCV, and none that are focussed on Treg induction. Anadys has an oral TLR7 agonist pro-drug that in early clinical studies induces production of Interferon alpha in HCV patients.

Commercial landscape and competitive position

HCV: According to Datamonitor, the Hepatitis C market was worth \$2.3 billion in 2007, with forecast sales to grow to \$4.5billion by 2017, Melnikova predicts a market of \$10-15 billion by 2017. This increase is predicted to be driven primarily by the launch of the new protease inhibitors. The US and EU are predicted to remain the largest markets, generating at least three quarters of sales in 2017. In 2006, Pegasys the Roche IFN for HCV sold \$1.2bn and PEG-Intron from Schering plough sold \$0.8bn.

Metabolic Syndrome: Given the vast and growing numbers of people that are affected by Metabolic syndrome it is not surprising that market figures can be enormous. For example an analysis by Medco Heath solutions claimed that the average yearly US pharmacy cost of treating adult patients over age 20 with metabolic syndrome exceeds \$4,000 -- more than four times the average annual drug spend for all other patients. For the 47m Americans affected by metabolic syndrome this would equate to a total market of just under \$200bn! Looking only at sales of individual drugs used in managing metabolic syndrome and its constituents Obesity, High Blood Pressure and Type 2 diabetes reveals many that sell \$bns per year. For example in 2006 Lipitor sold over \$14.3bn, Avandia \$3.0bn, Actos \$2.8bn, Zocor \$2.8bn, Crestor \$2bn. Even after patent expiries, Lipitor sold \$2.7bn in 2007.

The key drivers that will affect the commercial success of Immuron's potential products relate to their likely product profile. Based on the data described in the patent and accompanying draft manuscript, as well as information on Immuron's other colostrum-derived products, its antibody-enriched colostrum for Metabolic syndrome/NASH would:

• Be taken orally as a tablet
• Demonstrate significant efficacy by generating T regulatory cells, targeted to affected tissues, that can control the chronic inflammatory response. improving diabetic symptoms, liver inflammation and fibrosis and reducing the risk of stroke, heart attack and liver cancer
• Have an excellent safety profile
• Not require medical expertise for administration
• Have easy follow up of its effects

Most of the current marketed drugs as well as those in clinical trials are either:

• · Iniectable, not a favoured route by patients for chronic use;
• Do not directly affect the inflammation that underlies much of the pathology.
• Targeting symptoms rather than the drivers of disease progression,
• Prone to significant side effects, (e.g. avandia with fractures and inconclusive reports of heart attacks; and acomplia with psychiatric issues)

Sales of several drugs have been badly affected due to side effects that rapidly become obvious due to the large numbers of patients treated in these common conditions, who often have significant cardiovascular risk factors. Many of these will require close follow up by the treating physician, and side effects also reduce patient compliance. In extreme examples the drugs may be withdrawn from use.

Given its likely safety profile as a milk-derived product, and its mode of action in stimulating the production of the body's own regulatory T cells, it is also likely that it will be used in addition to many of the existing drugs for diabetes, obesity, hypertension and NASH.

Biocomm²

In chronic HCV infection Immuron's colostrum derived products may either replace the injectable interferon drugs in the Interferon plus Ribavarin combination therapy, or may be used in addition to them. This will probably require further experiments in cell culture and animal models before confirmation in human clinical studies. Alternatively, Immuron's products may be used in the majority of HCV patients who either fail to respond, or do not complete the combination therapy.

Summary

HIRT combined with Immuron's existing technology has promise as a competitive new approach, that, as a medical food, can rapidly lead to treatments for diseases with multi-\$billion markets.

References and Information Resources

In addition to general web searches, the following were used; clinicalTrials.gov. www2.niddk.nih.gov, www.fda.gov, www.liverfoundation.org, www.americanheart.org, www.nice.org.uk, www.hepatitis-central.com, medlineplus.gov

Hepatitis C Therapies; Melnikova I, (2008) Nature Reviews Drug Discovery 7:799

Inflammation stress and diabetes; Wellen K E and Hotamisligil (2005) J. clin invest 115:1111

Association of diabetes and Hepatitis C infection; Bahtiyar G et al (2004) Curr. Diab. Rep 4:194

A placebo controlled trail of Pioglitazone in subjects with NASH; Belfort R et al (2006) New England J med 355:22

Survival advantage of milk and dairy consumption evidence from a cohort studies of vascular diseases diabetes and cancer Elwood PC e al (2008) J Am Coll Nutr 27:723s

Materials provided by Immuron and reviewed.

A copy of a US provisional Patent 23477/US/07 Prov, entitled "Immunomodulating compositions for the treatment of immune-mediated disorders"

A copy of a draft scientific manuscript entitled "Promotion of adipose tissue and stromal Vasculature-derived FoxP3 regulatory cells and decreased TH17 cells by oral administration of antigen-specific antibodies" written by its collaborators in Hadassah Hebrew University Medical Center, Israel.

A copy of an investor briefing presentation by Yaron Ilan, M.D. entitled "Oral immunotherapy" dated 2009.