IMUGENE LIMITED — Capital/Financing Update 2003

Apr 15, 2003

LIMITED

Imugene Limited Market Release ASX Code - IMU

OWNERSHIP INCREASES TO 100% OF VECTOGEN LIMITED

Imugene Limited, Sydney, 16 April 2003, is pleased to announce the acquisition of the balance of the outstanding share capital in its production animal subsidiary, VectoGen Limited.

Imugene has entered into agreements with the various owners to acquire all of the VectoGen shares not currently owned by Imugene.

The consideration for the acquisition comprises the issue of 14,745,433 new ordinary Imugene shares and the issue of 8,872 convertible preference shares which are split into three types, Series A, B and C. Each preference share converts into 1,662 new ordinary Imugene shares subject to the satisfaction of various performance and commercial milestones including a requirement for Imugene to reach and maintain a market capitalisation in excess of \$33 million. These terms are contained in the annexure to this announcement.

On settlement of the acquisition agreements with the various VectoGen shareholders including interests associated with Mr Harold Clough owning 27% of VectoGen, Imugene will increase its ownership from 40% to 100% of VectoGen.

Imugene Executive Chairman, Mr Graham Dowland said "By moving to absolute ownership of VectoGen, Imugene has now achieved one of its main goals and that is the ability to directly access the cash flows arising from the commercialisation of the VectoGen product portfolio.

"The VectoGen acquisition will allow the Imugene management team to efficiently apply the necessary resources to develop and progress the poultry and porcine products to maximize their commercial outcomes that will now maximize the future economic benefit for Imugene" said Dr. Warwick Lamb, Imugene's Managing Director.

Imugene's initial equity interest in VectoGen was acquired in August 2002 and represents the Company's principal production animal (poultry and porcine) biopharmaceutical products company. Over the past 6 months, Imugene and VectoGen has achieved progress in several important areas. During this time Imugene management has carefully evaluated VectoGen particularly the product portfolio and their respective markets and now consider the acquisition of the balance of VectoGen on the terms contained herein is the next achievement in the delivery of the commercial ambitions of Imugene.

ABN: 99 009 179 551 Level 1, 14 - 20 Delhi Road, North Ryde NSW 2113 PO Box 307, North Ryde NSW 1870 Tel: +61 2 9870 7330 Fax: +61 2 9888 9338 website: www.imugene.com

The progress made over the past 6 months, includes:

• . The recruitment of a team of uniquely qualified scientific and commercial personnel, including ex USA based Pfizer directors. Dr Fahev and Dr Sheppard. collectively having the necessary international animal health experience and skills to develop and commercialise the VectoGen products and platform biological delivery vaccines,
• The establishment of VectoGen's commercial arrangements over 3 products with Merial Limited (Merck & Aventis) and one product with Intervet (Akzo Nobel) two of the top four world animal health pharmaceutical companies, and
• Continued extensions of the areas of patent coverage by VectoGen for its porcine and poultry platform biological delivery vaccines.

Imugene is in a position whereby the move to full ownership and control of the production animal health products will enable the maximization of the financial benefit from the various opportunities that have been and will continue to be created within VectoGen.

In addition to the commercial agreements already in place with Merial and Intervet. Imugene with the application of its new personnel resources and in association with the CSIRO, will continue to develop and commercialise its range of poultry and porcine biological vaccines using the adenovirus vector delivery system.

Coinciding with the move to full ownership of VectoGen, Imugene's director, Dr Warwick Lamb, has been appointed Imugene's Managing Director. Graham Dowland has been appointed Executive Chairman of Imugene.

The acquisition agreements are conditional upon the approval of Imugene shareholders in a general meeting to be convened in the near future.

The consideration shares that are issued upon settlement of the VectoGen acquisition will be subject, as a minimum, to a voluntary escrow arrangement until 31 May 2004.

The Board of Imugene and their associates, who collectively own 22% of the issued capital of Imugene, have indicated their support for the proposed transaction.

END.

ABOUT IMUGENE:

Imugene Limited (ASX Code: IMU) is an Australian biopharmaceutical company specialising in the development and commercialisation of animal health products for production and companion (pet) animals.

Imugene's biological products safely prevent disease in animals, reduce or eliminate the use of antibiotics, harmful chemicals and drugs, and reduce the level of antibiotic and chemical residue entering the human food chain.

FUTHER INFORMATION:

Mr Graham Dowland	Executive Chairman	٠	08 9322 9189
Dr Warwick Lamb	Managing Director	$\bullet$	02 9870 7330
Website address:	www.imugene.com

ANNEXURE A

CONVERTIBLE PREFERENCE SHARES

Pursuant to the agreements signed with the VectoGen shareholders owning 60% (and being all of the issued shares not owned by Imugene) of the issued share capital of VectoGen, each selling VectoGen shareholder will receive the following convertible preference shares in the following ratios:

1 Series A Convertible Preference Share for every 1,000 VectoGen Shares being sold; and

1 Series B Convertible Preference Share for every 3,000 VectoGen Shares being sold; and

1 Series C Convertible Preference Share for every 3,000 VectoGen Shares being sold.

Accordingly Imugene will, subject to shareholder and other approvals, issue a total of :

5.324 Series A Convertible Preference Shares 1,774 Series B Convertible Preference Shares 1,774 Series C Convertible Preference Shares

In the event that the relevant milestones (see below) are satisfied, each convertible preference share (CPS), in all three Series, converts into 1,662 new ordinary shares in the capital of Imugene (the "Maximum Conversion Ratio"). Accordingly the maximum number of new ordinary shares that may be issued for each Series of CPS, assuming the relevant milestones are achieved, is as follows:

ABN: 99 009 179 551 Level 1, 14 - 20 Delhi Road, North Ryde NSW 2113 PO Box 307, North Ryde NSW 1870 Tel: +61 2 9870 7330 Fax: +61 2 9888 9338 website: www.imugene.com

	Max. No. of ordinary Imugene shares
Series A Convertible Preference Shares	8.848.488
Series B Convertible Preference Shares	2,948,388
Series C Convertible Preference Shares	2,948,388
Total	14.745.264

If the relevant milestones (see below) are not satisfied within the defined period for each Series of CPS, each CPS converts into 1 new ordinary share in the capital of Imugene.

Milestones

In order for each of the Series A, B or C Convertible Preference Shares to be converted in accordance with the Maximum Conversion Ratio, the Market Capitalisation Target must be achieved.

Market Capitalisation Target means a weighted average market capitalisation of \$33,000,000 achieved over a period of 20 consecutive trading days on Australian Stock Exchange Limited at any time during the 12 months from the date of issue of the CPS's

In addition to the Market Capitalisation Target milestone, each Series CPS has an independent milestone that is required to be achieved in order for the conversion to occur to ordinary Imugene shares at the Maximum Conversion Ratio as follows:

Series A

The Series A CPS will be eligible for the Maximum Conversion Ratio upon Merial Limited exercising its previously granted option to sub-license and signing with VectoGen a sublicense in relation to the 'Fowl Adenovirus Vector productivity enhancer' - as announced on 27 September 2002. The period for this milestone to occur is 12 months from the date of the issue of the Series A CPS.

Series B

The Series B CPS will be eligible for the Maximum Conversion Ratio upon Merial Limited exercising its previously granted option to sub-license and signing with VectoGen a sublicense in relation to the 'Fowl Adenovirus Vector viral vaccine' - as announced on 27 September 2002. The period for this milestone to occur is 18 months from the date of the issue of the Series B CPS.

Series C

The Series C CPS will be eligible for the Maximum Conversion Ratio upon Merial Limited and VectoGen signing a sub-license in relation to the 'Porcine Adenovirus Vector viral vaccine' - as announced on 27 September 2002. The period for this milestone to occur is 12 months from the date of the issue of the Series C CPS.

ABN: 99 009 179 551 Level 1, 14 - 20 Delhi Road, North Ryde NSW 2113 PO Box 307, North Ryde NSW 1870 Tel: +61 2 9870 7330 Fax: +61 2 9888 9338 website: www.imugene.com