<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, 1997

                                          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 24, 1997, 22,767,267 shares of common stock were outstanding.
         

<PAGE>

 
                           THE IMMUNE RESPONSE CORPORATION
                                           
                                      FORM 10-Q
                                           
                                   QUARTERLY REPORT
                                           
                                           
                                  TABLE OF CONTENTS
                                           
                                                                       Page
                                                                       ----
                                           
                                           
                            PART I.  FINANCIAL INFORMATION
                                           

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                                      7



                             PART II.  OTHER INFORMATION
                                           


Signature                                                              14




                                          2
<PAGE>


 
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                           THE IMMUNE RESPONSE CORPORATION
                                           
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                           
                                           
                                        ASSETS
                                           

                                                  September 30,
                                                     1997           December 31,
ASSETS                                             (unaudited)         1996
                                                  -------------  -------------

Current Assets:    
    Cash and cash equivalents                   $  15,104,118    $  3,785,433 
    Marketable securities-available-for-sale       23,453,076      42,736,310 
    Short-term investment                                 ---       1,265,000 
    Other current assets                            1,625,073         679,847 
                                                -------------    -------------

            Total current assets                   40,182,267      48,466,590 


Property and equipment, net                         5,980,414       5,570,378 
Deposits and other assets                             298,609          49,016 
                                                -------------    -------------

                                                $  46,461,290   $  54,085,984 
                                                -------------    -------------
                                                -------------    -------------


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Accounts payable                             $  2,211,029    $  1,870,853 
    Accrued expenses                                  540,011         497,671 
    Deferred rent obligation                          369,378         413,901 
                                                -------------    -------------

            Total current liabilities               3,120,418       2,782,425 

Stockholders' Equity (Note 3):
    Common stock, $.0025 par value, 40,000,000 
       shares authorized, 22,674,476 and
       20,229,719 shares issued and outstanding
       at September 30, 1997 and 
       December 31, 1996, respectively                 56,686          50,574 
    Warrants                                        2,144,143             ---  
    Additional paid-in capital                    185,902,804     171,055,691 
    Unrealized gain (loss) on marketable 
       securities                                    (36,704)         139,976 
    Accumulated deficit                         (144,726,057)    (119,942,682)
                                                -------------    -------------

            Total stockholders' equity             43,340,872      51,303,559 
                                                -------------    -------------

                                                $  46,461,290   $  54,085,984 
                                                -------------    -------------
                                                -------------    -------------

                                          3
<PAGE>


                                       THE IMMUNE RESPONSE CORPORATION
                                                                      
                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (UNAUDITED)
                                                                      


<TABLE>
<CAPTION>


                                      Three months ended September 30,         Nine months ended September 30,
                                      --------------------------------         -------------------------------
<S>                                <C>                    <C>              <C>                 <C>
                                         1997                  1996               1997                1996
                                    --------------     --------------      --------------      --------------
Revenues:                                        
    Contract research revenue        $  1,000,000        $  1,000,000        $  2,000,000       $  1,000,000 
    Licensed research revenue                 ---           6,000,000                 ---          6,000,000 
                                    --------------     --------------      --------------      --------------
    
                                        1,000,000           7,000,000           2,000,000          7,000,000 
Expenses:                                        
    Research and development            7,506,935           6,895,745          25,654,816         19,665,030 
    General and administrative            950,898             822,925           2,996,998          2,609,467 
                                    --------------     --------------      --------------      --------------
    
                                        8,457,833           7,718,670          28,651,814         22,274,497 
    
Other revenue:                                   
    Investment income                     590,567             584,695           1,868,439          1,908,094 
                                    --------------     --------------      --------------      --------------
    
    
Net loss                           $  (6,867,266)        $  (133,975)     $  (24,783,375)     $  (13,366,403)
                                    --------------     --------------      --------------      --------------
                                    --------------     --------------      --------------      --------------
    
Net loss per share (Note 2)             $  (0.31)           $  (0.01)           $  (1.15)           $  (0.78)
                                    --------------     --------------      --------------      --------------
                                    --------------     --------------      --------------      --------------
    
Weighted averge number of shares                 
    outstanding (Note 2)               22,473,136          17,352,281          21,584,162         17,094,984 
                                    --------------     --------------      --------------      --------------
                                    --------------     --------------      --------------      --------------
    

</TABLE>
    
    
See accompanying notes. 

                                                                      4
<PAGE>

                                         THE IMMUNE RESPONSE CORPORATION
                                                                      
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (UNAUDITED)
                                                                      
         
<TABLE>
<CAPTION>

                                                                    Nine months ended September 30,
                                                                    -------------------------------
                                                                       1997                1996
                                                                    -------------      ------------
<S>                                                                 <C>                 <C>        


Operating activities:
    Net loss                                                     $   (24,783,375)  $  (13,366,403)
    Adjustments to reconcile net loss to net cash provided from
       (used by) operating activities:
           Depreciation and amortization                                 899,882          614,795 
           Deferred rent expense                                         (44,523)         (22,464)
           Changes in operating assets and liabilities:
               Other current assets                                     (945,226)         115,214 
               Accounts payable                                          340,176           85,635 
               Accrued expenses                                           42,340          (89,757)
                                                                   -------------     -------------

                    Net cash used by operating activities            (24,490,726)     (12,662,980)


Investing activities:
    Liquidation of short-term investments, net                        20,371,554       14,080,445 
    Purchase of property and equipment                                (2,329,918)        (675,165)
    Sale of land                                                       1,020,000             ---  
    Deposits and other assets                                           (249,593)            ---  
                                                                   -------------     -------------

                    Net cash provided from investing activities       18,812,043       13,405,280 


Financing activities:
    Net proceeds from sale of common stock
      (Note 3)                                                        15,639,992        5,000,000 
    Net proceeds from exercise of stock options                        1,357,376          807,418 
                                                                   -------------     -------------

                    Net cash provided from financing activities       16,997,368        5,807,418 
                                                                   -------------     -------------


Net increase in cash and cash equivalents                             11,318,685        6,549,718 
Cash and cash equivalents at beginning of period                       3,785,433        1,462,676 
                                                                   -------------     -------------

Cash and cash equivalents at end of period                         $  15,104,118     $  8,012,394 
                                                                   -------------     -------------
                                                                   -------------     -------------


</TABLE>


See accompanying notes.


                                                                      5
<PAGE>
 
 
                           THE IMMUNE RESPONSE CORPORATION
                                           
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                           
                                  SEPTEMBER 30, 1997
                                           

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, 1997 and 1996 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, 1997, and the 
    consolidated results of operations for the three and nine month periods 
    ended September 30, 1997 and 1996.  The results of operations for the 
    nine months ended September 30, 1997 are not necessarily indicative of 
    the results to be expected for the year ended December 31, 1997.  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, 1996 
    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 month periods ended September 
    30, 1997 and 1996 is computed using the weighted average number of common 
    shares outstanding during the period.  

    In February 1997, the Financial Accounting Standards Board issued 
    Statement of Financial Accounting Standards ("FAS") No. 128, "Earnings 
    per Share."  The Company will be required to adopt these new rules 
    effective December 15, 1997.  Management does not anticipate any impact 
    resulting from the adoption of this new standard upon current or 
    previously reported earnings per share.

3.  EQUITY TRANSACTION 
    During the second quarter of 1997, the Company completed a $16.0 million 
    private placement of units consisting of common stock and warrants to 
    purchase common stock of the Company.  These units were purchased at a 
    price of $7.80 per unit by Kevin B. Kimberlin, a director of the Company, 
    and Dennis J. Carlo, Ph.D., a director and president and chief executive 
    officer of the Company.  The units sold in the private placement 
    consisted of 2,051,281 shares of common stock plus warrants exercisable 
    for 2,051,281 shares of common stock.  The warrants expire on April 17, 
    2001.  The warrants, with an exercise price of $14.00 per share, are 
    callable by the Company if the Company's common stock trades at $28.00 
    per share or greater for 45 consecutive days.  An initial payment of $4.1 
    million was made during the second quarter of 1997, while the balance was 
    paid in September 1997.  The shares and warrants are unregistered and are 
    not transferable until April 1998.

                                          6
<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
engaged in the development of proprietary products in the areas of HIV,
autoimmune disease, gene therapy and cancer. 

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 which could cause actual results to differ
materially from those projected.  For a further description of potential risks
and uncertainties involved related to the Company, this document should be read
in conjunction with the Company's 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 which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

During the third quarter of 1997, the Company received an $11.9 million payment
on a $16.0 million private placement of units consisting of common stock and
warrants to purchase common stock of the Company.  These units were purchased at
a price of $7.80 per unit by Kevin B. Kimberlin, a director of the Company, and
Dennis J. Carlo, Ph.D., a director and president and chief executive officer of
the Company.  The units sold in the private placement consisted of 2,051,281
shares of common stock plus warrants exercisable for 2,051,281 shares of common
stock.  The warrants expire on April 17, 2001.  The warrants, with an exercise
price of $14.00 per share, are callable by the Company if the Company's common
stock trades at $28.00 per share or greater for 45 consecutive days.  An initial
payment of $4.1 million was made during the second quarter of 1997.  The shares
and warrants are unregistered and are not transferable until April 1998.

The Company has not been profitable since inception and had an accumulated
deficit of $144.7 million as of September 30, 1997.  To date, the Company has
not recorded any revenues from the sale of products.  Revenues recorded through
September 30, 1997 were earned in connection with contract research, licensing
of technologies and investment income.  The Company expects its operating losses
to continue to increase 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.  There can be no
assurance that the Company will be able to generate sufficient product revenue
to become profitable at all or on a sustained basis.

RESULTS OF OPERATIONS
The contract research revenue recorded in the quarter and nine months ended
September 30, 1997, was received from Bayer Corporation related to a research
collaboration for a potential therapy for hemophilia which began in July 1996. 
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 increased to $591,000 for the quarter ended September 30,
1997, from $585,000 during the same period in 1996.  During the nine months
ended September 30, 1997 and 1996, investment income was $1.9 million.

Research and development expenditures of $7.5 million during the third quarter
of 1997 exceeded such expenditures during the same period in 1996 of $6.9
million.  Research and development expenditures for the nine months ended
September 30, 1997 were $25.7 million compared to $19.7 million for the same
period in 1996.  These additional expenditures in the third quarter of 1997, and
during the nine months ended September 30, 1997, over the amounts expended
during the same periods in 1996, were due primarily to the increased expenses
related to clinical testing of REMUNE-TM-.  Following the full recruitment of
the REMUNE 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.  In addition, research and development expenditures
have increased due to 


                                          7
<PAGE>

research related to gene drug delivery and cancer treatments.  Research and 
development expenses are expected to continue to rise in the foreseeable 
future due to expanding preclinical and clinical testing of the Company's 
proposed treatments. General and administrative expenses for the third 
quarter of 1997 and 1996 were $951,000 and $823,000, respectively. 
General and administrative expenses for the nine months ended September 30, 
1997 were $3.0 million as compared to $2.6 million for the same period in 
1996. 

General and administrative expenses for the remainder of 1997 
necessary to support the Company's expanded research and development 
activities are expected to remain consistent with the first three quarters of 
1997.

For the quarter ended September 30, 1997, the Company's net loss was $6.9
million, or $.31 per share, as compared to a net loss of $134,000, or $.01 per
share, for the same period in 1996.  For the nine months ended September 30,
1997, the Company's net loss was $24.8 million, or $1.15 per share, as compared
to a net loss of $13.4 million, or $.78 per share for the same period in 1996. 
The primary factors causing the net loss to increase in 1997 were the receipt of
$6.0 million of licensed research revenue from Bayer Corporation in July 1996
and the Company's increased research, development and clinical trial activities,
in particular with respect to clinical trials for HIV infection using REMUNE.

LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had working capital of $37.1 million,
including $38.6 million of cash, cash equivalents and marketable securities. 
This compares with working capital as of December 31, 1996 of $45.7 million,
including $47.8 million of cash, cash equivalents, marketable securities and
short-term investments.  Working capital decreased, despite the $16.0 million
private placement of common stock and warrants, as a result of normal costs of
operations, in particular, due to the cost of the HIV clinical trials with
REMUNE.

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 the REMUNE Phase III clinical 
trial costs will be approximately $10 million per year, with an additional 
$10 million cost per year for manufacturing, research and other costs 
associated with the product for approximately an additional two years.  The 
anticipated costs with respect to REMUNE will depend on many factors, 
including the time required for the Phase III clinical trial, the number of 
patients enrolled in the Phase III clinical trial, the availability of third 
party reimbursement for expanded access protocols for REMUNE, the potential 
for accelerated approval 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 
other factors not within the Company's control. The Company intends to seek 
additional funding through public or private financings, arrangement with 
corporate collaborations or other sources. 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 equity units in a private placement during the second 
quarter of 1997, will meet its anticipated requirements through late-1998.

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, 1996.)

                                          8
<PAGE>


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's potential HIV,
autoimmune disease, gene therapy and cancer products currently under development
will require significant additional research and development efforts and
regulatory approvals prior to potential commercialization.

The Company's potential HIV product, REMUNE, is in a Phase III clinical trial
designed to provide evidence of efficacy based on clinical endpoints; however
there can be no assurance that the results of such clinical trial will
demonstrate that REMUNE is safe and efficacious or, that even if the results of
the clinical trial are considered successful by the Company, that necessary FDA
clearances will be obtained in a timely manner, if at all.  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 and Spain.  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 products and 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 there can be no assurance that human testing of potential products
based on such technologies will be permitted by regulatory authorities or, that
even if human testing is permitted, that products based on such technologies
will be shown to be safe or efficacious.  Potential products based on the
Company's autoimmune technology and certain of its cancer technologies are at an
early stage of clinical testing and there can be no assurance that such products
will be shown to be safe or efficacious.

There can be no assurance that the results of the Company's preclinical studies
and clinical trials will be indicative of future clinical trial results.  A
commitment of substantial resources to conduct time-consuming research,
preclinical studies and clinical trials 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.  There can be no assurance that any of the Company's
potential products will prove to be safe and effective in clinical trials, that
FDA or other regulatory approvals will be obtained or that such products will
achieve market acceptance.

There can be no assurance that unacceptable toxicities or side effects will not
occur at any time in the course of human clinical trials or, 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, there can be no assurance that disease resistance will
not limit the efficacy of potential products.

LENGTHY APPROVAL PROCESS AND UNCERTAINTY OF GOVERNMENT REGULATORY REQUIREMENTS. 
Clinical testing, manufacture, promotion and sale of the Company's potential
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.  In general, the
regulatory framework for biological drug products is more rigorous than that for
nonbiological drug products.  The Food, Drug and Cosmetic Act and the Public
Health Service 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.  There can be no assurance as to the length of the clinical
trial period or the number of patients the FDA will require to be enrolled in
the clinical trials 

                                          9
<PAGE>


in order to establish the safety and efficacy of the Company's products.  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. 
There can be no assurance that the Company will 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 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.  Failure of the Company to obtain
marketing approval for REMUNE or any of its other products under development on
a timely basis, or FDA withdrawal of marketing approval once obtained, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The steps required before a biological drug product may be marketed in the
United States generally include preclinical studies and the filing of an
Investigational New Drug ("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 PLA for approval for marketing and
commercial shipment.  Submission of a Product License Application ("PLA") does
not assure FDA approval for marketing.  The PLA 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 ("ELA") usually must be filed and approved
by the FDA.

Among the other requirements for ELA approval is the requirement that
prospective manufacturers conform to the FDA's drug Good Manufacturing Practices
("GMP") requirements specifically for biological drugs, as well as for other
drugs. In complying with the FDA's drug 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.  There can be no
assurance that the Company or its contract manufacturers, if any, will 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.

Another requirement for many biological drug products is lot-by-lot release
approval, which necessitates FDA approval of the release of each lot of a
biologic drug before commercialization.  The lot-to-lot release and ELA
requirements may be applied to some or all of the Company's potential
immune-based therapies. The FDA amended its regulations to permit certain
biotechnology and synthetic biological drug products to be eligible for approval
under a biological product license that does not entail lot-to-lot release and
establishment licensing requirements.  The Company believes that its potential
synthetic protein autoimmune disease products will be subject to these new
regulations.  There can be no assurance that REMUNE or any of the Company's
other products will be eligible for approval under a biological drug product
license or otherwise be subject to less rigorous regulation than traditional
biological products.

The Company believes its proprietary GeneDrug-TM- and cancer treatment therapies
will likely be regulated more like traditional biological products, subject to
both PLA and ELA requirements.  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 there can be no assurance that
any of these products will be successful at securing the requisite FDA marketing
approval on a timely basis, if at all.

                                          10
<PAGE>


A number of procedures are available to expedite approval or to allow expanded
access to investigational drugs.  Generally, the FDA may permit an
investigational drug, including an investiga-tional biological drug, to be used
for patients outside of controlled clinical trials under certain conditions. 
The FDA has granted expanded access to REMUNE for those patients who are
ineligible to enroll in the Phase III clinical trial.  Expanded access might
permit third party reimbursement of some of the costs associated with making
REMUNE available to patients in such an expanded access context.  There can be
no assurance that the FDA will allow third party reimbursement for use of an
investigational drug or that third party payers will provide reimbursement for
any of 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.  There can be no assurance that the FDA will consider REMUNE or
any other of the Company's products under development to be an appropriate
candidate for accelerated approval or expedited review.

To market any drug products outside of 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 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.

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 HIV,
autoimmune disease, gene therapy and cancer 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 been issued a patent related to autoimmune disease research that
covers technology similar to that used by the Company.  There can be no
assurance that the Company's patent applications will be issued as patents or
that any of its issued patents, or any patent that may be issued in the future,
will 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 no assurance can be given that others will not 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 which contain claims applicable to the Company's product.  There
can be no assurance that any of the Company's patents, or any patents issued to
the Company in the future, will afford meaningful protection against
competitors.  Defending any such patent could be costly to the Company, and
there can be no assurance that the patent would 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.  There can be no assurance that these
agreements will not be breached, that the Company will have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
known or independently discovered by its competitors.

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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.  
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.  There can be no 
assurance that such licenses would be available at all or on terms 
commercially reasonable to the Company or that the Company could 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.

TECHNOLOGICAL CHANGE AND COMPETITION.  The biotechnology industry continues to
undergo rapid change and competition is intense and is expected to increase. 
There can be no assurance that competitors have not or will not 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 equal or 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.

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 (such as the Company's 
agreement with Bayer Corporation ("Bayer")), licensors, licensees and others, 
and the Company's commercial success is dependent upon these outside parties 
performing their respective contractual responsibilities.  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 or that the Company 
will derive any revenue from such arrangements.  Although the Company has 
collaborative agreements with several universities and research institutions, 
the Company's agreement with Bayer is the only collaborative agreement that 
will provide the Company with contract revenue.  There can be no assurance 
that these collaborations will result in the development of any commercial 
products. The Company intends to seek additional collaborative arrangements 
to develop and commercialize certain of its products. There can be no 
assurance that the Company will be able to negotiate collaborative 
arrangements on favorable terms, or at all, in the future, or that its 
current or future collaborative arrangements will 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 potential
products.  The Company has not yet manufactured its product candidates in
commercial quantities.  No assurance can be given that the Company, on a timely
basis, will 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, gene therapy and cancer
treatments in large-scale clinical or commercial quantities.  The Company has no
experience in the sales, marketing and distribution of pharmaceutical products. 
There can be no assurance that the Company will be able to establish sales,
marketing and distribution capabilities or make arrangements with its
collaborators, licensees or others to perform such activities or that such
efforts will be successful.

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 

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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 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 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.


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<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:         10/31/97                 S/CHARLES J. CASHION
      ----------------------      --------------------------------------
                                       Charles J. Cashion
                                       Vice President, Finance
                                       Secretary and Treasurer


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