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

                         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 September 30, 1996

                                         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 October 31, 1996, there were 18,891,443 shares of common stock
outstanding.


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

<PAGE>
                           RIBI IMMUNOCHEM RESEARCH, INC.

                                        INDEX



                                                                          Page
                                                                         Number
                                                                         ------

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

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

          Condensed Balance Sheets
          September 30, 1996 (Unaudited)
          and December 31, 1995. . . . . . . . . . . . . . . . . . . . . . .  4

          Condensed Statements of Operations
          Three months and nine months ended
          September 30, 1996 and 1995 (Unaudited). . . . . . . . . . . . . .  5

          Condensed Statements of Cash Flows
          Nine months ended September 30, 1996 and
          1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .  6

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

Item 2.  Management's Discussion and Analysis
          of Financial Condition and Results
          of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . .  9


PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------------

Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 11

Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------

                                          2

<PAGE>
                           RIBI IMMUNOCHEM RESEARCH, INC.



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



Item 1.   Financial Statements

     The condensed balance sheet as of September 30, 1996, the condensed
statements of operations for the three-month and nine-month periods ended
September 30, 1995 and 1996, and the condensed statements of cash flows for the
nine months ended September 30, 1995 and 1996, 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. Certain reclassifications have
been made to the prior year financial statements to conform to the 1996
presentation.

     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 1995 Annual Report to Stockholders and Annual Report
on Form 10-K for the fiscal year ended December 31, 1995.

     The results of operations for the three-month and nine-month periods ended
September 30, 1996, are not necessarily indicative of results expected for the
full year 1996.

                                          3

<PAGE>
                           RIBI IMMUNOCHEM RESEARCH, INC.

                              CONDENSED BALANCE SHEETS
                                   (In Thousands)

<TABLE>
<CAPTION>

                                                   September 30,    December 31,
                                                       1996             1995    
                                                   ------------     ------------
                                                     (Unaudited)            
<S>                                                    <C>              <C>
ASSETS
------

Current assets:
     Cash and cash equivalents                         $    984             284
     Available-for-sale investment 
       securities                                        15,086          11,653
     Accounts receivable                                    348             725
     Inventories                                          1,291             983
     Other current assets                                   116             250
                                                        -------         -------

          Total current assets                           17,825          13,895

Held-to-maturity investment securities                     -              7,887

Property, plant and equipment, net                       11,607          11,580

Other assets, net                                           584             549
                                                        -------         -------

                                                       $ 30,016          33,911
                                                        =======         =======


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

Current liabilities:
     Accounts payable                                  $    102             253
     Accrued expenses                                       458             601
     Deferred revenue                                       406             630
                                                        -------         -------

          Total current liabilities                         966           1,484
                                                        -------         -------

Stockholders' equity:
     Preferred stock                                       -               -
     Common stock                                            19              19
     Additional paid-in capital                          62,487          62,460 
     Unrealized investment holding 
      (losses)                                              (57)             (5)
     Accumulated deficit                                (33,399)        (30,047)
                                                        -------         -------

          Total stockholders' equity                     29,050          32,427
                                                        -------         -------

                                                       $ 30,016          33,911
                                                        =======         =======

</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         Nine Months Ended
                                            September 30,              September 30,   
                                         --------------------     --------------------

                                            1996         1995        1996         1995
                                            ----         ----        ----         ----
<S>                                      <C>             <C>        <C>          <C>
Revenues:
   Sales                                 $    603          279       1,421          818 
   Contracts and licenses                     516          399       1,549        1,253
   Investment income                          250          316         788          926
   Other, net                                   1            1           3            5
                                          -------      -------     -------      -------
      Total revenues                        1,370          995       3,761        3,002
                                          -------      -------     -------      -------

Costs and expenses:                    
   Purchases and production costs             279          236         753          731
   Proprietary research
     and development                        1,498        1,430       4,267        4,045
   Selling, general and
     administrative                           648          758       2,093        2,355
                                          -------      -------     -------      -------

      Total costs and expenses              2,425        2,424       7,113        7,131
                                          -------      -------     -------      -------

      Net loss                           $ (1,055)      (1,429)     (3,352)      (4,129)
                                          =======      =======     =======      =======

Net loss per common share                $   (.06)        (.08)       (.18)        (.22)
                                          =======      =======     =======      =======
 
Average number of shares
  outstanding                              18,891       18,878      18,890       18,874
                                          =======      =======     =======      =======

</TABLE>

See accompanying notes.

                                                                   5

<PAGE>
                                               RIBI IMMUNOCHEM RESEARCH, INC.

                                             CONDENSED STATEMENTS OF CASH FLOWS
                                                       (In Thousands)
                                                        (UNAUDITED)
<TABLE>
<CAPTION>

                                                            Nine Months Ended
                                                              September 30,
                                                         -----------------------
                                                         1996               1995
                                                         ----               ----
<S>                                                    <C>                 <C>
Cash flows from operating activities:
  Net loss                                             $ (3,352)          (4,129)
  Adjustments to reconcile net loss to 
    cash used by operating activities:
      Depreciation and amortization                         694              592
      Common stock issued in payment of
        expenses                                              7               12
      Compensation relating to stock options                 15               26
      Investment discount accretion                        (370)            (322)   
      Asset sales and abandoned patents                       3                8
      Changes in operating assets and
        liabilities                                        (316)              50
                                                        --------         -------
        Net cash used by operating
          activities                                     (3,319)          (3,763)
                                                        --------         -------

Cash flows from investing activities:
  Capital expenditures                                     (688)          (1,327)
  Payments from other assets                                (71)             (50)
  Proceeds from sale of assets                             -                   2
  Proceeds from maturities of held-to- 
    maturity investment securities                        3,121            5,613
  Proceeds from maturities and sale of
    available-for-sale investment securities              2,650            3,663
  Purchases of available-for-sale
    investment securities                                  (902)            (254)
  Purchases of held-to-maturity
    investment securities                                   (97)          (4,146)
                                                        -------          -------
        Net cash provided by investing
          activities                                      4,013            3,501
                                                        -------          -------

Cash flows from financing activities:
  Proceeds from exercise of options                           6               35
                                                        -------          -------
        Net cash provided by financing
          activities                                          6               35
                                                        -------          -------

        Net change in cash and short-term 
          deposits                                          700             (227) 

Cash and cash equivalents at  
  beginning of period                                       284              714
                                                        -------          -------

Cash and cash equivalents at       
  end of period                                        $    984              487
                                                        =======          =======

</TABLE>

See accompanying notes.

                                                                   6
<PAGE>
                         RIBI IMMUNOCHEM RESEARCH, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)



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

     Inventories are as follows:

<TABLE>
<CAPTION>

                                        September 30,      December 31,
                                            1996               1995   
                                         ----------         ----------
                                                 (In Thousands)
      <S>                                  <C>                    <C>
      Raw materials                        $    97                 99
      Work in process                        1,097                780
      Finished goods                            97                104
                                            ------             ------

                                           $ 1,291                983
                                            ======             ======

</TABLE>

2.   Reclassification of Investments
     -------------------------------

     On June 30, 1996, the Company reclassified all of its held-to-maturity
investment securities as available-for-sale and reported them as current
assets. The change resulted in a reduction of $49,000 to the unrealized
investment losses reported in the stockholders' equity section of the
balance sheet on June 30, 1996. Previously, the Company's investment
securities, which it had both the intent and ability to hold until maturity,
were classified as held-to-maturity. Additionally, both held-to-maturity
investment securities maturing after twelve months and available-for-sale
investment securities were previously classified as noncurrent assets. The
change was made to reflect the Company's belief that all investments are
available to support current operations and to report on a more consistent
basis with other companies in the industry.

3.   Commitments and Contingencies
     -----------------------------

     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 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 which it deposited at the Landfill
from 1982 to 1985 that the Landfill had permits to receive. The NIH
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 carbon filtering and air sparging,
and it is anticipated such treatment will continue through 1996 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

                                        7

<PAGE>

Landfill being voluntarily conducted by the NIH and which involves
installing individual replacement wells to provide both an alternate water
supply for the affected 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 current plan calls for
the wells to be installed in three phases: Phase I includes occupied
properties with the highest remaining contamination levels; Phase II
includes occupied properties with lesser degrees of contamination; and Phase
III consists largely of vacant properties. Preliminary studies completed in
1994 estimated the cost of the wells to be approximately $1,400,000. The
first Phase was completed in the spring of 1996. The DEQ could require the
PRPS to implement further remediation should these wells not provide
sufficient quality or quantity of water. 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. In 1993, the NIH stated that as of that time, it had
incurred costs and anticipated future interim remediation costs which could
total $2 million or more. The DEQ has filed an action against the Landfill,
the operator of the Landfill and the Company seeking reimbursement of costs
in the amount of $199,000 associated with its oversight activities. The
Company has filed a response to the action. Because of the uncertainties,
including the uncertainty of the cost of further remediation and whether the
NIH will seek and obtain partial reimbursement from the other PRPs, it is
not possible at this time to determine the potential liability of the
Company as a PRP.

     Two landowners in the vicinity of the Landfill had filed civil suits
seeking unspecified damages for alleged diminished value of land, possible
health hazards and loss of domestic water source. The suits named the PRPs
and the DEQ, as well as unknown individuals and corporations which may be
discovered to have contributed to the injuries alleged. The Company filed
answers to these suits denying any liability and in a motion for summary
judgement, denied the injuries alleged. On October 11, 1996, the court
granted the summary judgement and dismissed the plaintiffs claims. A motion
has been filed on behalf of one of the plaintiffs to vacate the order or
alternatively, to direct the entry of a final judgement as to all claims
against the defendants. Based on this filing, it is believed that this
plaintiff intends to appeal the summary judgement order, if it is not
vacated as requested. The Company is drafting an appropriate response to the
motion. It is not possible at this time, to predict whether additional civil
suits will be filed, the outcome of the pending suits or the potential
financial impact on the Company or the probability of adverse decisions.

     As of September 30, 1996, the Company has accrued a reserve of
approximately $190,000 primarily to cover billed and potential legal,
consulting and DEQ reimbursement costs associated with the Company as a PRP
and the civil suits. Some of the costs incurred in the defense of the civil
suits, including the action by the DEQ seeking reimbursement of costs, have
been paid by insurance and at least some of the future defense costs are
expected to be paid by insurance. None of the expected future insurance
reimbursements have been included in the reserve. Net costs charged against
earnings during the first nine-month periods of 1996 and 1995 were $9,000
and $48,000, respectively.

                                        8

<PAGE>

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 few years. At September 30, 1996,
the Company's accumulated deficit was approximately $33,399,000.

     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.

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

     The Company had a smaller net loss during both the third quarter and
the first nine months of 1996 compared to the same periods in 1995. The
reduced net loss can be attributed primarily to increased sales and revenues
from contracts and licenses, while expenses were nearly unchanged.

     Revenues increased by 38% in the third quarter of 1996 compared to the
third quarter of 1995 as a result of a 116% increase in sales and a 29%
increase in revenues from contracts and licenses, which were partially
offset by a 21% reduction in investment income. All of the increase in sales
during the third quarter of 1996 was due to improved sales of custom
adjuvants. Custom adjuvants made up 80% of total sales for the quarter.
Revenues from contracts and licenses increased because of new agreements
signed late in the fourth quarter of 1995 and in the second quarter of 1996.
During the second quarter of 1996 the Company entered into a fourth
agreement with SmithKline Beecham ("SB") which covers the use of the
Company's adjuvants in allergy vaccines under development by SB. Investment
income was down primarily because of a smaller total investment portfolio.

     For the first nine months of 1996, revenues were up 25% compared to the
first nine months of 1995. Sales increased 74% and revenues from contracts
and licenses were up 24%, slightly offset by a 15% reduction in investment
income. The trends explained in the preceding paragraph for the third
quarter are also

                                        9

<PAGE>

appropriate explanations for the first nine months of 1996 compared to the
first nine months of 1995.

     Purchases and production costs were a smaller percentage of sales
during the third quarter and first nine months of 1996 than during the same
periods in 1995. Construction of a new manufacturing plant was completed
late in 1994 and late in the second quarter of 1995, it became operational.
The Company also proceeded with validating the facility. Start-up and
validation caused purchases and production costs to be higher in relation to
sales in 1995.

     Proprietary research and development expenses increased approximately
5% in both the third quarter and the first nine months of 1996 compared to
the same periods of 1995. The increase in the third quarter of 1996 was
caused in part by expenses related to a Phase III human clinical trial which
began late in 1995 testing MELACINE melanoma theraccine. This trial treats
patients who have Stage IV melanoma with a combination of MELACINE and
interferon alfa-2b. Additionally, the Company is preparing a New Drug
Submission (a commercial license application) during 1996 and plans to file
it in Canada in the first quarter of 1997. These increased expenses were
partially offset by a reduction in certain preclinical and process scale-up
expenses in 1996. For the nine-month period, research and development
expenses were up primarily because of the new MELACINE clinical trial and
the New Drug Submission. The Company announced in April 1996 that it intends
to file commercial product license applications for MELACINE in the United
States, Canada and the European Community in 1997. A Phase II dose
escalation trial using MPL-C cardioprotectant to prevent or ameliorate the
effects of ischemia-reperfusion injury in cardiac bypass patients is also
moving forward as planned. These projects, along with other preclinical
projects, should cause research and development expenses in 1996 to exceed
those expenses reported in 1995. 

     Selling, general and administrative ("SG&A") expenses were
approximately 15% lower in the third quarter and 11% lower in the first nine
months of 1996 compared to those same periods in 1995. In 1996 advertising
and allocated employee benefit expenses were lower and more SG&A expenses in
total were allocated to the cost of manufacturing products in 1996 as the
plant has been operational throughout the year and has operated at a higher
level of throughput.

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

     During the first nine months of 1996, the Company used $3,319,000 in
operations which was 12% less than the amount used in the first nine months
of 1995. The decrease is attributable primarily to a smaller net loss with
greater depreciation charges, offset in part by timing differences in the
realization or use of cash reflected in operating assets and liabilities.
The Company expects cash flows used in operations for the year 1996 to
exceed the amount used in 1995 as research expenditures are expected to
increase over the remainder of the year.

     As of September 30, 1996, the Company had cash, cash equivalents and
short term investments totalling $16,070,000 which, based upon current
planning, it believes is enough to meet its objectives through 1998.

     See Note 3 of the Notes to Condensed Financial Statements for a
discussion of contingencies related to the Company's identification as a PRP
for groundwater contamination at and near the Bitterroot Valley Sanitary
Landfill and the Company being a named defendant in two civil suits brought
by landowners in the vicinity of the Landfill.

                                       10

<PAGE>

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

Item 1.   Legal Proceedings

     (a)  See Note 3 of the Notes to Condensed Financial Statements for a
          discussion of the Company's involvement as a PRP and a defendant
          in civil suits relating to the Bitterroot Valley Sanitary
          Landfill.


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
               September 30, 1996.

                                       11

<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)
       


November 14, 1996        By   /s/Vern D. Child                       
                           ------------------------------------------
                              Vern D. Child, Vice President-Finance
                              and Treasurer (duly authorized officer
                              and principal financial and accounting
                              officer)

                                       12