IMUGENE LIMITED — Interim / Quarterly Report 2013

Feb 27, 2013

(ASX: IMU)

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APPENDIX 4D

For the Half Year Ended 31 December 2012

Results for Announcement to the Market

Current Reporting Period - Half year ended 31 December 2012 Previous Reporting Period - Half year ended 31 December 2011

Revenues	Down	(93.90%)	to	$14,871
Loss after tax attributable to members	Down	(53.89%)	to	($1,235,999)
Net loss for theperiod attributable to members	Down	(53.89%)	to	($1,235,999)

Dividends (distribution)	Amount per Security	Amount per Security	Franked Amount
			per Security
Fil diidd	/		/
na ven	na		na
Pi di id	/		/
revous corresponng pero	na		na
Net Tangible Asset per Security (cents per security) As at 31 December 2012 0.23 As at 31 December 2011 1.20 Record date for determining entitlements to dividend Explanation of the above information: Refer to the Directors' Report - Review of Operations.		n/a

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2. Details of entities over which control has been gained or lost during the period

During the period, the Company acquired 100% of Lingual Consegna Pty Ltd, a drug delivery technology company which holds the Linguet Patented Buccal Delivery intellectual property.

Total purchase consideration is $1,400,000, settled by the issue of 100,000,000 of ordinary shares in Imugene Ltd at $0.014 per shares. Full details are disclosed on this interim financial report ended 31 December 2012 (refer to Note 7 Business Combination).

3. Details of individual and total dividends

None

4. Details of dividend reinvestment plans in operation.

None

5. Details of Associates and Joint Ventures

None

6. These accounts have been subject to review and there has been no qualification or dispute.

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ABN 99 009 179 551

Interim Financial Report

For the Half Year Ended 31 December 2012

(ASX: IMU)

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Corporate Directory .....................................................................................................1 Directors’ Report ..........................................................................................................2 Auditor’s Independence Declaration ............................................................................5 Consolidated Statement of Profit or Loss and Other Comprehensive Income ..............6 Consolidated Statement of Financial Position ..............................................................7 Consolidated Statement of Changes in Equity ..............................................................8 Consolidated Statement of Cash Flows ........................................................................9 Notes to the Consolidated Financial Statements for the period ending 31 December 2012 ..................................................................................................... 10 Independent Review Report ....................................................................................... 18 Directors’ Declaration ................................................................................................ 20

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Corporate Directory

Directors

Mr Steve Harris - Non-Executive Chairman Mr Paul Hopper - Non-Executive Director Dr Nicholas Ede - Executive Director

Solicitors

Hopgood Ganim Level 8, Waterfront Place, 1 Eagle Street Brisbane, Qld, 4000, Australia

Company Secretaries

Mr Justyn Stedwell Mr Phillip Hains

Registered and Principal Office

Suite 1, 1233 High Street, Armadale, Vic, 3143, Australia Telephone: (61 3) 9824 5254 Facsimile: (61 3) 9822 7735

Patent Attorney

David Collison Cave 1 Nicholson Street, Melbourne, Vic, 3002, Australia

Auditor

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA, 6008, Australia

Website and Email

www.imugene.com Info@imugene.com

Share Register

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth, WA, 6000, Australia Telephone: 1300 557 010 International: (61 8) 9323 2000 Facsimile: (61 8) 9323 2033

Bankers

National Bank of Australia Level 2, 181 William Street, Melbourne, Vic, 3000, Australia

Securities Exchange Listing

Imugene Limited shares are listed on the Australian Securities Exchange (Symbol: IMU)

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Directors’ Report

The Directors of Imugene Limited (“IMU”, “Imugene”, or “the Company”) provide the following report in relation to the Company for the half year ended 31 December 2012.

Directors

The following persons were Directors of the Company during the whole of the half-year and up to the date of this report, unless stated otherwise:

Current:
Mr Steve Harris	Non-Executive Chairman	Appointed:	1stAugust 2012
Mr Paul Hopper	Non-Executive Director	Appointed:	31stOctober 2012
Dr Nicholas Ede	Executive Director	Appointed:	11thFebruary 2013
Former:
Mr Fabio Pannuti	Executive Chairman	Appointed:	31stJuly 2012
		Resigned:	11thFebruary 2013
Mr Graham Dowland	Non-Executive Director	Resigned:	31stJuly 2012
Dr Warwick Lamb	Non-Executive Director	Resigned:	31stOctober 2012
Mr Roger Steinepreis	Non-Executive Director	Resigned:	2ndOctober 2012
Company Secretaries
Justyn Stedwell	Company Secretary
Phillip Hains	Company Secretary & Chief	Financial Officer (CFO)

Review and Results of Operations

Operating Results

The Company reported a loss for the half-year ended 31 December 2012 of $1,235,999 (2011: $2,680,557). The loss is after fully expensing all research and development costs.

Summary Review of Operations

During the six months ended 31 December 2012, the Company completed feasibility testing and formulation development for two initial Vitamin D formulations which had been enhanced using Imugene’s proprietary Linguet drug delivery technology.

The Company’s strategy is to focus on the development of a class of drugs known as super generics – which involves taking a known molecule and improving its effectiveness by applying a drug delivery technology. The Company is focused on candidates where its technology has the ability to address a significant market need and deliver commercial advantages, such as extended patent life and improved efficacy. Imugene’s first target is a novel dosage form of Vitamin D, designed to rapidly address Vitamin D deficiency. The Linguet drug delivery technology enables the drug to be delivered by being absorbed through the buccal mucosa, the lining of the cheek, directly into the bloodstream which avoids the need for the drug having to pass through the liver or gastro-intestinal tract.

The Company has decided to initially focus on the delivery of Vitamin D as Vitamin D deficiency is a major public health concern, and affects 31% of all Australian adults, and more than 1 billion people worldwide. Vitamin D deficiency has also been associated with a wide range of conditions including pre-diabetes, osteoporosis, cardiovascular health and prostate cancer.

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While current supplements are available over the counter and by prescription, they do not deliver sufficient amounts or consistent amounts of Vitamin D due to the varying absorption of the drug when it is passed through the gastro-intestinal tract via an oral delivery method. Furthermore, if the drug is absorbed too effectively by the gastro-intestinal tract, which can result in high doses of supplements producing marked surges in blood Vitamin D levels, thereby promoting local aberrations in calcium and phosphorous homeostasis, which may result in an increased risk of hypercalciuria, hypercalcemia and hyperphosphatemia, all being very serious medical indications.

Vitamin D supplementation above the normal requirements is frequently needed in certain individuals however, currently available oral Vitamin D supplements are not well suited for maintaining blood 25-hydroxyvitamin D levels at optimal levels given the problems of administering high doses of immediate release Vitamin D compounds.

Imugene’s Vitamin D formulation provides a dosage form that effectively and safely restores blood 25hydroxyvitamin D levels without the transient surges associated with the current over-the-counter supplements and prescription-only Vitamin D treatments. Imugene’s buccal tablet will be available in a high dose form for rapid treatment of Vitamin D deficiency, and will also be available in a lower dose maintenance form. The formulation of the drug uses a specialised Vitamin D molecule which is five times more effective at raising serum levels of 25-hydroxyvitamin D than colecalciferol and ergocalciferol, which are the main ingredients in the overthe-counter supplements currently on the market.

Commercialisation progress

Imugene’s high and low dose formulations of Vitamin D have now advanced through formulation development. Long-term stability studies and laboratory testing for the transport of the molecule across the buccal mucosa are now underway. These tests are due for completion by Q4 2013. A bioequivalence clinical study will be conducted in parallel before regulatory filing in the UK for a nutritional supplement. The target for achieving this is Q2 2014.

There is a high level of interest amongst pharmaceutical companies, predominantly in Europe and increasingly worldwide, for new and innovative forms of Vitamin D given the rising rates of deficiency and the lack of novel dosage forms in development. Imugene has commenced preliminary licensing discussions for both its high dose (prescription) and maintenance dose (nutritional supplement) forms of Vitamin D.

Events Occurring After Reporting Date

Changes to Board and Management

In February 2013, Imugene announced changes to its Board and Management structure with the appointment of Dr. Nicholas Ede as an Executive Director. Dr Ede has a record of successfully evolving research concepts to commercial products and processes. He has over 25 years’ experience in drug discovery and international business development gained at Chiron (acquired by Novartis), EqiTX, Mimotopes, Adistem and Consegna.

He has established joint ventures and partnerships with some of the leading pharmaceutical and biotechnology companies in the world, including a global alliance with the world’s 4th largest biotechnology company Genzyme Inc, Invitrogen Inc, GSK, Pfizer, Merck, and the Broad Institute (a joint venture of Harvard and MIT) among others. Dr Ede holds a PhD from Monash University and Grad. Cert. in Innovation from Melbourne Business School, and has published over 60 scientific papers and patents.

Along with the appointment of Dr Ede, existing Non-Executive Director, Mr Steve Harris, stepped forward to fill the role of Non-Executive Chairman of the Company following the resignation of the former Executive Chairman, Mr Fabio Pannuti.

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The new Director and Management structure, together with the existing Non-Executive Director, Mr Paul Hopper, has taken a very prudent approach to all expenditure, drug development, and overhead expenses by cutting monthly cash burn to 20% of 2012 levels.

The Board and Management Team have also engaged The CFO Solution with whom they’re working very closely with to manage all of the Company’s financial and company secretarial functions, which has resulted in substantial cost and time savings allowing management to focus on fast-tracking its development programs.

Imugene continues to use outsource specialised professional partners and consultants to minimise its overall internal overhead, enabling maximum efficiency and focus from its personnel to generate product and early revenues.

Auditor’s Independence Declaration

The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

This Director’s Report has been issued following a resolution of the Directors pursuant to section 306 (3) of the Corporations Act 2001, for an on behalf of the Board;

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Dr Nicholas Ede Director Imugene Limited

Dated: This the 28[th] Day of February 2013

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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28 February 2013

The Board of Directors Imugene Limited The Grain Store 7/21 Northumberland Street Collingwood MELBOURNE VIC 3066

Dear Sirs,

DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF IMUGENE LIMITED

As lead auditor for the review of Imugene Limited for the half-year ended 31 December 2012, I declare that to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Imugene Limited and the entities it controlled during the period.

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Peter Toll Director

BDO Audit (WA) Pty Ltd

Perth, Western Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half year ended 31 December 2012

	31 December 2012 31 December 2011	31 December 2012 31 December 2011
		Note $ AUD $ AUD
	Revenue Total revenue 2 14,871 243,743 Other Income 2 3,417 121,435 Expenses Amortisation - (170,570) Business Development - (48,640) Corporate administration expenses (607,328) (222,811) Commercialisation expenses (8,879) (309,587) Research and development expenses (607,996) (204,952) Impairment expenses 2 - (2,089,175) Unrealised foreign exchange (gain)/ loss (30,084) -
	Loss before tax 3 (1,235,999) (2,680,557) Income tax expense - -
	Net Loss for the half year (1,235,999) (2,680,557) Other comprehensive income / (expense) for the year, net of tax - -
	Total comprehensive loss for the half year (1,235,999) (2,680,557)
	Loss per share for the half year attributable to members of Imugene Ltd: Basic loss per share (cents per share) (0.40) (1.87) Diluted loss per share (cents per share) (0.40) (1.87)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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Consolidated Statement of Financial Position

As at 31 December 2012

	31 December 2012 30 June 2012
	Note $ AUD $ AUD
	ASSETS Current Assets Cash and cash equivalents 747,470 1,016,748 Trade and other receivables 33,508 - Current tax assets - 266,672 Other 8,712 34,291
	Total Current Assets 789,690 1,317,711
	Non-Current Assets Property, plant and equipment - 676 Goodwill 4,7 960,527 - Intangible assets 4,7 870,179 -
	Total Non-Current Assets 1,830,706 676
	TOTAL ASSETS 2,620,396 1,318,387
	LIABILITIES Current Liabilities Trade and other payables 159,249 138,758 Borrowings 10,696 - Provisions - 106,216
	Total Current Liabilities 169,945 244,974
	Non-Current Liabilities Trade and other payables - - Other financial liabilities 5,7 396,829 -
	Total Non-Current Liabilities 396,829 -
	TOTAL LIABILITIES 566,774 244,974
	NET ASSETS 2,053,622 1,073,413
	EQUITY Issued capital 6 17,123,661 14,907,453 Option Reserve 966,003 966,003 Accumulated Loss (16,036,042) (14,800,043)
	TOTAL EQUITY 2,053,622 1,073,413

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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Consolidated Statement of Changes in Equity

For the half year ended 31 December 2012

		Contributed Equity Share Based Payment Reserve Accumulated Losses Total
		$ AUD $ AUD $ AUD $ AUD
	Balance as at 1 July 2011	14,907,453 966,003 (11,666,610) 4,206,846
	Total comprehensive loss for the half year:	- - (2,680,557) (2,680,557)
	Balance at 31 December 2011	14,907,453 966,003 (14,347,167) 1,526,289
	Total comprehensive loss for the half year	- - (452,876) (452,876)
	Balance at 30 June 2012	14,907,453 966,003 (14,800,043) 1,073,413
	Total comprehensive loss for the half year	- - (1,235,999) (1,235,999)
	Transactions with Equity holders in their capacity	as equity holders: 2,350,000 - - 2,350,000 (138,792) - - (138,792) 5,000 - - 5,000
	Shares issued Capital raising costs Share basedpayment reserve
	Balance at 31 December 2012	17,123,661 966,003 (16,036,042) 2,053,622

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Consolidated Statement of Cash Flows

For the Half Year Ended 31 December 2012

		31 December 2012 31 December 2011
		$ AUD $ AUD
	Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Other income	- - (1,333,507) (761,149) 14,857 - 266,672 299,750
	Net cash inflows/ (outflows) from operating activities	(1,051,978) (461,399)
	Cash flows related to investing activities Loans to other entities Interest received	(33,508) - - 8,209
	Net cash inflows/ (outflows) from investing activities	(33,508) 8,209
	Cash flows related to financing activities Proceeds from issues of equity securities Capital raising costs	955,000 - (138,792) -
	Net cash inflows/ (outflows) from financing activities	816,208 -
	Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on cash and cash equivalents	(269,278) (453,190) 1,016,748 1,905,942 - 73,513
	Cash and cash equivalents at the end of the half year	747,470 1,526,265

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012

1. Summary of significant accounting policies

Statement of compliance

The consolidated financial statements comply with International Financial Reporting Standards as adopted in Australia. Compliance with these standards ensures that the financial statements of Imugene Limited comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

These financial statements are general purpose financial statements for the half-year reporting period ended 31 December 2012, which have been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

Basis of preparation

This half year report does not include full disclosures of the type normally included in an Annual Report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group.

Accordingly, this financial report should be read in conjunction with the 2012 Annual Report for the year ended 30 June 2012 and any public announcements made by Imugene Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Group’s 2012 Annual Report for the financial year ended 30 June 2012, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to the operations and effective for the current period.

The same accounting policies and methods of computation have generally been followed in these half-year financial statements as compared with the most recent annual financial statements, except as follows:

• AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income

Comparatives have been reclassified to be consistent with the current year presentation. The reclassification does not have an impact on the results presented.

Going concern

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

As at 31 December 2012, the consolidated entity has incurred an operating loss of $1,235,999 (31 December 2011: loss of $2,680,557). As at the half year ended 31 December 2012, the consolidated entity’s net assets were $2,053,622 (30 June 2012: $1,073,413). The consolidated entity’s cash position has reduced to $747,470 at 31 December 2012 from $1,016,748 at 30 June 2012.

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

1. Summary of significant accounting policies (continued)

The Board considers that the Company is a going concern and recognises that additional funding is required to ensure that the Company can continue to fund its and the consolidated entity’s operations and further develop its assets during the twelve month period from the date of this financial report. Such additional funding, can he derived from either one or a combination of the following:

• The placement of securities under ASX Listing Rule 7.1 or otherwise;

• An excluded offer pursuant to the Corporations Act 2001: or

• The sale of assets.

Accordingly, the Directors believe that subject to prevailing equity market conditions, the Company will obtain sufficient funding to enable it and the consolidated entity to continue as going concerns and that it is appropriate to adopt that basis of accounting in the preparation of the financial report. Should the company be unable to obtain sufficient funding as outlined above, there is significant uncertainty whether or not the entity will be able to continue as a going concern.

2. Profit and Loss for the half year

		Consolidated
	31 December	2012 31 December 2011
	Note $ AUD	$ AUD
	Revenue Sub-license / contract research fees (i) - 235,996 Interest 14,871 7,747
	14,871 243,743
	Other Income Income Tax Refund 3,417 58,161 Government Grant - (11,715) Unrealised FX gain/(loss) - 74,989
	3,417 121,435
	Expenses Impairment expense (ii) - (2,089,175)
	- (2,089,175)

(i) On 13 October 2010, Imugene entered into a Global Agreement with Novartis Animal Health, giving Novartis exclusive global rights to all of Imugene's technologies and intellectual properties, including vaccines and productivity enhancers. The Global Agreement with Novartis Animal Health had been terminated in the financial year ended 30 June 2012.

(ii) Please refer to Note 4 Intangible Assets for further details.

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

3. Segment Information

Management has determined, based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions, that the Group has one reportable segment being the research, development and commercialisation of health technologies.

			Consolidated
		31 December	2012 31 December 2011
		$ AUD	$ AUD
	Reportable segment revenue Revenue, including interest income, is disclosed below based on the reportable segment: Revenue from research, development and commercialisation Revenue from other corporate activities	3,417 224,198 14,871 140,980
		18,288 365,178
	Reportable segment assets Assets are disclosed based on the reportable segment: Asset from research, development and commercialisation Assets from other corporate activities: - Cash and cash equivalents - Other corporate assets	1,830,706 266,672 747,470 1,016,748 42,220 676
		2,620,396 1,284,096
	Reportable segment liabilities Liabilities are disclosed based on the reportable segment: Liabilities from research, development and commercialisation Liabilities from other corporate activities: - Trade and other payables - Other corporate liabilities	556,078 244,974 - - 10,696 -
		566,774 244,974
	Reportable segment profit/ (loss) Profit/ (loss) are disclosed below based on the reportable segment: Profit/ (loss) from research, development and commercialisation (Loss)from other corporate activities	(1,134,281) (2,598,726) (35,718) (81,831)
		(1,169,999) (2,680,557)

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

4. Intangible Assets

	Consolidated
31 December 2012 30 June 2012
Note $ AUD $ AUD
Patents, licenses and other rights Opening cost 3,027,920 5,117,095 Additions 7, 4(i) 870,179 - Impairment charge 4(ii) - (2,089,175)
Closing cost 4,858,626 3,027,920
Accumulated amortisation Accumulated amortisation at the start of the year (3,027,920) (2,857,350) Amortisation charge - (170,570)
Accumulated amortisation at the end of the year (3,027,920) (3,027,920)
Openingnet book amount - 2,259,745
Closing net book amount 870,179 -
Goodwill Opening cost - - Additions 4(iii) 960,527 - Impairment charge - -
Closing cost 960,527 -

• (i) On 31[st] July 2012, the Company acquired 100% of issue shares of Lingual Consegna Pty Ltd from Consegna Group Limited. The assets acquired include the Linguet Patented Buccal Delivery intellectual property. For further details, please refer to Note 7 Business Combination.

• (ii) In the absence of readily available market prices, the recoverable amounts of the intangible assets are determined based on a discounted cash flow model, using estimates of the present value of future cash flows using asset-specific discount rates.

At 31 December 2012, the Board has reviewed the assumptions used in the discounted cash flow model that was used to evaluate the carrying value of the newly acquired Linguet Patented Buccal Delivery intellectual property and believe the assumptions remain reasonable. The Board has resolved to maintain the carrying value of the intellectual property at its current level and no impairment has been charged. The Board will reevaluate the carrying value of the intellectual properties at 30 June 2013.

At 30 June 2012, the Board had resolved to impair the carrying value of the intellectual property to nil due to the following considerations:

• The global licence agreement with Novartis was terminated during the financial year 2011-2012, with an initial interpretation that the results did not satisfy Novartis’ requirements for commercial progression.

• The financial crisis has had an adverse effect on the life science arena and the ability to raise additional funding to progress intellectual properties through development stages.

As at 31 December 2012, the carrying value of the intellectual properties is $870,179 (30 June 2012: nil).

(iii) Refer to Note 7 Business Combination.

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

5. Other Financial Liabilities

	Consolidated
31 December 2012 30 June 2012
Note $ AUD $ AUD
Other financial liabilities Contingent royaltiespayable (i) 396,829 -
396,829 -

(i) Please refer to Note 7 Business Combination.

6. Issued Capital

Movements in equity during the half year ended 31 December 2012 and prior year are as follows:

		31 December 2012 30 June 2012
	Note	No. $ AUD No. $ AUD
Ordinary shares Options	(a) (b)	338,637,220 17,118,661 143,637,220 14,907,453 50,000,000 5,000 - -
Total at reporting date		17,123,661 14,907,453

(a) Ordinary Shares

		31 December 2012 30 June 2012
	Note	No. $ AUD No. $ AUD
At the beginning of the period Share issued during the period	(i)	143,637,220 14,907,453 143,637,220 14,907,453 195,000,000 2,218,208 --
Total at reporting date		338,637,220 17,118,661 143,637,220 14,907,453

(i)

	2012	Details	Number	Issue price $ AUD	$ AUD
31	Jul 2012	Share Placement	95,000,000	0.0100	950,000
31	Jul 2012	Acquisition of Lingual Consegna	* 100,000,000	0.0140	1,400,000
					(138,792)
			195,000,000		2,218,208

• The 100,000,000 ordinary share issued to Consegna Group Limited are subject to escrow until 31/07/2013.

Rights of each type of shares:

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote. Upon a poll every holder is entitled to one vote per share held.

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

6. Issued Capital (Continued…)

(b) Options

		31 December 2012 30 June 2012
	Note	No. $ AUD No. $ AUD
At the beginning of the period Share issued during the period	(i)	- - - - 50,000,000 5,000 - -
Total at reporting date		50,000,000 5,000 - -

(i)

	2012	Details	Number	Issue price $ AUD	$ AUD
3	Aug 2012	Unlisted options issued to Forrest Capital and CPS	50,000,000	0.0001	5,000
		Security, Exercisable at $0.02, expiry date 31
		December 2015
			50,000,000		5,000

Note: No options were exercised during the half year.

7. Business Combination

As at 31 December 2012 the company has elected to provisionally account the business combination as they are still in the process of finalising the Fair Values of the assets and liabilities acquired.

On 17 July 2012, the Company acquired 100% of the issued share in Lingual Consegna Pty Ltd, a drug delivery technology company which holds the Linguet Patented Buccal Delivery intellectual property.

Details of the acquisition are as follows:

(a) Consideration

	$AUD
Ordinary Shares 100,000,000 in Imugene Ltd at $0.014 per share	1,400,000
Total purchase consideration	1,400,000

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

7. Business Combination (Continued…)

(b) Fair Values

Details of the fair values at the date of acquisition are set out below:

		Book value Fair Value Adjustments	Total
		$AUD $AUD	$AUD
	ASSETS Cash and cash equivalents Intangible assets	- - 2,859,591 (1,989,412)	- 870,179
	TOTAL ASSETS	2,859,591 (1,989,412)	870,179
	LIABILITIES Trade and other payables Royaltiespayables	(33,878) - (2,386,241) 1,989,412	(33,878) (396,829)
	TOTAL LIABILITIES	(2,420,119) 1,989,412	(430,707)
	Fair value of identifiable net assets acquired Add: Goodwill	439,472 -	439,472 960,527
	NET ASSETS ACQUIRED		1,400,000

Note: The net loss attributable to the acquired entity, Lingual Consegna Pty Limited for the period from acquisition date to 31 December 2012 was $191,630. Costs related to the acquisition for the period were $8,081.

8. Net Tangible Assets

	31 December 2012	30 June 2012
Net Tangible Assets ($AUD)	789,690	1,318,387
Shares (No.)	338,637,220	143,637,220
Net Tangible Assets (Cents)	0.23	0.92

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(ASX: IMU)

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Notes to the Consolidated Financial Statements for the period ending 31 December 2012 (Continued…)

9. Related Party Disclosure

	Consolidated
31 December 2012 30 June 2012
Note $ AUD $ AUD
Loans to Related Parties: Loan from Consegna Group Limited to Lingual Consegna Limited (45,930) - Loan to Consegna Group Limited from Imugene Limited 79,458 - Transactions with related parties: Management services fee paid to Consegna Group Limited (i) 223,683 -

• (i) Management Services Agreement covering corporate, secretarial and accounting services and the provision of office premises.

Note: Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

10. Events Subsequent to Reporting Date

In February 2013, Imugene announced changes to its Board and Management structure with the appointment of Dr. Nicholas Ede as an Executive Director. Along with the appointment of Dr Ede, existing Non-Executive Director, Mr Steve Harris, stepped forward to fill the role of Non-Executive Chairman of the Company following the resignation of the former Executive Chairman, Mr Fabio Pannuti.

No other significant events have occurred since reporting date that has not been disclosed elsewhere in this report.

11. Contingencies

Other than those disclosed in note 5, the Consolidated Entity has no contingent assets or liabilities at reporting date (2011: none).

The Consolidated Entity has no commitments at reporting date. (2011: none).

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Tel: +8 6382 4600 38 Station Street Fax: +8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF IMUGENE LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Imugene Limited, which comprises the consolidated statement of financial position as at 31 December 2012, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a statement of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the disclosing entity are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Imugene Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Imugene Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Imugene Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

Emphasis of Matter

Without modifying our conclusion, as disclosed in financial report, Imugene Limited incurred a net loss of $1,235,999 and had net cash outflows from operating activities of $1,051,978 during the six month period ended 31 December 2012. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast doubt about the entity’s ability to continue as a going concern, and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business.

BDO Audit (WA) Pty Ltd

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Peter Toll Director

Perth, Western Australia Dated this 28[th] day of February 2013

(ASX: IMU)

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Directors’ Declaration

The Directors of the Company declare that:

• a. The financial statements and the accompanying notes set out on pages 7 to 18, are in accordance with the Corporations Act 2001, including:

• i. complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• ii. giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2012 and of its performance for the half year ended on that date.

• b. In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

• c. the financial statements and accompanying notes are prepared in compliance with IFRS and interpretations adopted by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the Board of Directors;

For and on behalf of the Board;

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Dr Nicholas Ede Director Imugene Limited

Dated: This 28[th] Day of February 2013

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