<PAGE>
================================================================================

                   UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549
                                  __________________

                                      FORM 10-Q



[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the Quarterly Period Ended June 30, 1999

                                          OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the Transition Period from ____________________ to ____________________

Commission File Number 0-11094
                       -------



                            RIBI IMMUNOCHEM RESEARCH, INC.
                (Exact name of registrant as specified in its charter)



        Delaware                                  81-0394349
------------------------     ---------------------------------------------------
(State of Incorporation)            (I.R.S. Employer Identification No.)

                   553 Old Corvallis Road, Hamilton, MT 59840
--------------------------------------------------------------------------------
             (Address of principal executive offices and zip code)

Registrant's telephone number, including area code (406) 363-6214
                                                   --------------



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                    Yes   X       No _____
                        -----

As of July 31, 1999 there were 21,434,870 shares of common stock outstanding.



================================================================================

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                                        INDEX



                                                                          Page
                                                                        Number
                                                                        ------

PART I.   FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . .  3
-------------------------------

Item 1.   Financial Statements: . . . . . . . . . . . . . . . . . . . . . .  3

          Condensed Balance Sheets
          June 30, 1999 (Unaudited)
          and December 31, 1998 . . . . . . . . . . . . . . . . . . . . . .  4

          Condensed Statements of Operations
          Three months and six months ended
          June 30, 1999 and 1998 (Unaudited). . . . . . . . . . . . . . . .  5

          Condensed Statements of Cash Flows
          Six months ended June 30, 1999 and
          1998 (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . .  6

          Notes to Condensed Financial Statements
          (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Item 2.   Management's Discussion and Analysis
          of Financial Condition and Results
          of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 11


PART II.  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 15
---------------------------

Item 1.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 15

Item 4.   Submission of Matters to a Vote of
          Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . 15

Item 5.   Other Information . . . . . . . . . . . . . . . . . . . . . . . . 15

Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 15


SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------

                                          2

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.



PART I.  FINANCIAL INFORMATION
------------------------------



Item 1.  Financial Statements

     The condensed balance sheet as of June 30, 1999, the condensed statements
of operations for the three month and six month periods ended June 30, 1998 and
1999, and the condensed statements of cash flows for the six months ended June
30, 1998 and 1999, have been prepared by the Company without audit. In the
opinion of management, all adjustments necessary to present fairly the financial
position, results of operations and cash flows as of and for the periods
indicated have been made, all of which are normal and recurring in nature.

     It is suggested that the accompanying condensed financial statements be
read in conjunction with the audited financial statements and the notes thereto
included in the Company's 1998 Annual Report to Shareholders and Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.

     The results of operations for the three month and six month periods ended
June 30, 1999 are not necessarily indicative of results expected for the full
year 1999.

                                          3

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                               CONDENSED BALANCE SHEETS
                                    (In Thousands)
<TABLE>
<CAPTION>
                                                June 30,       December 31,
                                                  1999             1998
                                              ------------     ------------
                                               (Unaudited)
ASSETS
------
<S>                                               <C>               <S>
Current assets:
     Cash and cash equivalents                    $     95              458
     Available-for-sale investment
       securities                                   10,630           12,767
     Accounts receivable                               647            1,302
     Inventories                                     1,391            1,185
     Other current assets                              214              213
                                                   -------          -------

          Total current assets                      12,977           15,925

Property, plant and equipment, net                  11,712           11,738

Deposits                                             1,612            1,568

Other assets, net                                      564              597
                                                   -------          -------

                                                  $ 26,865           29,828
                                                   =======          =======


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
     Accounts payable                             $    240              275
     Accrued expenses                                  802              793
     Deferred revenue                                3,355            3,160
                                                   -------          -------

          Total current liabilities                  4,397            4,228
                                                   -------          -------

Stockholders' equity:
     Preferred stock                                     1                1
     Common stock                                       21               20
     Additional paid-in capital                     75,654           75,446
     Accumulated other comprehensive income (loss)     (40)               7
     Accumulated deficit                           (53,168)         (49,874)
                                                   -------          -------

          Total stockholders' equity                22,468           25,600
                                                   -------          -------

                                                  $ 26,865           29,828
                                                   =======          =======

</TABLE>
See accompanying notes.

                                          4

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                          CONDENSED STATEMENTS OF OPERATIONS
                         (In Thousands Except per Share Data)
                                     (UNAUDITED)
<TABLE>
<CAPTION>
                                     Three Months Ended      Six Months Ended
                                           June 30,              June 30,
                                     ------------------    ------------------
<S>                                <C>         <C>         <C>        <C>
                                       1999       1998        1999       1998
                                       ----       ----        ----       ----

Revenues:
   Sales                           $    695        625       1,306      1,424
   Contracts and licenses               706        748       1,550      1,427
   Investment income                    154        165         324        324
   Other, net                           -            1         (12)        (4)
                                    -------    -------     -------    -------

      Total revenues                  1,555      1,539       3,168      3,171
                                    -------    -------     -------    -------

Costs and expenses:
   Purchases and production costs       432        452         801        722
   Research and development           1,600      2,002       3,447      4,056
   Selling, general and
     administrative                   1,026      1,075       2,016      2,111
                                    -------    -------     -------    -------

      Total costs and expenses        3,058      3,529       6,264      6,889
                                    -------    -------     -------    -------

Net loss                             (1,503)    (1,990)     (3,096)    (3,718)

Accretion of liquidation preference
 on preferred shares                     96        -           198        -
                                    -------    -------     -------    -------

Net loss applicable to common
 shares                            $ (1,599)    (1,990)     (3,294)    (3,718)
                                    =======    =======     =======    =======

Net loss per common share          $   (.08)      (.10)       (.16)      (.18)
                                    =======    =======     =======    =======

Average number of shares
  outstanding                        20,690     20,317      20,507     20,315
                                    =======    =======     =======    =======

</TABLE>

See accompanying notes.

                                          5

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                          CONDENSED STATEMENTS OF CASH FLOWS
                                    (In Thousands)
                                     (UNAUDITED)
<TABLE>
<CAPTION>
                                                     Six Months Ended
                                                         June 30,
                                                  ----------------------
<S>                                            <C>               <C>
                                                  1999              1998
                                                  ----              ----
Cash flows from operating activities:
  Net loss                                     $ (3,096)          (3,718)
  Adjustments to reconcile net loss to
    cash used by operating activities:
      Depreciation and amortization                 583              522
      Common stock grants                             3                3
      Compensation relating to stock options          8               10
      Discount accretion, accrued interest
        and investment losses, net                   99               70
      Asset sales and abandoned patents              16               23
      Changes in operating assets and
        liabilities                                 618            2,060
                                                -------          -------
        Net cash used by operating
          activities                             (1,769)          (1,030)
                                                -------          -------

Cash flows from investing activities:
  Capital expenditures                             (547)            (600)
  Payments for deposits and other assets            (49)          (1,564)
  Proceeds from sale of assets                       12                5
  Proceeds from maturities and sales of
    available-for-sale investment securities      4,501            6,124
  Purchases of available-for-sale
    investment securities                        (2,511)          (3,642)
                                                -------          -------
        Net cash provided by
          investing activities                    1,406              323
                                                -------          -------

Cash flows from financing activities:
  Proceeds from exercise of options                 -                 30
                                                -------          -------
        Net cash provided by financing
          activities                                -                 30
                                                -------          -------
        Net change in cash and cash
          equivalents                              (363)            (677)

Cash and cash equivalents at
  beginning of period                               458            1,224
                                                -------          -------
Cash and cash equivalents at
  end of period                                $     95              547
                                                =======          =======

Significant noncash financing activities:
  Issuance of common stock on conversion of
    convertible preferred stock                $  1,042              -
                                                =======          =======
</TABLE>
See accompanying notes.

                                          6

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)



1.  Inventories
    -----------

     Inventories are as follows:
<TABLE>
<CAPTION>
                                   June 30,         December 31,
                                     1999              1998
                                 -----------        -----------
                                         (In Thousands)
      <S>                          <C>                 <C>
      Raw materials                $    95                112
      Work in process                1,212              1,024
      Finished goods                    84                 49
                                    ------             ------

                                   $ 1,391              1,185
                                    ======             ======
</TABLE>

2.  Commitments and Contingencies
    -----------------------------

Groundwater Contamination. The Company, the National Institutes of Health
("NIH") and the Bitterroot Valley Sanitary Landfill ("Landfill") were notified
by the Montana Department of Health and Environmental Sciences (now known as the
Department of Environmental Quality ["DEQ"]) in March of 1991 that they had been
identified as potentially responsible parties ("PRPs") and as such are jointly
and severally liable for groundwater contamination located at and near the site
of the Landfill in Ravalli County, Montana. The Company's involvement arises out
of waste materials that it deposited at the Landfill from 1982 to 1985, which
the Landfill had permits to receive. The NIH unilaterally and voluntarily
initiated and completed work pursuant to an interim remediation plan approved by
the DEQ to remove and decontaminate the believed source of contamination and
treat the aquifers, which tests have shown contain contaminants. Although
decontamination of the soil at and around the Landfill has been completed,
treatment of the groundwater in the proximity of the disposal site continues
utilizing air sparging, and it is anticipated such treatment will continue
through 1999 and possibly longer. The DEQ conducted a "Risk Assessment" and
issued a "Draft Final Feasibility Study" in October 1994 that discussed possible
final remediation alternatives. In August 1995 the DEQ announced that it had
approved a second interim action in the vicinity of the Landfill being
unilaterally and voluntarily conducted by the NIH and which involves installing
individual replacement wells and new wells to provide both an alternate water
supply for the area residents and to develop additional information on the site
hydrogeology. Information collected from these wells through a multi-year
monitoring program will be used by the DEQ to evaluate the effectiveness of the
remediation efforts to date. The second interim action plan calls for the wells
to be installed in three phases. Phase I included occupied properties with the
highest remaining contamination levels. Phase II included occupied properties
with lesser degrees of contamination. Phase III consisted largely of vacant
properties. Preliminary studies completed in 1994 estimated the cost of the
wells to be approximately $1,400,000. Information indicates that a total of 19
alternate water supply wells

                                          7

<PAGE>

have been installed at a cost of approximately $1,000,000. The DEQ could require
the PRPs to implement further remediation should these wells not provide
sufficient quality or quantity of water. Additionally, the NIH has indicated it
is undertaking Phase II groundwater remediation to intercept and treat
contaminated groundwater near the eastern landfill boundary. The NIH has
projected costs for this Phase II groundwater remediation to be in excess of
$1,000,000 through 1999. The NIH, which has taken the lead and incurred
substantially all of the remediation costs, has represented publicly that it
would continue to work with the DEQ toward an acceptable final remediation plan.

     The DEQ initiated an action in 1997 in the State District Court in Lewis
and Clark County, Montana, against the Company, the Landfill and the owners of
the Landfill seeking recovery of past alleged costs associated with its
oversight activities in the amount of $238,000, as well as a declaratory
judgment finding the parties liable for future remedial costs, plus civil
penalties in the event the parties fail to comply. Since the action was
initiated, the Company and the NIH jointly have received statements requesting
payment of an additional $30,000. In May 1998 the Company was informed that the
DEQ had entered into a settlement agreement with the Landfill and its owners,
whereby the Landfill and its owners agreed to collectively pay the DEQ
approximately $35,000. The Company believes that it has meritorious defenses to
the claim, including the amount thereof, and that there are other responsible
parties. The Company filed a response to the action, including a counter claim
and motions for a change in venue and to dismiss. The court granted the
Company's motion for a change of venue to Ravalli County where the Company is
located. The court did not rule on the motion to dismiss, which motion will now
be acted upon by the court in Ravalli County. The DEQ filed a Motion for Stay of
Proceedings pending the outcome of the action in Federal District Court
discussed below in which the DEQ is a plaintiff. The court granted the motion
which the Company did not oppose. The Federal District Court recently denied a
motion of the DEQ to file an amended complaint to incorporate the complaint
filed with the State Court. In view of the District Court's denial of the motion
of the DEQ to amend its complaint, the DEQ has indicated it intends to petition
the State Court to lift the Stay of Proceedings.

     On April 21, 1998 the Company received notice that the United States,
acting on behalf of the Department of Health and Human Services, which overseas
the NIH, filed suit in United States District Court seeking contribution from
the Company of an "equitable share" of past and future response costs incurred
by the NIH in connection with remediation at and near the Landfill. The
complaint alleges that as of September 30, 1997 the United States had incurred
response costs in excess of $3,400,000 and that it expects to incur more than
$1,000,000 in additional response costs. The Company filed a response to the
action. On or about June 4, 1998 the Company received notice that the United
States had entered into a settlement agreement with the Landfill and the
Landfill owner pursuant to which the settling parties agreed to make payment in
of $440,000. In view of the settlement, the United States filed with the court a
Joint Motion for Stay of Proceedings between the United States of America, the
Landfill and the Landfill owner. Assuming the settlement is completed, the
action against the Landfill and the Landfill owners would be dismissed. Although
the Company believes it has meritorious defenses to the cost recovery claim,
including the amount thereof, and that there are other responsible parties,
there can be no assurance that the Company will be successful in its defenses to
claims arising out of the Landfill,

                                          8

<PAGE>

including the claims made by the United States. A preliminary pretrial
conference was recently held. The court issued a scheduling order. Pursuant to
the order the trial of this matter is anticipated to begin in the fall of 2000.

     On or about June 6, 1998 the DEQ filed a complaint in the United States
District Court against the Company, the Landfill and the owners of the Landfill
seeking recovery of past alleged costs associated with its oversight activities
in the amount of $258,000, of which it indicated not more than $154,000 had been
reimbursed, plus interest and attorneys' fees and costs as well as a declaratory
judgment finding the parties liable for future response costs. This action,
brought under the Federal Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA"), is similar to that filed in the State District Court
under a State Comprehensive Environmental Cleanup and Responsibility Act
("CECRA") described above. The Company has filed a response to the action,
including a counterclaim against the DEQ. The DEQ has initiated discovery, and
the Company responded to a discovery request. The Company believes that it has
meritorious defenses to the claim, including the amount thereof, and that there
are other responsible parties. There can be no assurance that the Company's
defenses and counterclaim will be successful.

     Depending upon the eventual outcome of the above discussed litigation and
when in time the litigation is concluded and the success of the Company in
pursuing defense and indemnity with insurance carriers, the outcome may harm the
Company's financial condition. Recently, an insurance carrier agreed to assume
reasonable defense costs in the cases discussed above but has reserved its
rights to challenge its responsibility. The insurance carrier has also agreed to
reimburse the Company's defense costs incurred to date. Accordingly, it is not
possible at present to accurately predict whether an adverse outcome will
significantly harm the Company's financial condition. The Company is unable to
determine its overall potential liability with respect to the Landfill at this
time. As of June 30, 1999 the Company has accrued a reserve of approximately
$300,000 to cover billed and potential legal, consulting and DEQ reimbursement
costs associated with the Company as a PRP. Net costs charged against operations
during the first six month periods of 1999 and 1998 were $54,000 and $47,000,
respectively.

Wrongful Discharge.  In June 1997 a complaint was filed in District Court in
Ravalli County against the Company by a former employee who was discharged for
cause in June 1996. The former employee alleges discharge in violation of the
Montana Wrongful Discharge from Employment Act ("Act") and further, that
discharge was for refusal to violate public policy. The court granted dismissal
with respect to that portion of the complaint which alleges termination for
refusal to violate public policy. The former employee filed a motion for
reconsideration asking the court to reverse its decision with respect to the
issue of termination for refusal to violate public policy and requested the
court for permission to amend the complaint to include additional allegations
relative to the public policy issue. On April 6, 1998 the court allowed the
former employee to amend the complaint as requested. The Company recently filed
a motion for partial summary judgement on the violation of public policy issue.
Plaintiff has filed a motion for partial summary judgement on the issue of
discharge in violation of the Wrongful Discharge Act. It is anticipated there
will be oral arguments to the court concerning the respective motions. However,
no date has

                                          9
<PAGE>

been set for the oral arguments. If the former employee should ultimately
prevail on the issue of discharge in violation of the Wrongful Discharge Act,
the potential liability of the Company would be approximately $320,000,
exclusive of the Company's attorneys' fees and related costs. If the former
employee prevails on the public policy issue, the Company could be subject to
punitive damages of an unknown amount in addition to the potential liability for
violation of the Wrongful Discharge Act. The Company believes that it has a
meritorious defense and plans to vigorously defend the suit. However, it is not
possible to reliably assess the outcome. Depending upon the eventual outcome of
this litigation and the timing of its conclusion, the result of this litigation
may significantly harm the Company's financial condition. It is possible the
case may go to trial during the first half of 2000.

     The former employee also filed a petition for Judicial Review in District
Court in Missoula County naming the Company and the State of Montana Department
of Labor and Industry respondents and asking the Court to review and overturn
the Department of Labor's decision finding the former employee was terminated
for misconduct under Montana law and is, therefore, not allowed to collect
unemployment benefits. The Company filed a response arguing the correctness of
the Department of Labor's decision. The court remanded the matter to the
Department of Labor for further testimony, which was taken. The Department of
Labor recently confirmed its previous findings that the former employee
willfully and purposefully failed to follow the reasonable instructions of the
Company and, therefore, was discharged for misconduct connected with his work
and directly affecting his employment. Accordingly, the Department of Labor
confirmed its previous findings that the former employee is not eligible to
receive unemployment insurance benefits. The former employee has filed a
petition for judicial review of the most recent decision of the Department of
Labor in District Court in Missoula County.

3.  Conversion of Preferred Stock
    -----------------------------

     Pursuant to a 1998 agreement with RGC International Investors, LDC, 1000
shares of preferred stock were converted into 666,214 shares of common stock
during the second quarter of 1999. At June 30, 1999 there were 7,240 shares of
preferred stock outstanding which were convertible into common stock at the
lower of $6.04 per share or a per share market price based on average market bid
prices for three consecutive trading days during the 22 trading days prior to
the date of conversion.

     On July 13, 1999 RGC converted an additional 750 shares of preferred stock
into 444,483 shares of common stock, leaving a balance of 6,490 shares of
preferred stock outstanding.

4.  Planned Merger with Corixa Corporation
    --------------------------------------

     On June 10, 1999 the Company announced that it had reached an agreement
with Corixa Corporation whereby Corixa would acquire all of the outstanding
common stock of the Company. Under terms of the proposed merger, the Company's
common shareholders will receive 0.1685 shares of Corixa common stock for each
share of Company common stock owned. Based on the closing price of Corixa common
stock on July 31, 1999, the value received for the Company's common stock is

                                          10

<PAGE>

approximately $49,210,000. In addition Corixa will provide approximately
$7,891,000 in cash attributed to the purchase of shares currently held as
preferred by RGC International Investors, LDC, stemming from a July 1998
financing by the Company. All outstanding shares of the Company's preferred
stock will be redeemed or converted into the Company's common stock in
accordance with the terms of the agreement. The transaction is intended to
qualify as a tax-free reorganization and will be accounted for as a purchase.
Subject to shareholder approval, the merger is expected to be completed in the
fall of 1999.

5.  Comprehensive Loss
    ------------------

     Total comprehensive loss for the Company consists of the sum of net loss
and unrealized gains and losses on available-for-sale investment securities. For
the three months ended June 30, 1999 and 1998, total comprehensive loss was
$1,536,000 and $1,991,000, respectively. For the six months ended June 30, 1999
and 1998, total comprehensive loss was $3,143,000 and $3,694,000, respectively.

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

General
-------

     Since its inception in 1981, the Company has been engaged primarily in the
research and development of immunostimulants for use in preventing and treating
human diseases. To date the Company has received limited revenues from
commercial sales and sales of clinical supplies. The Company has incurred net
losses in each year since its inception and expects to incur additional losses
for at least the next year, and probably longer. At June 30, 1999 the Company's
accumulated deficit was approximately $53,168,000.

     The Company's results of operations can vary significantly from quarter to
quarter and depend, among other factors, on costs related to the progress of
clinical trials conducted by the Company and, to a lesser extent, on revenues
and costs associated with manufacturing. To date research and development
expenses, together with manufacturing costs, have exceeded product and other
revenues in all periods.

     The Company is not able to estimate with certainty the amount of cash and
working capital which may be needed for operations. Such requirements typically
vary depending upon the results of basic research and clinical trials, the time
and expense required for governmental approval of products, and competitive and
technical developments, most of which are beyond management's control. There is
no assurance that the Company will be able to obtain the necessary funding in
sufficient amounts or at the appropriate time for its planned activities. In the
event the Company may require additional funding, it might not be able to
proceed as rapidly as it would like, if at all, with the development and
commercialization of its products, which would have a material adverse effect on
its future financial condition and results of operations.

     Pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, several forward-looking statements that involve a number of
risks and uncertainties are included within this Management's Discussion and

                                          11

<PAGE>

Analysis of Financial Condition and Results of Operations. In addition to the
risks and uncertainties discussed with the forward-looking statements, there are
a number of other factors that could cause actual results to differ materially
from projected results, including but not limited to the following: levels of
expenditure on and results of the Company's research and the impact of those
results on milestone and transfer payments from partners; research results of
other companies using the Company's products; competition from other companies;
changes in government regulation, including price controls for newly developed
drugs; and risk factors listed from time-to-time in the Company's reports to the
Securities and Exchange Commission. Forward-looking statements herein are
followed by an asterisk ("*").

Results of Operations
---------------------

     The Company incurred a smaller net loss in the second quarter and first six
months of 1999 than in the same periods in 1998. The smaller net loss resulted
from level total revenues and lower costs and expenses to date in 1999 than in
the comparable periods in 1998.

     Sales were up 11% in the second quarter of 1999 compared to the second
quarter of 1998 and down 8% in the first half of 1999 compared to the same
period in 1998. Sales vary from period to period depending upon the clinical
trial adjuvant needs of the Company's corporate partners who are developing
vaccines. Revenues from contracts and licenses were down slightly for the second
quarter but up 9% for the first half when compared to the same periods in 1998.
The increase in the first half reflects primarily the receipt of minimum
royalties under one of the Company's adjuvant license agreements.

     Purchases and production costs decreased slightly in the second quarter of
1999 compared to the second quarter of 1998, while at the same time sales were
up 11%. The resulting improved gross profit is attributed primarily to greater
plant throughput in the second quarter of 1999. Conversely, purchases and
production costs were slightly higher in the first half of 1999 than in the
first half of 1998 on slightly lower sales. Fluctuations in the relationship of
purchases and production costs to sales has to date been primarily a function of
the level of throughput of the Company's manufacturing plant. Plant throughput
varies with customer product requirements and validation testing of the
Company's manufacturing plant and processes.

     Research and development expenses decreased 20% in the second quarter of
1999 compared to the second quarter of 1998 and decreased 15% in the first six
months of 1999 compared to the first six months of 1998. Most of the decrease in
the second quarter and first six months of 1999 over the same periods in 1998
are outside contract costs incurred in 1998 associated with the preparation and
filing of commercial license applications for MELACINE in the treatment of Stage
IV (late stage) melanoma. An application to market MELACINE in Canada was filed
in the third quarter of 1997 and in Europe in the first quarter of 1998. Work
has been ongoing to satisfy FDA requirements to file an application to market
MELACINE in the United States. The Company has answered all questions from the
Canadian Health Protection Branch and is waiting a final decision on its
Canadian application. The application filed in Europe has been withdrawn leaving
open the possibility of refiling with additional data from ongoing Phase 3

                                          12

<PAGE>

clinical trials scheduled for completion later this year. A meeting with the FDA
has been requested to review the Company's progress on product potency and
consistency verification tests. This FDA meeting along with an FDA review of the
Company's independently verified clinical data may lead to the completion and
filing of a product license application in the United States.* Additionally, the
Company has continued its preclinical development of its new synthetic immune
system modulators, including its drug for protection against cardiac ischemia-
reperfusion injury. The Company expects total research and development expenses
for the year 1999 to be lower than those expenses in 1998 as much of the work
for commercial license applications for MELACINE was completed in 1997 and
1998.* It is possible that completion of the commercial license application to
be filed with the FDA will require more time than expected or that the FDA will
not accept the filing for detailed review. It is also possible that neither the
MELACINE commercial license application pending in Canada nor the one to be
filed with the FDA will be approved, or that planned clinical trials of
synthetic immune system modulators will not proceed as expected.

     Selling, general and administrative expenses were down 5% in both the
second quarter and first six months of 1999 compared to those same periods in
1998. During the second quarter of 1999 compared to the second quarter of 1998,
the decrease relates primarily to lower costs for salaries, investor relations
and support for regulatory filings, which were offset in part by merger costs
and greater depreciation expenses. For the first six months of 1999 compared to
the first six months of 1998, the reduction is attributable primarily to lower
costs for salaries, investor relations and recruiting, offset in part by merger
costs and higher depreciation and Year 2000 expenses. In 1999 external merger
costs through June 30 total approximately $100,000. The Company allocates part
of its administrative and depreciation costs, which are directly related to
manufacturing, to the cost of producing products for sale and for use in
clinical trials. Such costs allocated in the second quarters of 1999 and 1998
were $244,000 and $233,000, respectively. The amount allocated in the first six
month periods of 1999 and 1998 were $491,000 and $434,000, respectively.

Financial Condition
-------------------

     During the first six months of 1999 the Company used $1,769,000 in
operations which was 72% more than the amount used in the first six months of
1998. In 1998 the Company received in cash more license fee revenues than in the
first six months of 1999, which more than offset the decrease in net loss where
license fees are recognized on an accrual basis. These timing differences are
reflected in the caption "Changes in operating assets and liabilities." The
Company expects cash flows used in operations for the year 1999 to be less than
those in the year 1998 as expenses will likely continue to be lower in 1999 than
in 1998.* Projected cash flows are dependent upon the Company receiving revenues
that are anticipated. Projected cash flows are also dependent upon the Company
preparing the commercial filings and conducting the research and clinical trials
that are now planned.

     In June 1999 the Company announced that it had reached a definitive
agreement with Corixa Corporation, subject to shareholder approval, whereby
Corixa will acquire all of the outstanding stock of the Company in an exchange

                                          13

<PAGE>

of stock. Note 4 of the Notes to Condensed Financial Statements and Part II,
Item 5, provide more information regarding the proposed merger.

     Note 2 of the Notes to Condensed Financial Statements includes a discussion
of contingencies related to the Company's identification as a Potentially
Responsible Party for groundwater contamination at and near the Bitterroot
Valley Sanitary Landfill, and a suit filed by the U.S. Department of Justice
seeking to recover a portion of the related remediation costs. Note 2 also
contains information regarding the Company being a named defendant in two suits
brought by the Montana Department of Environmental Quality seeking to recover
alleged costs associated with its oversight activities of the Landfill and two
suits filed by a former employee.

Year 2000
---------

     In computer systems and applications developed in the 1970s and 1980s,
years were often stored in a 2-digit rather than 4-digit format to save
expensive computer storage and processing space. These systems correctly assumed
the 2-digit year in data storage was preceded by the digits "19." At Year 2000 a
2-digit date of "00" may not be interpreted correctly by these systems, which
could lead to incorrect or inadequate results or equipment failure in cases
where computer chips regulate equipment operation. The Company established a
committee, which made a preliminary assessment, and hired an outside firm, which
determined in reasonable detail the Company's exposure to the "Year 2000"
problem. Systems that potentially required remediation and testing were
prioritized. Remediation of identified systems is complete. The Company is
surveying critical vendors to determine their level of compliance, with a
targeted completion date of September 1, 1999.* Depending upon the results of
the vendor survey, appropriate contingency plans will be developed prior to
January 1, 2000.* The Company expects to continue to incur both internal
staffing costs, as well as consulting and other expenses related to these
issues. These costs will be expensed as incurred. The Company is not yet able to
estimate with certainty the potential costs associated with the Year 2000
problem. At June 30, 1999 approximately $190,000 has been spent for assessment
and remediation. Additionally, approximately $200,000 has been spent for the
acquisition and implementation of software for tracking and managing
manufacturing and for new accounting systems that, under other circumstances,
would have been purchased at a later time. The Company has allocated additional
funds of approximately $80,000 to complete its identification, necessary
remediation and contingency planning. Although the Company is working to solve
these issues in a timely manner, there can be no assurance that all of the Year
2000 problems will be resolved before the end of 1999 or that all of the
Company's vendors and customers will be Year 2000 compliant. At the present time
the Company does not expect Year 2000 issues to have a major impact on its
operation.* Most of its raw materials are fairly common and are available from
several different suppliers. However, the Company is developing contingency
plans to control the impact of an unforeseen failure. Depending upon the nature
and length of a possible Year 2000 compliance failure by the Company and/or its
vendors, the result could be a minor delay in the production of one or more of
the Company's products with little, if any, financial impact; or, in a worst
case scenario, for example, in the event of a long-term disruption of electrical
and/or natural gas service, the result could be partial or complete cessation of
operations of the Company pending restoration

                                          14

<PAGE>

of service. Depending upon the event, it could impact the ability of the Company
to produce product in response to potential orders from its customers and
otherwise effect the normal day-to-day operations of the Company, which could
have a material adverse financial effect upon the Company.

PART II.  OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings

     (a) Note 2 of the Notes to Condensed Financial Statements includes a
discussion of the Company's involvement as a PRP and a defendant in civil suits
relating to the Bitterroot Valley Sanitary Landfill. Note 2 also contains
information regarding two suits filed by a former employee.

Item 4.  Submission of Matters to a Vote of Security Holders

     (a) The Annual Meeting of Shareholders was held on April 26, 1999.

     (b) Proxies were solicited by the Company pursuant to Regulation 14A of the
Securities Exchange Act of 1934 and all of management's nominees for director
were elected as follows:

<TABLE>
<CAPTION>
                                                          TOTAL
                                 FOR        WITHHELD      VOTED
                                 ---        --------      -----
      <S>                     <C>            <C>        <C>
      John L. Cantrell        17,371,948     431,848    17,803,796
      Philipp Gerhardt        17,319,848     483,948    17,803,796
      Paul Goddard            17,358,892     444,904    17,803,796
      Mark I. Greene          17,166,304     637,492    17,803,796
      Robert E. Ivy           17,275,282     528,514    17,803,796
      Thomas N. McGowen, Jr.  17,337,147     466,649    17,803,796
      Frederick B. Tossberg   17,314,273     489,523    17,803,796

</TABLE>

Item 5.  Other Information

     On July 13, 1999 RGC International Investors, LDC, converted 750 shares of
preferred stock into 444,483 shares of common stock. Note 3 of the Notes to
Condensed Financial Statements contains additional information about the
preferred shares.

     Note 4 of the Notes to Condensed Financial Statements contains a
description of a planned merger between Corixa Corporation and the Company.

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Exhibit 27 - Financial Data Schedule (filed only electronically)

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed during the quarter ended
          June 30, 1999.

                                          15

<PAGE>

SIGNATURES
----------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                               RIBI IMMUNOCHEM RESEARCH, INC.
                               --------------------------------------
                               (Registrant)



August 11, 1999                By   /s/Vern D. Child
                                 ------------------------------------
                               Vern D. Child, Vice President-Finance
                               and Treasurer (duly authorized officer
                               and principal financial and accounting
                               officer)

                                          16