To Our Shareholders:
AutoImmune Inc. had a turbulent year in 2004, with both positive and negative events impacting the company. Although it was transparent to many of you, NASDAQ made a determination that from their perspective we were not sufficiently an operating company to maintain a SmallCap market listing and thus had to transfer stock trading to the OTC Bulletin Board.
Despite all efforts to date, we have not yet been successful in building substantial sales volume for the dietary supplement produced by our joint venture with Deseret Laboratories, Inc. The issues here are believed related both to product positioning and the choice of sales channels. Business Development Resources, Inc., a prominent consumer marketing firm, has been retained to create a plan that addresses these deficiencies. We remain optimistic this product can produce considerable value for our company, but need to resolve a current challenge to its regulatory status before making a final decision on significant promotional investments.
As long term shareholders well know, AutoImmune has licensed two applications of its intellectual property to capable partners in deals that could generate substantial value for the Company if products are approved for sale. The first of these is with Teva Pharmaceutical Industries, Ltd., which is working on an oral formulation of Copaxone® (glatiramer acetate), its injectable product for the treatment of relapsing-remitting multiple sclerosis. During the last half of 2004, Teva began a Phase II human clinical trial looking at two different doses of the oral product. We expect the first data from this trial will be available sometime next year. The second license is with BioMS Medical Corporation, which in December 2004 began a Phase III trial of its MBP8298 product for the treatment of chronic progressive multiple sclerosis. Recruitment for this trial is expected to take at least twelve months. We are pleased with the progress of our licensees this past year and look forward to the results of their clinical studies.
Final data from the oral insulin arm of the NIH sponsored diabetes prevention trial (DPT1), which tested a therapeutic method covered by AutoImmune's patents, is soon to be published and shows a statistically significant benefit for patients enrolled under the original entry criteria. We are told that NIH is currently planning a confirmatory study that could start later this year and hope this might lead 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 174 issued US and foreign patents, plus two 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 in the future.
With adequate financial reserves to wait for results from clinical trials of products based on our intellectual property and the prospect of positive cash flows in the future, we believe we are well positioned for success and remain optimistic that our technology will be proven of significant therapeutic value.
Your interest in AutoImmune is greatly appreciated.
Sincerely,
Robert C. Bishop
Chairman of the Board
March 30, 2005
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