To Our Shareholders:

AutoImmune Inc. had a successful 2002. While continuing to operate in a virtual mode to minimize expenses, we made considerable progress in building a foundation for increasing shareholder value.

Most importantly, we created the potential for additional revenue through the formation of a joint venture with Deseret Laboratories, Inc. to manufacture, market and sell ColloralŽ, a product for nutritional support of patients with rheumatoid arthritis. The product was launched in February 2003 and we are hopeful it will produce meaningful income for the company in future years.

AutoImmune has licenses for two aspects of its intellectual property with capable partners in deals that could generate significant value for the Company if and when products are approved for sale. The first of these is with Teva Pharmaceutical Industries, Ltd., which is working on an oral formulation of CopaxoneŽ (glatiramer acetate), its injectable product for the treatment of relapsing-remitting multiple sclerosis. After completing additional pharmacological and immunological studies on the oral formulation, Teva has begun planning for the next human clinical trial and seems committed to successful development of this product. The second license is with BioMS Medical Corporation, which has said it will start a Phase III trial of its MBP8298 product for the treatment of chronic progressive multiple sclerosis during 2003. We are pleased with the progress of our licensees this past year and look forward to the results of their clinical studies.

Recruitment has ended for the oral insulin arm of the NIH sponsored diabetes prevention trial (DPT-1), which is testing a therapeutic method covered by AutoImmune's patents, and preliminary results are expected toward the middle of 2003. If the results are positive, it could open the door to an additional licensing opportunity for the company.

The success of our licensing efforts is dependent on expanding and defending AutoImmune's intellectual property. At year end we had 154 issued US and foreign patents, plus nine original and continuation-in-part patent applications with numerous foreign counterparts. The majority of these relate to methods and products that induce immunological tolerance for the treatment of disease. We hope to see more patents issued and continue to support limited research efforts at The Brigham and Women's Hospital.

With adequate financial reserves to wait for results from the clinical trials of our products and the prospect of positive cash flows in the future, we believe we are well positioned for success and remain confident that our technology will be proven of significant therapeutic value.

Your interest in AutoImmune is greatly appreciated. We hope you share our vision for the future.

Sincerely,

Robert C. Bishop
Chairman of the Board
March 24, 2003

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