<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q


(Mark One)

/ X /      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
----       EXCHANGE ACT OF 1934.


For the quarterly period ended SEPTEMBER 30, 1998
                               ------------------
                                       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 0-18006
                       -------


                         THE IMMUNE RESPONSE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)


           DELAWARE                                    33-0255679
(State or Other Jurisdiction of            (IRS Employer Identification Number)
 Incorporation or Organization)


                      5935 DARWIN COURT, CARLSBAD, CA 92008
                    (Address of Principal Executive Offices)
                                   (Zip Code)


                            TELEPHONE (760) 431-7080
              (Registrant's Telephone Number, Including Area Code)



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 ___
   ---

Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.

As of October 31, 1998, 23,479,412 shares of common stock were outstanding.



<PAGE>



                         THE IMMUNE RESPONSE CORPORATION

                                    FORM 10-Q

                                QUARTERLY REPORT


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                     ----
                          PART I. FINANCIAL INFORMATION

<S>        <C>                                                                       <C>
Item 1.    Financial Statements

               Condensed Consolidated Balance Sheets                                   3
               Condensed Consolidated Statements of Operations                         4
               Condensed Consolidated Statements of Cash Flows                         5
               Notes to Condensed Consolidated Financial Statements                    6

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                   8


                                       
                           PART II. OTHER INFORMATION


Item 4.    Submission of Matters to a Vote of Security Holders                        17

Item 6.    Exhibits and Reports on Form 8-K                                           17


Signature                                                                             18

</TABLE>
                                       2

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
                                       
                         THE IMMUNE RESPONSE CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>


                                                           September 30,
                                                               1998             December 31,
                                                           (unaudited)             1997
                                                           -------------        ------------
<S>                                                        <C>                  <C>
Assets

Current Assets:
    Cash and cash equivalents                              $    5,860           $     4,872
    Marketable securities-available-for-sale                   24,418                25,567
    Other current assets                                        1,895                   773
                                                           ----------           -----------
            Total current assets                               32,173                31,212


Property and equipment, net                                     6,305                 5,810
Deposits and other assets                                         956                   353
                                                           ----------           -----------
                                                           $   39,434           $    37,375
                                                           ----------           -----------
                                                           ----------           -----------

Liabilities and stockholders' equity

Current liabilities:
    Accounts payable                                       $    3,408           $     1,356
    Other accrued expenses                                      1,277                   917
                                                           ----------           -----------

            Total current liabilities                           4,685                 2,273

Convertible Preferred Stock                                     9,277                   ---

Stockholders' equity:
    Preferred stock, 5,000,000 shares 
        authorized; none issued                                  ---                    ---
    Common stock, $.0025 par value, 
        40,000,000 shares authorized,
        23,265,470 and 22,815,054 shares 
        issued and outstanding at
        September 30, 1998 and 
        December 31, 1997, respectively                            58                    57
    Warrants                                                    2,144                 2,144
    Additional paid-in capital                                188,496               186,374
    Cumulative comprehensive income                               168                    27
    Accumulated deficit                                     (165,394)             (153,500)
                                                           ----------           -----------
            Total stockholders' equity                         25,472                35,102
                                                           ----------           -----------
                                                           $   39,434           $    37,375
                                                           ----------           -----------
                                                           ----------           -----------
</TABLE>
See accompanying notes.

                                       3

<PAGE>

                         THE IMMUNE RESPONSE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except share data)
                                   (unaudited)


<TABLE>
<CAPTION>

                                                          Three months ended September 30,          Nine months ended September 30,
                                                          -------------------------------           -------------------------------
                                                               1998                 1997              1998                 1997
                                                            -----------        -----------           -----------       -----------
<S>                                                         <C>                <C>                   <C>               <C>        
   
Revenues:
    Contract research revenue                               $     1,488        $     1,000           $     2,488       $     2,000
    Licensed research revenue                                     1,000                ---                11,667               ---
                                                            -----------        -----------           -----------       -----------
                                                                  2,488              1,000                14,155             2,000
Expenses:
    Research and development                                      7,420              7,507                24,109            25,655
    General and administrative                                    1,073                951                 3,177             2,997
                                                            -----------        -----------           -----------       -----------
                                                                  8,493              8,458                27,286            28,652

Other revenue:
    Investment income                                               524                591                 1,237             1,869
                                                            -----------        -----------           -----------       -----------

Net loss                                                    $   (5,481)        $   (6,867)          $   (11,894)       $  (24,783)
                                                            -----------        -----------           -----------       -----------
                                                            -----------        -----------           -----------       -----------
Net loss per share - basic and diluted                      $    (0.24)        $    (0.31)          $     (0.52)       $    (1.15)
                                                            -----------        -----------           -----------       -----------
Weighted averge number of shares
    outstanding                                              23,207,942         22,473,136            22,984,853        21,584,162
                                                            -----------        -----------           -----------       -----------
                                                            -----------        -----------           -----------       -----------
</TABLE>

See accompanying notes.


                                       4

<PAGE>

<TABLE>
<CAPTION>

                         THE IMMUNE RESPONSE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


                                                                           Nine months ended September 30,
                                                                           -------------------------------
                                                                              1998                1997
                                                                           -----------       -----------
<S>                                                                        <C>               <C>       
Operating activities:
    Net loss                                                               $  (11,894)       $  (24,783)
    Adjustments to reconcile net loss to net cash provided from
       (used by) operating activities:
           Depreciation and amortization                                         1,112               900
           Deferred rent expense                                                  (67)              (45)
           Changes in operating assets and liabilities:
               Other current assets                                            (1,122)             (945)
               Accounts payable                                                  2,052               340
               Accrued expenses                                                    427                42
                                                                           -----------       ------------
                    Net cash used by operating activities                      (9,492)          (24,491)


Investing activities:
    Purchase/sale of marketable securities, net                                  1,290            20,372
    Purchase of property and equipment                                         (1,607)           (2,330)
    Sale of land                                                                   ---             1,020
    Deposits and other assets                                                    (603)             (250)
                                                                           -----------       ------------

                    Net cash provided from investing activities                  (920)            18,812


Financing activities:
    Net proceeds from sale of common stock and warrants                          1,333            15,640
    Net proceeds from sale of converible preferred stock                         9,160               ---
    Net proceeds from exercise of stock options                                    907             1,357
                                                                           -----------       ------------
                    Net cash provided from financing activities                 11,400            16,997
                                                                           -----------       ------------

Net increase in cash and cash equivalents                                          988            11,319
Cash and cash equivalents at beginning of period                                 4,872             3,785
                                                                           -----------       ------------
Cash and cash equivalents at end of period                                 $     5,860       $    15,104
                                                                           -----------       ------------
                                                                           -----------       ------------

Supplemental disclosure of noncash investing and financing activities:
    Accretion of preferred stock                                           $       117       $       ---
                                                                           -----------       ------------

</TABLE>
See accompanying notes
                                       5
<PAGE>

                         THE IMMUNE RESPONSE CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1998

1.     BASIS OF PRESENTATION
       The condensed consolidated financial statements of The Immune Response
       Corporation (the "Company") for the three and nine month periods ended
       September 30, 1998 and 1997 are unaudited. These financial statements
       reflect all adjustments, consisting of only normal recurring adjustments
       which, in the opinion of management, are necessary to fairly present the
       consolidated financial position as of September 30, 1998, and the
       consolidated results of operations for the three and nine month periods
       ended September 30, 1998 and 1997. The results of operations for the nine
       months ended September 30, 1998 are not necessarily indicative of the
       results to be expected for the year ended December 31, 1998. For more
       complete financial information, these financial statements, and the notes
       thereto, should be read in conjunction with the consolidated audited
       financial statements for the year ended December 31, 1997 included in the
       Company's Form 10-K filed with the Securities and Exchange Commission.


2.     NET LOSS PER SHARE
       Net loss per share for the three and nine months ended September 30, 1998
       and 1997 is computed using the weighted average number of common shares
       outstanding during the period. Outstanding stock options and warrants are
       not included in the calculation of earnings per share because as their
       effect would be antidilutive. Therefore, there is no difference between
       basic and diluted net loss per share.


3.     COMPREHENSIVE INCOME
       In January 1998, the Company adopted Statement of Financial Accounting
       Standards ("FAS") No. 130, "Reporting Comprehensive Income." The
       components of comprehensive income are as follows:

<TABLE>
<CAPTION>

       (in thousands)                           Three Months Ended Sept 30                Nine Months Ended Sept 30
                                                --------------------------                -------------------------
                                                  1998                1997                1998                1997
                                                  ----                ----                ----                ----
       <S>                                      <C>                 <C>                 <C>                <C>
         Net loss                               $ (5,481)           $ (6,867)           $(11,894)          $(24,783)
         Net unrealized gain (loss)
           on marketable securities                  191                  38                 140               (177)
                                                ---------           ---------           ---------         ---------
         Comprehensive loss                     $ (5,290)           $ (6,829)           $(11,754)          $(24,960)
                                                ---------           ---------           ---------         ---------
                                                ---------           ---------           ---------         ---------
</TABLE>

       All prior periods have been restated to reflect the adoption of this
       statement.


4.     EQUITY TRANSACTION
       During the second quarter of 1998, the Company sold 200 shares of its
       Series F Convertible Preferred Stock ("Series F Stock") in return for
       gross proceeds of $10 million. The Series F Stock is convertible into
       common stock initially at a conversion price of $14.07 per share of
       common stock. If the Company's common stock does not trade at prices
       higher than $14.07 per share over a period of time, the conversion price
       will be adjusted downward on April 24, 1999 (or sooner if the Company
       issues common stock at less than $14.07 per share) and quarterly
       thereafter. The Series F Stock bears a dividend of 7.5% per annum. In
       general, the dividend is payable in shares of common stock. The Company
       has filed a registration statement with the Securities and Exchange
       Commission covering the resale of the common stock issuable upon
       conversion of the Series F Stock. Further, the Company has the option for
       one year to sell up to $10 million more of the Series F Stock if certain
       conditions are met.

                                       6

<PAGE>

5.     COLLABORATION WITH AGOURON PHARMACEUTICALS, INC.
       During June 1998, the Company and Agouron Pharmaceuticals, Inc.
       ("Agouron") entered into a binding agreement under which the Company
       agreed to exclusively license REMUNE-TM-, its immune-based therapy 
       under development for the treatment of HIV infection, to Agouron. Under
       the terms of the agreement, the Company will manufacture commercial 
       supplies of REMUNE and Agouron will have exclusive rights to market
       REMUNE in North America, Europe and certain other countries, if 
       regulatory approvals are received. The agreement provides that the 
       Company may receive as much as $77 million over the next two years, 
       including license and milestone payments of $45 million, payments to 
       support research and development of $18 million and $14 million to 
       purchase the Company's common stock, priced at a premium to the market,
       subject to certain rights of termination by Agouron. In addition, the 
       two companies will share all profits from the commercialization of REMUNE
       on a 50/50 basis, if REMUNE is successfully developed and receives the 
       necessary regulatory approvals.

       In June 1998, the Company received a $10 million license fee and Agouron
       purchased 118,256 shares of newly issued common stock of the Company,
       priced at a premium to market, for $2 million. In October 1998, the
       Company received a $5 million payment from Agouron consisting of a $3
       million payment for research and development and a $2 million payment for
       the purchase of 126,758 shares of unregistered common stock priced at a
       premium to the market. The October 1998 payment is the first in a series
       of quarterly payments that the Company expects Agouron to make to fund
       research and development and to purchase unregistered common stock.


                                       7

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND 
          RESULTS OF OPERATIONS

OVERVIEW 
The Immune Response Corporation (the "Company") is a biopharmaceutical 
company developing immune-based therapies to induce specific T cell responses 
for the treatment of HIV, autoimmune diseases and cancer. The Company is 
conducting clinical trials for its immune-based therapies for HIV, rheumatoid 
arthritis, psoriasis, multiple sclerosis, colon cancer and brain cancer and 
preclinical studies for prostate cancer. In addition, the Company is 
developing a targeted delivery technology for gene therapy that is designed 
to enable the intravenous injection of genes for delivery directly to the 
liver. The Company's gene therapy program is currently focused on diseases of 
the liver and is in preclinical studies for the treatment of hemophilia and 
hepatitis.

This discussion contains forward-looking statements concerning the Company's 
operating results and timing of anticipated expenditures. Such statements are 
subject to risks and uncertainties that could cause actual results to differ 
materially from those projected. For a further description of potential risks 
and uncertainties related to the Company, this document should be read in 
conjunction with the Company's 1997 Form 10-K filed with the Securities and 
Exchange Commission. These forward-looking statements speak only as of the 
date hereof. The Company undertakes no obligation to publicly release the 
result of any revisions to these forward-looking statements that may be made 
to reflect events or circumstances after the date hereof or to reflect the 
occurrence of unanticipated events.

In July 1998, the Company entered into a research collaboration and option 
agreement with Schering-Plough Corporation ("Schering-Plough") to develop 
gene therapy products for the treatment of hepatitis B and C, and other 
diseases. Under terms of the initial preclinical research agreement, the 
Company could receive approximately $5 million in initial fees, reimbursement 
expenses and technical milestone payments related to the delivery of the 
interferon alpha-2b gene for the treatment of hepatitis B and C. As part of 
the agreement, Schering-Plough has the option to license Immune Response's 
gene delivery system for additional proprietary Schering-Plough genes. The 
agreement also provides for Schering-Plough to pay royalties on future 
product sales.

The Company has not been profitable since inception and had an accumulated 
deficit of $165.4 million as of September 30, 1998. The Company has not 
recorded any revenues from the sale of products. Revenues recorded through 
September 30, 1998 were earned in connection with contract research, 
licensing technology and investment income. The Company expects its operating 
losses to continue over the next several years, as well as to have 
quarter-to-quarter fluctuations, some of which could be significant, due to 
expanded research, development and clinical trial activities. The Company may 
not be able to generate sufficient product revenue to become profitable at 
all or on a sustained basis.

RESULTS OF OPERATIONS
The contract research revenue received in the first nine months of 1998 was 
received from Bayer Corporation related to a research collaboration for a 
potential therapy for hemophilia which began in July 1996 and from 
Schering-Plough related to a research collaboration for a potential therapy 
for hepatitis which began in July 1998. The licensed research revenue 
received in July 1998 was received from Schering-Plough. The Company has not 
received any revenue from the commercial sale of products and does not expect 
to derive revenue from the sale of products for the foreseeable future.

Investment income decreased to $524,000 for the quarter ended September 30, 
1998, from $591,000 during the same period in 1997. During the nine months 
ended September 30, 1998 and 1997, investment income was $1.2 million and 
$1.9 million, respectively.

Research and development expenditures decreased to $7.4 million during the 
third quarter of 1998 compared to such expenditures during the same period in 
1997 of $7.5 million. Research and development expenditures for the nine 
months ended September 30, 1998 were $24.1 million compared to $25.7 million 
for the same period in 1997. The decrease in research and development costs 
from 1997 was due primarily to the initial costs incurred in the first half 
of 1997 to enroll the

                                       8

<PAGE>

final clinical trial sites related to the Phase III clinical endpoint trial 
for HIV infection using REMUNE-TM-. Also, following the full recruitment of 
the Phase III clinical trial in May 1997, each participating clinical site 
was converted to a semi-annual payment schedule rather than payments based 
upon patient enrollment. As a result, payments that would otherwise have been 
made during the third quarter of 1997 were paid late in the second quarter of 
1997. The Company expects research and development expenditures to rise as it 
continues its Phase IIb rheumatoid arthritis clinical trial, expected to be 
completed by year-end 1998. Research and development expenditures should also 
continue to rise in the foreseeable future due to expanding preclinical and 
clinical testing of the Company's proposed gene therapy and cancer 
treatments. Research and development expenses related to advancing REMUNE are 
also expected to increase due to the continuance of the Company's ongoing 
Phase III clinical endpoint trial with REMUNE and to increased expenditures 
related to scaling up of the manufacturing process for REMUNE as the Company 
approaches possible commercialization of REMUNE.

General and administrative expenses for the third quarter of 1998 and 1997 
were $1.1 million and $951,000, respectively. General and administrative 
expenses for the nine months ended September 30, 1998 were $3.2 million as 
compared to $3.0 million for the same period in 1997. General and 
administrative expenses for the remainder of 1998 necessary to support the 
Company's expanded research and development activities are expected to remain 
consistent with the first three quarters of 1998.

For the quarter ended September 30, 1998, the Company's net loss was $5.5 
million, or $.24 per share, as compared to a net loss of $6.9 million, or 
$.31 per share, for the same period in 1997. For the nine months ended 
September 30, 1998, the Company's net loss was $11.9 million, or $.52 per 
share, as compared to a net loss of $24.8 million, or $1.15 per share for the 
same period in 1997. The primary factor causing the change in 1998 from 1997 
was the payments received from Agouron Pharmaceuticals, Inc. ("Agouron") in 
June 1998 and Schering-Plough in July 1998.

LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1998, the Company had 
working capital of $27.5 million, including $30.3 million of cash, cash 
equivalents and marketable securities. This compares with working capital as 
of December 31, 1997 of $28.9 million, including $30.4 million of cash, cash 
equivalents, marketable securities and short-term investments. Cash, cash 
equivalents and marketable securities are approximately the same at September 
30, 1998 as it was at December 31, 1997, despite the Company incurring 
operating expenses of $27.3 million through September 30, 1998, primarily due 
to the $10 million private placement of Series F Convertible Preferred Stock 
and the $12 million payment received from Agouron, both of which occurred in 
the second quarter of 1998, as well as due to the $2.5 million received from 
Schering-Plough and Bayer Corporation in July 1998 to fund gene therapy 
research.

During June 1998, the Company and Agouron entered into a binding agreement 
under which the Company agreed to exclusively license REMUNE, its 
immune-based therapy under development for the treatment of HIV infection, to 
Agouron. Under the terms of the agreement, the Company will manufacture 
commercial supplies of REMUNE and Agouron will have exclusive rights to 
market REMUNE in North America, Europe and certain other countries, if 
regulatory approvals are received. The agreement provides that the Company 
may receive as much as $77 million over the next two years, including license 
and milestone payments of $45 million, payments to support research and 
development of $18 million and $14 million to purchase the Company's common 
stock, priced at a premium to the market, subject to certain rights of 
termination by Agouron. In addition, the two companies will share all profits 
from the commercialization of REMUNE on a 50/50 basis, if REMUNE is 
successfully developed and receives the necessary regulatory approvals.

In June 1998, the Company received a $10 million license fee and Agouron 
purchased 118,256 shares of newly issued common stock of the Company, priced 
at a premium to market, for $2 million. In October 1998, the Company received 
a $5 million payment from Agouron consisting of a $3 million payment for 
research and development and a $2 million payment for the purchase of 126,758 
shares of unregistered common stock priced at a premium to the market. The 
October 1998 payment is the 

                                       9

<PAGE>

first in a series of quarterly payments that the Company expects Agouron to 
make to fund research and development and to purchase unregistered common 
stock.

The Company will need to raise additional funds to conduct research and 
development, preclinical studies and clinical trials necessary to bring its 
potential products to market and establish manufacturing and marketing 
capabilities. The Company anticipates that in the remainder of 1998 and in 
1999, the REMUNE clinical trials will continue to represent a significant 
portion of the Company's overall expenditures. The Company also anticipates 
that costs related to the development of REMUNE will continue to increase as 
the Company approaches possible commercialization. In particular, the Company 
anticipates additional capital improvements of approximately $3 million to be 
made over the next nine months related to increasing the capacity of its 
manufacturing facility, some of which the Company anticipates it will lease. 
Other anticipated costs with respect to REMUNE will depend on many factors, 
including the results of interim analyses of the data from the Phase III 
clinical endpoint trial, the potential for accelerated approval, the 
continuation of the Company's collaboration with Agouron and certain other 
factors which will influence the Company's determination of the appropriate 
continued investment of the Company's financial resources in this program.

The Company's future capital requirements will depend on many factors, 
including continued scientific progress in its research and development 
programs, the scope and results of preclinical studies and clinical trials, 
the time and costs involved in obtaining regulatory approvals, the costs 
involved in filing, prosecuting and enforcing patent claims, competing 
technological and market developments, the cost of manufacturing scale-up, 
effective commercialization activities and arrangements and other factors not 
within the Company's control. The Company intends to seek additional funding 
through public or private financings, arrangements with corporate 
collaborators or other sources. If funds are acquired through additional 
collaborations, the Company will likely be required to relinquish some or all 
rights to products that the Company may have otherwise developed itself. 
Adequate funds may not be available when needed or on terms acceptable to the 
Company. Insufficient funds may require the Company to scale back or 
eliminate some or all of its research and development programs or license to 
third parties products or technologies that the Company would otherwise seek 
to develop itself. The Company believes that its existing resources, 
including the funds received from the sale of Series F Convertible Preferred 
Stock and the funds received from Agouron, including interest thereon, will 
enable the Company to maintain its current and planned operations through the 
first half of 1999.

YEAR 2000 
The Company has performed a review of its computer applications and equipment 
related to their continuing functionality for the year 2000 and beyond. The 
Company does not believe that it has material exposure with respect to the 
year 2000 issue concerning its computer applications and equipment. The 
Company is communicating with third parties with whom it has a material 
relationship to assess its risk with respect to year 2000 issues. This 
assessment is not complete, in particular, because the Company has not 
completed inquiries of such outside third parties. However, the Company is 
not aware, at this time, of any material year 2000 issues with respect to its 
dealings with such third parties. The Company anticipates that its assessment 
will be completed by June 30, 1999. In the event that year 2000 issues were 
to disrupt the Company, such disruption may have a material impact on the 
Company and its results of operations. Since no significant issues have 
arisen, the Company does not have a contingency plan to address any material 
year 2000 issues. Such contingency plan, if required, will be developed 
immediately upon completion of the Company's assessment.

                                      10

<PAGE>

CERTAIN RISK FACTORS (For a discussion of additional Risk Factors applicable 
to the Company, see the Company's Annual Report on Form 10-K for the year 
ended December 31, 1997.)

UNCERTAINTY OF PRODUCT DEVELOPMENT AND CLINICAL TESTING.  The Company has not 
completed the development of any products and there can be no assurance any 
products will be successfully developed. The Company has been in existence 
since 1986, and to date only six of its product candidates have entered 
clinical trials. The Company's potential immune-based therapies for HIV, 
autoimmune disease, cancer and gene therapy products currently under 
development will require significant additional research and development 
efforts and regulatory approvals prior to potential commercialization. To 
achieve profitable operations, the Company must successfully develop, 
manufacture, introduce and market products. The Company's potential products 
may not prove to be safe and effective in clinical trials, United States Food 
and Drug Administration ("FDA") or other regulatory approvals may not be 
obtained and such products may not achieve market acceptance.

The Company's potential HIV immune-based therapy, REMUNE, is in a Phase III 
clinical endpoint trial designed to provide evidence of efficacy based on 
clinical endpoints. The results of this clinical trial may not demonstrate 
that REMUNE is safe and efficacious and, even if the results of the clinical 
trial are considered successful by the Company, the FDA may require the 
Company to conduct additional large scale clinical trials with REMUNE before 
the FDA will consider approving REMUNE for commercial sale. Failure to 
successfully complete the Phase III clinical endpoint trial in a timely 
fashion and a failure to obtain FDA approval of REMUNE will materially and 
adversely affect the Company.

The results of the Phase III trial may not be consistent with Phase II 
results. Even if the results of the Phase III trial are consistent with the 
results of the Phase II trial, the FDA may not approve REMUNE for marketing. 
In addition, REMUNE is being tested in a Phase II clinical trial in Thailand, 
in a pediatric Phase I clinical trial in the United States and in combination 
trials with approved HIV therapies in the United States, Spain, Switzerland 
and the United Kingdom. Failure of these trials to demonstrate the safety and 
effectiveness of REMUNE could have a material adverse effect on the 
regulatory approval process for this potential product.

The Company's other potential immune-based therapies and gene therapy 
technologies are at a much earlier stage of development than REMUNE. The 
Company's gene therapy technology and certain of its technologies for the 
treatment of cancer have not yet been tested in humans and human testing of 
potential products based on such technologies may not be permitted by 
regulatory authorities and, even if human testing is permitted, products 
based on such technologies may not be developed and shown to be safe or 
efficacious. Potential immune-based therapies based on certain of the 
Company's autoimmune technologies, which are in various stages of clinical 
testing, and certain of its cancer technologies, which are at an early stage 
of clinical testing, may not be shown to be safe, efficacious or receive 
regulatory approval.

The results of the Company's preclinical studies and clinical trials may not 
be indicative of future clinical trial results. A commitment of substantial 
resources to conduct time-consuming research, preclinical studies and 
clinical trials, including the REMUNE Phase III clinical endpoint trial will 
be required if the Company is to develop any products. Delays in planned 
patient enrollment in the Company's current clinical trials or future 
clinical trials may result in increased costs, program delays or both. None 
of the Company's potential products may prove to be safe and effective in 
clinical trials, FDA or other regulatory approvals may not be obtained or 
such products may not achieve market acceptance. Any products resulting from 
these programs are not expected to be successfully developed or commercially 
available for a number of years, if at all.

Unacceptable toxicities or side effects may occur at any time in the course 
of human clinical trials and, if any products are successfully developed and 
approved for marketing, during commercial use of the Company's products. The 
appearance of any such unacceptable toxicities or side effects could 
interrupt, limit, delay or abort the development of any of the Company's 
products or, if previously approved, necessitate their withdrawal from the 
market. Furthermore, disease resistance may limit the efficacy of the 
Company's potential products.

                                      11

<PAGE>

ADDITIONAL FINANCING REQUIREMENTS AND ACCESS TO CAPITAL. The Company will 
need to raise additional funds to conduct research and development, 
preclinical studies and clinical trials necessary to bring its potential 
products to market and establish manufacturing and marketing capabilities. 
The Company anticipates that in 1998 and 1999, the REMUNE clinical trials 
will continue to represent a significant portion of the Company's overall 
expenditures. The Company also anticipates that costs related to the 
development of REMUNE will continue to increase as the Company approaches 
possible commercialization. The anticipated costs with respect to REMUNE will 
depend on many factors, including the results of interim analyses of the data 
from the Phase III clinical endpoint trial, the potential for accelerated 
approval, the continuation of the Company's collaboration with Agouron and 
certain other factors which will influence the Company's determination of the 
appropriate continued investment of the Company's financial resources in this 
program.

The Company's future capital requirements will depend on many factors, 
including continued scientific progress in its research and development 
programs, the scope and results of preclinical studies and clinical trials, 
the time and costs involved in obtaining regulatory approvals, the costs 
involved in filing, prosecuting and enforcing patent claims, competing 
technological and market developments, the cost of manufacturing scale-up, 
effective commercialization activities and arrangements and other factors not 
within the Company's control. The Company intends to seek additional funding 
through public or private financings, arrangements with corporate 
collaborators or other sources. If funds are acquired through additional 
collaborations, the Company will likely be required to relinquish some or all 
rights to products that the Company may have otherwise developed itself. 
Adequate funds may not be available when needed or on terms acceptable to the 
Company. Insufficient funds may require the Company to scale back or 
eliminate some or all of its research and development programs or license to 
third parties products or technologies that the Company would otherwise seek 
to develop itself. The Company believes that its existing resources, 
including the funds received from the sale of Series F Convertible Preferred 
Stock and the funds received from Agouron, including interest thereon, will 
enable the Company to maintain its current and planned operations through the 
first half of 1999.

PATENTS AND PROPRIETARY TECHNOLOGY. The Company has filed, or participated as 
licensee, in the filing of a number of patent applications in the United 
States and many international countries. The Company files applications as 
appropriate for patents covering its products and processes. The Company has 
been issued patents, or has licensed patents, covering certain aspects of its 
proposed immune-based therapies for HIV, autoimmune disease, cancer and gene 
therapy technologies. The Company's success may depend in part on its ability 
to obtain patent protection for its products and processes. The Company is 
aware that a group working with Connetics Corporation has received a United 
States patent related to autoimmune disease research that covers technology 
similar to that used by the Company.

The Company may not be able to negotiate any necessary cross licenses, and 
failure to do so could have a negative impact on the Company. The Company's 
patent applications may not issue as patents and its issued patents, or any 
patent that may be issued in the future, may not provide the Company with 
adequate protection for the covered products, processes or technology.

The patent positions of biotechnology and pharmaceutical companies can be 
highly uncertain, and involve complex legal and factual questions. Therefore, 
the breadth of claims allowed in biotechnology and pharmaceutical patents 
cannot be predicted. The Company also relies upon unpatented trade secrets 
and know how, and others may independently develop substantially equivalent 
trade secrets or know how. In addition, whether or not the Company's patents 
are issued, or issued with limited coverage, others may receive patents that 
contain claims applicable to the Company's product. Any of the Company's 
patents, or any patents issued to the Company in the future, may not afford 
meaningful protection against competitors. Defending any such patent could be 
costly to the Company, and the patent may not be held valid by a court of 
competent jurisdiction.

The Company also relies on protecting its proprietary technology in part 
through confidentiality agreements with its corporate collaborators, 
employees, consultants and certain contractors. These agreements may be 
breached, the Company may not have adequate remedies for any breach and the 
Company's trade secrets may otherwise become known or independently 
discovered by its competitors.
                                      12

<PAGE>
It is possible that the Company's products or processes will infringe, or 
will be found to infringe, patents not owned or controlled by the Company, 
such as the patent owned by Connetics Corporation. If any relevant claims of 
third-party patents are upheld as valid and enforceable, the Company could be 
prevented from practicing the subject matter claimed in such patents, or 
would be required to obtain licenses or redesign its products or processes to 
avoid infringement. Such licenses may not be available at all or on terms 
commercially reasonable to the Company and the Company may not be able to 
redesign its products or processes to avoid infringement. Litigation may be 
necessary to defend against claims of infringement, to enforce patents issued 
to the Company or to protect trade secrets. Such litigation could result in 
substantial costs and diversion of management efforts regardless of the 
results of such litigation and an adverse result could subject the Company to 
significant liabilities to third parties, require disputed rights to be 
licensed or require the Company to cease using such technology.

HISTORY OF OPERATING LOSSES. As of September 30, 1998, the Company had an 
accumulated deficit of $165.4 million. The Company has not generated revenues 
from the commercialization of any products and expects to incur substantial 
net operating losses over the next several years. The Company may not be able 
to generate sufficient product revenue to become profitable at all or on a 
sustained basis. The Company expects to have quarter-to-quarter fluctuations 
in expenses, some of which could be significant, due to expanded research, 
development and clinical trial activities.

LENGTHY APPROVAL PROCESS AND UNCERTAINTY OF GOVERNMENT REGULATORY 
REQUIREMENTS. Clinical testing, manufacture, promotion and sale of the 
Company's drug products are subject to extensive regulation by numerous 
governmental authorities in the United States, principally the FDA, and 
corresponding state and foreign regulatory agencies. The Company believes 
that REMUNE and most of its other potential immune-based therapies will be 
regulated by the FDA as biological drug products under current regulations of 
the FDA. Biological products must be shown to be safe, pure and potent (i.e., 
effective) and are subject to the same regulatory requirements as 
nonbiological products under the FDC Act, as amended by the FDA Modernization 
Act, except that a biological product licensed under the Public Health 
Services Act ("PHS Act") is not required to have an approved NDA under the 
Federal Food, Drug and Cosmetic Act ("FDC Act"). The FDA Modernization Act 
directed the FDA to take measures to minimize the differences in the review 
and approval of marketing applications for biological and nonbiological 
products. The FDA Modernization Act also made significant revisions to the 
statutory requirements with regard to the approval of new biological and 
nonbiological products. Among other things, the FDA Modernization Act 
established a new statutory program for the approval of fast track drugs, 
streamlined clinical research, and revised the content of product approval 
applications and the FDA review process. The FDA is required to issue 
regulations and guidelines in order to implement certain of these new 
requirements. Until the FDA implements these regulations and guidelines, it 
is impossible to predict the impact of the FDA Modernization Act on the 
review and approval of any marketing applications that the Company may submit 
to the FDA. The FDC Act, the PHS Act and other federal and state statutes and 
regulations govern or influence the testing, manufacture, safety, 
effectiveness, labeling, storage, recordkeeping, approval, advertising, 
distribution and promotion of biological prescription drug products. 
Noncompliance with applicable requirements can result in, among other things, 
fines, injunctions, seizure of products, total or partial suspension of 
product marketing, failure of the government to grant premarket approval, 
withdrawal of marketing approvals and criminal prosecution.

The regulatory process for new therapeutic drug products, including the 
required preclinical studies and clinical testing, is lengthy and expensive 
and there can be no assurance that necessary FDA clearances will be obtained 
in a timely manner, if at all. The length of the clinical trial period and 
the number of patients the FDA will require to be enrolled in the clinical 
trials in order to establish the safety and efficacy of the Company's 
products are uncertain. The Company may encounter significant delays or 
excessive costs in its efforts to secure necessary approvals, and regulatory 
requirements are evolving and uncertain. Future United States or foreign 
legislative or administrative acts could also prevent or delay regulatory 
approval of the Company's products. The Company may not be able to obtain the 
necessary approvals for clinical trials, manufacturing or marketing of any of 
its products under development. Even if commercial regulatory approvals are 
obtained, they may include significant limitations on the indicated uses for 
which a product may be marketed. In addition, a marketed product is subject 
to continual FDA review. Later discovery of previously unknown problems or 
failure to comply with the applicable 

                             13
<PAGE>

regulatory requirements may result in restrictions on the marketing of a 
product or withdrawal of the product from the market, as well as possible 
civil or criminal sanctions.

The steps required before a biological drug product may be marketed in the 
United States generally include preclinical studies and the filing of an IND 
application with the FDA. Reports of results of preclinical studies and 
clinical trials for biological drug products are submitted to the FDA in the 
form of a Biologics Licensing Application ("BLA") for approval for marketing 
and commercial shipment. Submission of a BLA does not assure FDA approval for 
marketing. The BLA review process may take a number of years to complete, 
although reviews of applications for treatments of AIDS, cancer and other 
life-threatening diseases may be accelerated or expedited. Failure of the 
Company to receive FDA marketing approval for REMUNE or any of its other 
products under development on a timely basis could have a material adverse 
effect on the Company's business, financial condition and results of 
operations. In addition to obtaining approval for each biological drug 
product, an Establishment LIcense Application usually must be filed and 
approved by the FDA.

Among the other requirements for BLA approval is the requirement that 
prospective manufacturers conform to the FDA's Good Manufacturing Practices 
("GMP") requirements specifically for biological drugs, as well as for other 
drugs. In complying with the FDA's GMP requirements, manufacturers must 
continue to expend time, money and effort in production, recordkeeping and 
quality control to assure that the product meets applicable specifications 
and other requirements. Failure to comply with the FDA's drug GMP 
requirements subjects the manufacturer to possible FDA regulatory action. The 
Company or its contract manufacturers, if any, may not be able to maintain 
compliance with the FDA's drug GMP requirements on a continuing basis. 
Failure to maintain such compliance could have a material adverse effect on 
the Company's business, financial condition and results of operations.

The Company believes its proprietary GeneDrug and cancer treatment therapies 
will likely be regulated as biological products. As with the Company's other 
potential products, the gene therapy and cancer products will be subject to 
extensive FDA regulation throughout the product development process, and any 
of these products may not be approved for marketing by the FDA on a timely 
basis, if at all.

The FDA Modernization Act also amended the FDC Act to permit expanded access 
to individuals and larger groups to unapproved new therapeutic and diagnostic 
products. Although the new law largely codifies existing FDA regulations in 
this area, it expands access to all investigational therapies under certain 
conditions. Although the FDA has granted expanded access to REMUNE for those 
patients who are ineligible to enroll in the Phase III clinical endpoint 
trial, the FDA has to date not designated expanded access protocols for 
REMUNE as "treatment" protocols. Either expanded access or a treatment 
protocol designation might permit third party reimbursement of some of the 
costs associated with making REMUNE available to patients in such an expanded 
access context. The FDA may not determine that REMUNE meets all of the FDA's 
criteria for use of an investigational drug for treatment use and, even if 
the product is allowed for treatment use, third party payers may not provide 
reimbursement for the costs of treatment with REMUNE.

The FDA also has issued regulations to accelerate the approval of or to 
expedite the review of new biological drug products for serious or 
life-threatening illnesses that provide meaningful therapeutic benefit to 
patients over existing treatments. Under the accelerated approval program, 
the FDA may grant marketing approval for a biological or nonbiological drug 
product earlier than would normally be the case. In addition to the 
accelerated approval process, the FDA has established procedures designed to 
expedite the development, evaluation and marketing of new therapies intended 
to treat persons with life-threatening and severely debilitating illnesses, 
especially when no satisfactory alternative therapy exists. In addition, the 
FDA Modernization Act established a new statutory program for the approval of 
fast track drugs, including biological products. The FDA may not consider 
REMUNE or any other of the Company's products under development to be an 
appropriate candidate for accelerated approval, expedited review or fast 
track designation.

To market any drug products outside the United States, the Company is also 
subject to numerous and varying foreign regulatory requirements, implemented 
by foreign health authorities, governing the design and conduct of human 
clinical trials and marketing approval. The approval procedure varies among 

                                      14

<PAGE>
countries and can involve additional testing, and the time required to obtain 
approval may differ from that required to obtain FDA approval. The foreign 
regulatory approval process includes all of the risks associated with 
obtaining FDA approval set forth above, and approval by the FDA does not 
ensure approval by the health authorities of any other country.

TECHNOLOGICAL CHANGE AND COMPETITION. The biotechnology industry continues to 
undergo rapid change and competition is intense in the fields of HIV, 
autoimmune disease, cancer and gene therapy, and such competition is expected 
to increase. The Company will compete with fully integrated pharmaceutical 
companies, small biotechnology companies, universities and research 
organizations. Competitors may succeed in developing technologies and 
products that are more effective than any which have been or are being 
developed by the Company or which would render the Company's technology and 
products obsolete and noncompetitive. Many of the Company's competitors have 
substantially greater experience, financial and technical resources and 
production, marketing and development capabilities than the Company. 
Accordingly, certain of the Company's competitors may succeed in obtaining 
regulatory approval for products more rapidly or effectively than the 
Company. If the Company commences commercial sales of its products, it will 
also be competing with respect to manufacturing efficiency and sales and 
marketing capabilities, areas in which it currently has no experience. 
Competitors may develop and commercialize more effective or affordable 
products.

DEPENDENCE ON THIRD PARTIES. The Company's strategy for the research, 
development and commercialization of its products requires entering into 
various arrangements with corporate collaborators, licensers, licensees and 
others, and the Company's commercial success is dependent upon these outside 
parties performing their respective contractual responsibilities, including 
the analysis of the data generated in the Company's clinical trials. The 
amount and timing of resources such third parties will devote to these 
activities may not be within the control of the Company. There can be no 
assurance that such parties will perform their obligations as expected and 
the failure of third parties to perform their obligations would have a 
material adverse effect on the Company. Although the Company has 
collaborative agreements with several universities and research institutions, 
the Company's agreements with Bayer and Schering-Plough, and its binding 
Letter of Intent with Agouron, are the only collaborative agreements that 
provide the Company with revenue. These collaborations may not result in the 
development of any commercial products. Immune Response intends to seek 
additional collaborative arrangements to develop and commercialize certain of 
its products. The Company may not be able to negotiate collaborative 
arrangements on favorable terms, or at all, in the future and its current or 
future collaborative arrangements may not be successful.

LACK OF COMMERCIAL MANUFACTURING AND MARKETING EXPERIENCE. The Company has a 
manufacturing facility for REMUNE located in King of Prussia, Pennsylvania, 
and a pilot manufacturing facility in Carlsbad, California for its other 
products. The Company has not yet manufactured its product candidates in 
commercial quantities. The Company may not be able to make the transition 
from manufacturing clinical trial quantities to commercial production 
quantities successfully or be able to arrange for contract manufacturing. The 
Company believes it will be able to manufacture REMUNE for initial 
commercialization, if the product obtains FDA approval, but it has not yet 
demonstrated the capability to manufacture REMUNE in commercial quantities, 
or its autoimmune disease, cancer and gene therapy treatments in large-scale 
clinical or commercial quantities. The Company has no experience in the 
sales, marketing and distribution of pharmaceutical products. The Company may 
not be able to establish sales, marketing and distribution capabilities or 
make arrangements with its collaborators, licensees or others to perform such 
activities and such efforts may not be successful. The Company's products may 
not be successfully commercialized even, if they are developed and approved 
for commercialization.

The manufacture of the Company's products involves a number of steps and 
requires compliance with stringent quality control specifications imposed by 
the Company itself and by the FDA. Moreover, the Company's products can only 
be manufactured in a facility that has undergone a satisfactory inspection by 
the FDA. For these reasons, the Company would not be able quickly to replace 
its manufacturing capacity if it were unable to use its manufacturing 
facilities as a result of a fire, natural disaster (including an earthquake), 
equipment failure or other difficulty, or if such facilities are deemed not 
in compliance with the FDA's drug GMP requirements and the non-compliance 
could not be rapidly rectified. The 

                                      15

<PAGE>

Company's inability or reduced capacity to manufacture its products would 
have a material adverse effect on the Company's business and results of 
operations.

The Company may enter into arrangements with contract manufacturing companies 
to expand its own production capacity in order to meet requirements for its 
products, or to attempt to improve manufacturing efficiency. If the Company 
chooses to contract for manufacturing services and encounters delays or 
difficulties in establishing relationships with manufacturers to produce, 
package and distribute its finished products, clinical trials, market 
introduction and subsequent sales of such products would be adversely 
affected. Further, contract manufacturers must also operate in compliance 
with the FDA's drug GMP requirements; failure to do so could result in, among 
other things, the disruption of product supplies. Until recently, biologic 
product licenses could not be held by any company unless it performed 
significant manufacturing operations. The FDA recently amended its 
regulations in this regard, and the Company believes that under these new 
regulations it can now hold licenses for its biological products without 
performing significant manufacturing steps. Nonetheless, the Company's 
potential dependence upon third parties for the manufacture of its products 
may adversely affect the Company's profit margins and its ability to develop 
and deliver such products on a timely and competitive basis.

UNCERTAINTY OF PRODUCT PRICING, REIMBURSEMENT AND RELATED MATTERS. The 
Company's ability to earn sufficient returns on its products will depend in 
part on the extent to which reimbursement for the costs of such products and 
related treatments will be available from government health administration 
authorities, private health coverage insurers, managed care organizations and 
other organizations. Third party payers are increasingly challenging the 
price of medical products and services. If purchasers or users of the 
Company's products are not able to obtain adequate reimbursement for the cost 
of using such products, they may forego or reduce such use. Significant 
uncertainty exists as to the reimbursement status of newly approved health 
care products, and adequate third party coverage may not be available. 
Failure to obtain appropriate reimbursement would have a material adverse 
effect on the Company.

SUBORDINATION OF COMMON STOCK TO PREFERRED STOCK. The Company's Common Stock 
is expressly subordinate to the Company's Series F Convertible Preferred 
Stock in the event of the liquidation, dissolution or winding up of the 
Company. If the Company were to cease operations and liquidate its assets, 
there may not be any remaining value available for distribution to the 
holders of Common Stock after providing for the Series F Convertible 
Preferred Stock liquidation preference.

VOLATILITY OF STOCK PRICE AND ABSENCE OF DIVIDENDS. The market price of 
Immune Response's common stock, like that of the common stock of many other 
biopharmaceutical companies, has been and is likely to be highly volatile. 
Factors such as the results of preclinical studies and clinical trials by the 
Company, its collaborators or its competitors, other evidence of the safety 
or efficacy of products of the Company or its competitors, announcements of 
technological innovations or new products by the Company or its competitors, 
governmental regulatory actions, changes or announcements in reimbursement 
policies, developments with the Company's collaborators, developments 
concerning patent or other proprietary rights of the Company or its 
competitors (including litigation), concern as to the safety of the Company's 
products, period-to-period fluctuations in the Company's operating results, 
changes in estimates of the Company's performance by securities analysts, 
market conditions for biopharmaceutical stocks in general and other factors 
not within the control of the Company could have a significant adverse impact 
on the market price of the common stock. The Company has never paid cash 
dividends on its common stock and does not anticipate paying any cash 
dividends in the foreseeable future.

                                      16
<PAGE>

PART II.  OTHER INFORMATION

ITEM 4. -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

If a stockholder wishes to have a stockholder proposal considered at the
Company's next annual meeting, the stockholder must have given timely notice of
the proposal in writing to the Secretary of the Company. To be timely, a
stockholder's notice of the proposal must be delivered to, or mailed and
received at the executive offices of the Company, not less that 50 days nor more
than 75 days prior to the date of the annual meeting; provided, however, that if
less than 65 days notice or prior public disclosure of the date of the annual
meeting is given or made to stockholders, notice of the proposal to be timely
must be received no later than the 15th day following the day on which such
notice of the date of the annual meeting was mailed or public disclosure of the
meeting date was given.

ITEM 6. -- EXHIBITS AND REPORTS ON FORM 8-K

a)   Exhibits

     27   Financial Data Schedule


b)   Report on Form 8-K

        A report on Form 8-K dated June 11, 1998, was filed by The Immune
Response Corporation reporting under Item 5 that the Company had entered into a
binding Letter of Intent with Agouron Pharmaceuticals, Inc. under which the
Company exclusively licensed REMUNE to Agouron in return for license fees,
research and development funding and stock purchases.

                                      17

<PAGE>
                                       
                                   SIGNATURE



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.



                                 THE IMMUNE RESPONSE CORPORATION




Date: November 4, 1998           s/Charles J. Cashion
                                 --------------------------------------------

                                 Charles J. Cashion
                                 Sr. Vice President, Finance & Administration
                                 Secretary and Treasurer

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