<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 March 31, 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 April 30, 1999, there were 20,323,473 shares of common stock outstanding.



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

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                                        INDEX

 
                                                                       Page
                                                                     Number

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

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

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

                    Condensed Statements of Operations
                    Three months ended March 31,
                    1999 and 1998 (Unaudited). . . . . . . . . . . . . . .5

                    Condensed Statements of Cash Flows
                    Three months ended March 31,
                    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. . . . . . . . . . . . . . . . . . . . 10

Item 3.             Quantitative and Qualitative Disclosures
                    About Market Risk. . . . . . . . . . . . . . . . . . 13

PART II.     OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . 14
------------------------------

Item 1.             Legal Proceedings. . . . . . . . . . . . . . . . . . 14

Item 6.             Exhibits and Reports on Form 8-K . . . . . . . . . . 14


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------

                                          2

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.



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


Item 1.   Financial Statements

     The condensed balance sheet as of March 31, 1999, the condensed statements
of operations and the condensed statements of cash flows for the three-month
periods ended March 31, 1999 and 1998 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 comprehensive loss and changes
in 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 Stockholders and Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.

     The results of operations for the three-month period ending March 31, 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>
                                              March 31,    December 31,
                                                1999          1998    
                                             -----------   -----------
                                             (Unaudited)
<S>                                             <C>            <C>
Assets
------

Current assets:
  Cash and cash equivalents                     $    482           458
  Available-for-sale investment 
    securities and accrued interest               11,614        12,767
  Accounts receivable                                638         1,302
  Inventories                                      1,114         1,185
  Other current assets                               197           213
                                                 -------       -------

     Total current assets                         14,045        15,925

Property, plant and equipment, net                11,805        11,738

Deposits                                           1,590         1,568

Other assets, net                                    579           597
                                                 -------       -------

                                                $ 28,019        29,828
                                                 =======       =======

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
  Accounts payable                              $    363           275
  Accrued liabilities                                794           793
  Deferred revenue                                 2,864         3,160
                                                 -------       -------

     Total current liabilities                     4,021         4,228
                                                 -------       -------

Stockholders' equity:
  Preferred stock                                      1             1
  Common stock                                        20            20
  Additional paid-in capital                      75,553        75,446
  Accumulated other comprehensive income (loss)       (7)            7
  Accumulated deficit                            (51,569)      (49,874)
                                                 -------       -------

     Total stockholders' equity                   23,998        25,600
                                                 -------       -------

                                                $ 28,019        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
                                                      March 31,     
                                                 -------------------
                                                 1999           1998
                                                 ----           ----
<S>                                          <C>             <C>
Revenues:
  Sales                                      $    611            799
  Contracts and licenses                          844            679
  Investment income                               170            159
  Other, net                                      (12)            (5)
                                              -------        -------

     Total revenues                             1,613          1,632
                                              -------        -------

Costs and expenses:
  Purchases and production costs                  369            270
  Research and development                      1,847          2,054
  Selling, general and administrative             990          1,036
                                              -------        -------

     Total costs and expenses                   3,206          3,360
                                              -------        -------

Net loss                                       (1,593)        (1,728)

Accretion of liquidation preference
  on preferred shares                             102            -  
                                              -------        -------

Net loss applicable to common shares         $ (1,695)        (1,728)
                                              =======        =======

Weighted average number of shares
  outstanding                                  20,323         20,312
                                              =======        =======

Net loss per common share                    $   (.08)          (.09)
                                              =======        =======

</TABLE>
See accompanying notes.

                                          5

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                          CONDENSED STATEMENTS OF CASH FLOWS
                                    (In Thousands)
                                      UNAUDITED)

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,    
                                                    ------------------
                                                    1999          1998
                                                    ----          ----

<S>                                               <C>          <C>
Cash flows from operating activities:
  Net loss                                        $ (1,593)     (1,728)
  Adjustments to reconcile net loss to
    cash provided (used) by operating activities:
      Depreciation and amortization                    286         261
      Common stock grants                                1           3
      Compensation relating to stock options             4           4
      Discount accretion, accrued interest
        and losses, net                                130          (5)
      Asset sales and abandoned patents                 20           6
      Changes in operating assets and
        liabilities                                    544       2,014
                                                   -------     -------
      Net cash provided (used) by operating
        activities                                    (608)        555
                                                   -------     -------

Cash flows from investing activities:
  Capital expenditures                                (358)       (234)
  Payments for deposits and other assets               (24)     (1,506)
  Proceeds from sale of assets                           5           5
  Proceeds from maturities and sales of
    available-for-sale investment securities         2,501       3,554
  Purchases of available-for-sale
    investment securities                           (1,492)     (2,606)
                                                   -------     -------
      Net cash provided (used) by investing                                 
       activities                                      632        (787)
                                                   -------     -------

Cash flows from financing activities:
  Proceeds from exercise of options                    -            13
                                                   -------     -------
      Net cash provided by financing
        activities                                     -            13   
                                                   -------     -------

      Net change in cash and cash equivalents           24        (219)

Cash and cash equivalents at beginning
  of period                                            458       1,224
                                                   -------     -------

Cash and cash equivalents at end
  of period                                       $    482       1,005 
                                                   =======     =======

</TABLE>
See accompanying notes.

                                          6

<PAGE>
                            RIBI IMMUNOCHEM RESEARCH, INC.

                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)


1.   Inventories
     -----------
        
     Inventories are as follows:

<TABLE>
<CAPTION>

                                March 31,      December 31,
                                  1999             1998   
                               -----------     -----------
                                    (In Thousands)
     <S>                       <C>                <C>
     Raw materials             $   100              112
     Work in process               933            1,024
     Finished goods                 81               49
                                 -----            -----

                               $ 1,114            1,185
                                 =====            =====
</TABLE>

2.   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 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
which it generated and were subsequently 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
involved installing individual replacement and new 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 is being 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; and 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

                                          7

<PAGE>

alternate water supply wells 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 recently issued a "Unilateral
Administrative Order" to the NIH and the Company to undertake certain domestic
well operation, maintenance and sampling activities. Information indicates the
NIH has agreed to undertake the additional activities requested. The cost of
these activities is estimated to be about $10,000 annually. It is not known how
long the DEQ will require these activities to continue.

     The DEQ initiated an action in 1997 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 approximately $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 has filed a response to the action, including a
counterclaim and motions for a change in venue and to dismiss. Recently 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. Recently 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.

     On April 21, 1998 the Company received notice that the United States of
America ("U.S."), 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 the remediation at and
near the Landfill. The complaint alleges that as of September 30, 1997 the U.S.
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
U.S. had entered into a settlement agreement with the Landfill and the Landfill
owners pursuant to which the settling parties agreed to make payment in the
amount of $440,000. In view of the proposed settlement, the U.S. filed with the
Court a Joint Motion for Stay of Proceedings between the U.S., the Landfill and
Landfill owners. 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, and that

                                          8

<PAGE>

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,
including the claims made by the U.S.

     On or about June 6, 1998 the DEQ filed a complaint in the United States
District Court against the Company, the Landfill and 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. The DEQ also seeks to collect interest and attorneys' fees and
costs, as well as a declaratory judgment finding the parties liable for future
response costs. This action is similar to that filed in the State District Court
where further action has been deferred pending the outcome of the Federal
action. The Company has filed a response to the action, including a counterclaim
against the DEQ. The DEQ has initiated discovery. 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 litigation, when in time the
litigation is concluded, and the success of the Company in pursuing defense and
indemnity with insurance carriers, the outcome may or may not have a material
adverse effect on the Company's financial condition. Subject to a reservation of
rights, the Company has reached agreement with an insurance carrier which will
assume past and future reasonable defense costs incurred with respect to the
suits pending in Federal District Court and State District Court discussed
above. Accordingly, it is not possible at present to accurately predict whether
an adverse outcome will have a material adverse effect on 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 March 31, 1999 the
Company has accrued a reserve of approximately $300,000, primarily to cover
legal, consulting and DEQ reimbursement costs associated with the Company as a
PRP. Net costs charged against operations during the first quarters of 1999 and
1998 were $42,000 and $22,000, respectively.

     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 plaintiff 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. Plaintiff 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 plaintiff to amend the complaint as
requested. If plaintiff should ultimately prevail on the issue of discharge in
violation of the Act, the potential liability of the Company could be
approximately $320,000, exclusive of the Company's attorneys' fees and related
costs. If the plaintiff 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 Act. The Company believes it has a meritorious
defense and plans to

                                          9

<PAGE>

vigorously defend the suit. However, it is not possible to reliably assess the
outcome. Depending upon the eventual outcome of this litigation and when in time
the litigation is concluded, the outcome may or may not have a material adverse
effect of the Company's financial condition. It is possible the case may go to
trial during 1999.

     The plaintiff 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. The plaintiff asked the Court to review and
overturn the Department of Labor's decision finding plaintiff was terminated for
misconduct as defined in MCA Section 39-51-2303 and, therefore, not allowing
plaintiff 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 issued a Findings of Fact; Conclusions of Law; and
Order in which it confirmed its previous findings that the plaintiff 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 confirmed its
previous findings that the plaintiff is not eligible to receive unemployment
insurance benefits. The plaintiff filed an appeal with the Board of Appeals of
the Department of Labor seeking to overturn the decision. A hearing was held on
May 6, 1999. The Board of Appeals affirmed the decision of the Department of
Labor. The plaintiff has indicated he will appeal the decision to the State
District Court. However, if plaintiff is eventually successful, it would not
have a material adverse effect on the financial condition of the Company.

3.   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 March 31, 1999 and 1998, total comprehensive loss was
$1,607,000 and $1,703,000, 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 March 31, 1999 the Company's
accumulated deficit was approximately $51,569,000.

     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,

                                          10

<PAGE>

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.

     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 nearly complete with
completion targeted for May 31, 1999.* The Company is preparing a survey of
critical vendors to determine their level of compliance with a targeted
completion date of July 31, 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 March 31, 1999
approximately $154,000 has been spent for assessment and remediation.
Additionally, approximately $190,000 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
$100,000 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

                                          11

<PAGE>

operations of the Company pending restoration 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.

     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
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 within this
document are followed by an asterisk ("*").

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

     During the first quarter of 1999 the Company incurred a net loss of
$1,593,000 compared to a net loss of $1,728,000 in the first quarter of 1998.
The lower net loss reflects level total revenues and lower expenses.

     Increased revenues from contracts and licenses were offset by lower sales
for the first quarter of 1999 compared to the first quarter of 1998. The
increase in revenues from contracts and licenses results from the receipt of
minimum royalties under one of its adjuvant license agreements. Sales were lower
reflecting the needs of the Company's corporate partners who are developing
vaccines using the Company's adjuvants. The Company expects sales for the year
1999 to be comparable with those of 1998.* However it is possible that customer
orders will be lower than projected.

     Purchases and production costs increased $99,000 while sales decreased
$188,000 during the first quarter of 1999 compared to the first quarter of 1998.
Costs were lower in the first quarter of 1998 in relation to sales because of
higher plant throughput during the first quarter of 1998.

     Research and development expenses decreased 10% during the first quarter of
1999 compared to the same quarter in 1998. The decrease mainly reflects
additional outside contract and other costs incurred in the first quarter of
1998 necessary to prepare and file its commercial license application for
MELACINE melanoma theraccine in Europe. The application was later withdrawn,
leaving open the possibility of refiling with additional data from ongoing Phase
3 clinical trials scheduled for completion later this year. The Company has been
preparing a commercial license application for filing with the Food and Drug
Administration ("FDA") in the United States. A meeting with the FDA is planned
for later this year to obtain further guidance on filing the application.
Additionally, the Company has continued its preclinical development of its new
synthetic immune

                                          12

<PAGE>

system modulators, including its drug for protection against cardiac 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 will not proceed as
expected.

     Selling, General and Administrative expenses decreased $46,000 in the first
quarter of 1999 compared to the first quarter of 1998. The decrease relates
primarily to reductions in recruiting costs and validation support, offset in
part by increased Year 2000 remediation and testing costs. Additionally, the
Company allocated $247,000 in administrative expenses relating to manufacturing
activities to production costs in the first quarter of 1999 compared to $200,000
in the first quarter of 1998.

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

     During the first quarter of 1999 the Company used $608,000 in operations
compared to cash provided by operations during the first quarter of 1998 of
$555,000. The variance mainly reflects changes in operating assets and
liabilities connected to differences between the timing of cash and accrual for
the recognition of license fee revenues. 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 and preparing
the commercial filings and conducting the research and clinical trials that are
now planned.

     See Note 2 of the Notes to Condensed Financial Statements for 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 a suit
brought by the Montana Department of Environmental Quality seeking to recover
alleged costs associated with its oversight activities of the Landfill and a
suit filed by a former employee.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

     Interest earned on the Company's investment portfolio is affected by
changes in the general level of interest rates in the United States. The
following table provides information about the Company's investment portfolio
including principle cash flows and related weighted average interest rates by
anticipated maturity dates. At March 31, 1999 the Company's available-for-sale
investment securities, comprising primarily of debt instruments of major
corporations and the United States Government and its agencies, are
substantially similar in nature and have been combined for this presentation.

                                          13

<PAGE>

<TABLE>
<CAPTION>

                    Twelve Months             Principal            Average
                   Ended March 31,            Maturing          Interest Rate
                   ---------------            ---------         -------------
                                           (In Thousands)

                        <S>                  <C>                    <C> 
                        2000                 $   8,299              5.33%

                        2001                     3,160              5.26%

                        2006                         5              5.42%
                                                ------

                                             $  11,464
                                                ======

Fair value at March 31, 1999                 $  11,457
                                                ======

</TABLE>

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

Item 1.   Legal Proceedings

     (a)  See Note 2 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.
          Note 2 also contains information regarding two suits filed by a former
          employee.

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
               March 31, 1999.

                                          14

<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)
       


May 12, 1999             By   /s/ Vern D. Child                      
                           -------------------------------------------
                         Vern D. Child, Vice President-Finance
                         and Treasurer (duly authorized officer
                         and principal financial and accounting
                         officer)

                                          15