SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 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 MARCH 31, 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 0-11472

                             BIOMUNE SYSTEMS, INC.
         (Exact name of registrant as specified in its charter)

          Nevada                                          87-0380088
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                                                                                
                            2401 South Foothill Drive
                         Salt Lake City, Utah 84109-1405
                                 (801) 466-3441
         (Address and telephone number of principal executive offices)


Indicate by a 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: 21,273,365 as of March 31, 
1997.




<PAGE>
                              TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I.     FINANCIAL INFORMATION                                                   
<S>    <C>                                                                        <C>
                                                                                  Page
                                                                                  No.
                                                                                  ___
1.  Financial Statements

       Unaudited Condensed Consolidated Balance Sheets as of
       March 31, 1997 and September 30, 1996                                      3

       Unaudited Condensed Consolidated Statements of Operations for
       the three and six  months ended  March 31, 1997 and 1996                   5

       Unaudited Condensed Consolidated Statements of Cash Flows for
       the six  months ended March 31, 1997 and 1996                              6

       Unaudited Notes to Condensed Consolidated Financial Statements             8

2.     Management's Discussion and Analysis of Financial Condition and
       Results of Operations                                                      12


PART II.     OTHER INFORMATION                                                    20
</TABLE>























                                         2
<PAGE>
                      BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)

                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                <C>             <C>
                                                     March 31,      September 30,
                                                       1997             1996     
                                                    -----------    ---------------
Current assets:
  Cash and cash equivalents                         $5,374,516      $4,192,868
  Accounts receivable, net                             168,963          74,784
  Inventories                                          503,491         556,742
  Amounts due from related parties                     385,000          15,000
  Preferred stock subscription receivable                 -          3,500,000
                                                    ----------      ----------
    Total current assets                             6,431,970       8,339,394

Property and equipment, net                            441,893         434,205
Other assets, net                                      463,454         498,403
                                                    ----------      ----------
    Total assets                                    $7,337,317      $9,272,002
                                                    ==========      ==========

</TABLE>






















                  The accompanying notes are an integral part of
                  these condensed consolidated balance sheets.


                                       3
<PAGE>
                       BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                       LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S>                                                 <C>               <C>
                                                                                
                                                       March 31,         September 30,
                                                         1997                 1996
                                                    ---------------   ------------------

Current liabilities:
  Accounts payable and accrued liabilities          $       206,620   $     351,565
  Preferred Stock dividends payable                         190,753          91,199
  Accrued payroll and payroll taxes                          78,211          60,451
  Other accrued liabilities                                    -             38,262
  Unearned revenue                                             -             84,000
                                                    ---------------   -------------
      Total current liabilities                             475,584         625,477
                                                    ---------------   -------------

Shareholders' equity:
  Convertible Preferred Stock:
     Series A, 72,110 and 135,589 shares
     outstanding, respectively                              349,307         652,199
     Series B, 0 and 11,058 shares outstanding,
     respectively                                              -            163,837
     Series C, 5,000 shares outstanding                   4,920,050       4,171,500
  Common Stock, 21,273,365 and 19,877,034 shares
     outstanding, respectively                                2,127           1,988
  Additional paid-in capital                             28,665,865      26,392,477
  Deficit accumulated during the development stage      (27,341,115)    (23,372,299)
  Deferred consulting expense                              (451,774)       (246,450)
  Related party receivable from sale or issuance of 
     Common Stock                                          (166,000)           -  
  Common Stock warrants                                     883,273         883,273
                                                    ---------------   -------------
      Total shareholders' equity                          6,861,733       8,646,525
                                                    ---------------   -------------
      Total liabilities and shareholders' equity    $     7,337,317   $   9,272,002
                                                    ===============   =============
          
</TABLE>          





                    The accompanying notes are an integral part of
                    these condensed consolidated balance sheets.
  
                                          4
<PAGE>
                        BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                              (A Development Stage Company)
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (UNAUDITED)
<TABLE>
<CAPTION>

                                     For the Three Months        For the Six Months
                                       Ended March 31,             Ended March 31,
                                       1997         1996         1997           1996
                                  -----------   -----------  -----------    -----------
<S>                               <C>           <C>          <C>            <C>
REVENUES                          $   135,353   $   124,272  $   431,520    $   240,530
                                  -----------   -----------  -----------    -----------
OPERATING EXPENSES:
   Cost of revenues                   100,761        67,164      231,854        143,835
   Management, consulting
        and research fees             763,809       807,097    1,485,164      1,650,192
   Other general and 
        administrative                851,010       790,876    1,889,501      1,363,312
                                  -----------   -----------  -----------    -----------
     Total operating expenses       1,715,580     1,665,137    3,606,519      3,157,339
                                  -----------   -----------  -----------    -----------
LOSS FROM OPERATIONS               (1,580,227)   (1,540,865)  (3,174,999)    (2,916,809)
                                  -----------   -----------  -----------    -----------
OTHER INCOME (EXPENSE):
   Interest income                     70,201        82,860      145,486        150,020
   Other, net                            -          (39,165)        -           (39,165)
                                  -----------   -----------  -----------    -----------
     Total other income, net           70,201        43,695      145,486        110,855
                                  -----------   -----------  -----------    -----------
NET LOSS                           (1,510,026)   (1,497,170)  (3,029,513)    (2,805,954)

PREFERRED STOCK:
   Dividends                         (110,280)      (25,165)    (190,753)       (51,915)
   Redemption premium                (748,550)         -        (748,550)          -  
                                  -----------   -----------  -----------    -----------
NET LOSS APPLICABLE TO
   COMMON SHARES                  $(2,368,856)  $(1,522,335) $(3,968,816)   $(2,857,869)
                                  ===========   ===========  ===========    ===========
NET LOSS PER COMMON SHARE         $      (.11)  $      (.08) $      (.19)   $      (.16)
                                  ===========   ===========  ===========    ===========
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING              21,145,634    18,168,445   20,916,256     17,835,491
                                  ===========   ===========  ===========    ===========

</TABLE>








                      The accompanying notes are an integral part
                      of these condensed consolidated statements.

                                         5
<PAGE>
                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                         (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)
                 Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                                                                
                                                              For the Six Months
                                                                Ended March 31,      
                                                             1997            1996    
                                                         ---------------  ------------
<S>                                                      <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                              $ (3,029,513)    $ (2,805,954)
   Adjustments to reconcile net loss to net cash used
     in operating activities:
        Depreciation and amortization                          84,771           82,150
        Issuance of Common Stock and warrants
           for services                                       538,594          243,822
        Amortization of deferred consulting expense           731,930          512,708
        Loss on disposal of fixed assets                         -              39,163
        Exchange of related-party note receivable                -             125,662
        Changes in assets and liabilities:
           Accounts receivable, net                           (94,179)         (50,843)
           Inventories                                         53,251            4,716
           Other assets                                           (24)          (4,683)
           Accounts payable and accrued liabilities          (183,207)          43,924
           Accrued payroll and payroll taxes                   17,760          (13,401)
           Unearned revenue                                   (84,000)            -
                                                         ------------     ------------
           Net cash used in operating activities           (1,964,617)      (1,822,736)
                                                         ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                         (57,485)        (349,771)
   Net payments from (advances to) related parties           (420,000)          43,153
   Loans to employees                                            -             (20,018)
                                                         ------------     ------------
           Net cash used in investing activities             (477,485)        (326,636)
                                                         ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from Preferred Stock subscriptions
      receivable                                            3,500,000             -
   Proceeds from exercise of Common Stock warrants            123,750             -
   Proceeds from issuance of Series D Preferred
      Stock and related Common Stock warrants,
      net of offering costs                                      -           2,555,000
                                                         ------------     ------------
           Net cash provided by financing activities        3,623,750        2,555,000
                                                         ------------     ------------
</TABLE>


                     The accompanying notes are an integral part
                     of these condensed consolidated statements.

                                         6
<PAGE>
                      BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)

                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                 Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                                             For the Six Months
                                                               Ended March 31,
                                                             1997          1996
                                                         -----------   ------------
<S>                                                      <C>           <C>
NET INCREASE IN CASH AND CASH
      EQUIVALENTS                                        $ 1,181,648   $   405,628
CASH AND CASH EQUIVALENTS AT  BEGINNING
      OF THE PERIOD                                        4,192,868     5,206,112
                                                         -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF
      THE PERIOD                                         $ 5,374,516   $ 5,611,740
                                                         ===========   ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

     During the six months ended March 31, 1997, 78,719 shares of Series A 
Preferred Stock with a recorded value of $379,092 were converted into 236,157 
shares of Common Stock, and 12,058 shares of Series B Preferred Stock with a 
recorded value of $178,837 were converted into 36,174 shares of Common Stock.

     During the six months ended March 31, 1997, 15,240 shares of Series A 
Preferred Stock and 1,000 shares of Series B Preferred Stock were issued as 
payment of accrued Preferred Stock dividends.

     During the six months ended March 31, 1997, an employee exercised options 
to purchase 100,000 shares of Common Stock at $1.16 per share, for which the 
Company accepted payment in the form of a note receivable for $116,000.

     During the six months ended March 31, 1997, the Company recorded a 
$748,550 premium to be paid upon the redemption of the Series C Preferred 
Stock(see Note 8).

     During the six months ended March 31, 1996, 47,757 shares of Series A 
Preferred Stock with a recorded value of $214,907 were converted into 143,271 
shares of Common Stock, and 3,120 shares of Series D Preferred Stock with a 
recorded value of $2,406,136 were converted into 1,837,310 shares of Common 
Stock.

     During the six months ended March 31, 1996, 20,494 shares of Series A 
Preferred Stock and 1,000 shares of Series B Preferred Stock were issued as 
payment of accrued Preferred Stock dividends.






                    The accompanying notes are an integral part
                    of these condensed consolidated statements.

                                        7
<PAGE>
                      BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                           (A Development Stage Company)

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1)  PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated financial statements have been 
prepared by the Company, without audit, pursuant to the rules and regulations 
of the Securities and Exchange Commission.  Certain information and 
disclosures normally included in financial statements prepared in accordance 
with generally accepted accounting principles have been condensed or omitted 
pursuant to such rules and regulations, although the Company believes that the 
following disclosures are adequate to make the information presented not 
misleading.  These condensed financial statements reflect all adjustments 
(consisting only of normal recurring adjustments) that, in the opinion of 
management, are necessary to present fairly the financial position and results 
of operations of the Company for the periods presented.  It is suggested that 
these condensed financial statements be read in conjunction with the financial 
statements and the notes thereto included in the Company's Annual Report on 
Form 10-K for the fiscal year ended September 30, 1996.

(2) POTENTIAL SPIN-OFF OF VOLU-SOL, INC.

On February 25, 1997, the board of directors approved, subject to finalization 
and execution of a separation and distribution agreement, the spin-off of its 
wholly-owned subsidiary, Volu-Sol, Inc., to the Common stockholders of record 
as of March 5, 1997.  The Company intends to seek shareholder approval of the 
transaction, although such approval is not required.  The spin-off is expected 
to occur during the Company's fourth fiscal quarter.  The stockholders are 
expected to receive one share of Volu-Sol, Inc. common stock for every ten 
shares of the Company's common stock owned.  The Company intends to  account 
for the spin-off as discontinued operations once the separation and 
distribution agreement has been finalized and once a resolution as to 
stockholder approval has been determined.

(3)  NET LOSS PER COMMON SHARE

Net loss per common share is computed based on the weighted average number of 
common shares outstanding during the periods presented.  Convertible Preferred 
Stock, warrants and options outstanding were not included in the computations 
because any assumption of conversion would be anti-dilutive, thereby 
decreasing net loss per common share.  Preferred Stock dividends and the 
redemption accretion increase the net loss applicable to common shares for 
purposes of computing the net loss per common share.

During 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."  This 
statement is effective for periods ending after December 15, 1997 and early 
application is prohibited.  SFAS No. 128 will require that the Company present 
basic earnings per share and diluted earnings per share data to replace the 
current earnings per share information.  All prior period earnings per share 
data must be restated.  SFAS No. 128 provides new guidelines expected to 
simplify the computation of diluted earnings per share.  This statement will 
not have a material impact when adopted.


                                        8
<PAGE>
(4)  PREFERRED STOCK AND COMMON STOCK TRANSACTIONS

For the six months ended March 31, 1997, 78,719 shares of Series A Preferred 
Stock with a recorded value of $379,092 were converted into 236,157 shares of 
Common Stock, and 12,058 shares of Series B Preferred Stock with a recorded 
value of $178,837 were converted into 36,174 shares of Common Stock.  During 
the six months ended March 31, 1997, the Company accrued dividends on its 
outstanding Series A, Series B and Series C Preferred Stock of $14,013, $6,740 
and $170,000, respectively.  Preferred Stock dividends are payable in either 
additional shares of Preferred Stock or in cash, at the option of the Board of 
Directors.  During the six months ended March 31, 1997, dividends on Series A 
and B Preferred Stock accrued as of September 30, 1996 totaling $91,199 were 
paid by issuing 15,240 shares of Series A Preferred Stock and 1,000 shares of 
Series B Preferred Stock.

During the six months ended March 31, 1997, the Company issued 969,000 shares 
of Common Stock for services rendered or to be rendered to the Company and 
recorded expense of $1,317,850 associated with those shares.  Of this expense, 
$937,254 was initially deferred and will be recognized over the term of the 
related consulting agreements.  The Company also has deferred consulting 
expense related to shares issued under consulting agreements entered into 
prior to September 30, 1996 as well as from stock warrants issued during 
fiscal 1996.  These deferred amounts are being recognized over the terms of 
the agreements as services are provided.  Total amortization of these deferred 
consulting expenses was $731,930 for the six months ended March 31, 1997.

On December 4, 1996, James J. Dalton, the Vice Chairman of the Board and 
Senior Vice President of Investor Relations, exercised options to purchase 
100,000 shares of Common Stock at $1.16 per share, for which the Company 
accepted payment in the form of a note receivable for $116,000.  This note 
bears interest at 7%, is full recourse in nature and is due on demand.  This 
note receivable is classified as a reduction in shareholders' equity in the 
accompanying financial statements.

During the six months ended March 31, 1997, existing options for 55,000 shares 
of Common Stock were exercised at $2.25 per share for total proceeds of 
$123,750.

(5)  STOCK OPTIONS AND WARRANTS

During the six months ended March 31, 1997, the Company granted options to 
employees to purchase a total of 447,500 shares of Common Stock at an exercise 
price of $1.16 per share, which price represented the average of the closing 
bid and ask price of the Company's Common Stock on the grant date.  The 
Company also amended stock option agreements to adjust the exercise price of 
all outstanding options held by employees and directors, aggregating 2,214,419 
options, to $1.16 per share, which price represented the average of the 
closing bid and ask price of the Company's Common Stock at that date.

The Company granted warrants to a consultant to purchase a total of 200,000 
shares of Common Stock at an exercise price of $2.25.   The Company recognized 
expense of $158,000 in connection with the grant of these warrants.

(6)  RELATED-PARTY TRANSACTIONS

During the six months ended March 31, 1997, the Company loaned $30,000 to 
Genesis Investment Corporation, an entity owned by shareholders of the 
Company, and $50,000 

                                        9
<PAGE>
to Daliz Associates, a shareholder of and a consultant to the Company.  These
loans were made in consideration for the termination of agreements the Company 
had previously entered into with each of those entities, are non-interest 
bearing, short term in duration, and are secured by shares of the Company's 
Common Stock.  The loan to Genesis Investment Corporation was repaid prior to 
March 31, 1997.  The Daliz Associates loan has been classified as a reduction 
in shareholders' equity in the accompanying financial statements.

During the six months ended March 31, 1997, the Company loaned $385,000 to PB 
Financial, an entity owned by a shareholder of the Company.  The loan is 
unsecured, bears an annual interest rate of 10 percent and is due on or before 
June 30, 1997. 

(7)  CONSULTING AGREEMENTS

Paramount Marketing Corp.

On October 23, 1996, the Company entered into a consulting agreement with 
Paramount Marketing Corp. ("Paramount"), whereby Paramount was issued a total 
of 108,000 shares of the Company's Common Stock in exchange for consulting 
services to be provided through September 30, 1997.  Paramount is assisting 
the Company in developing marketing strategies.  The shares have "piggy back" 
registration rights.  The Company recorded consulting expense of $125,280 of 
which $62,640 is deferred as of March 31, 1997 and will be recognized over the 
remaining term of the agreement.

Medifin Incorporated

On October 23, 1996, the Company entered into a consulting agreement with 
Medifin Incorporated ("Medifin"), whereby Medifin was issued a total of 
300,000 shares of the Company's Common Stock in exchange for consulting 
services to be provided through September 30, 1997.  Medifin is assisting the 
Company in developing marketing strategies.  The shares have "piggy back" 
registration rights.  The Company recorded consulting expense of $348,000 of 
which $174,000 is deferred as of March 31, 1997 and will be recognized over 
the remaining term of the consulting agreement.

J.R. Axelrod and Company

On October 23, 1996, the Company entered into a consulting agreement with J.R. 
Axelrod and Company ("Axelrod"), whereby Axelrod was issued a total of 180,000 
shares of the Company's Common Stock in exchange for consulting services, 
consisting primarily of investment advisory services, to be provided through 
September 30, 1997.  The shares have "piggy back" registration rights.  The 
Company recorded consulting expense of $208,800 of which $104,400 is deferred 
as of March 31, 1997 and will be recognized over the remaining term of the 
consulting agreement.

Consolidated General Ltd.

On October 23, 1996, the Company entered into a consulting agreement with 
Consolidated General Ltd. ("Consolidated"), whereby Consolidated was issued a 
total of 200,000 shares of the Company's Common Stock in exchange for 
consulting services, consisting primarily of investment advisory and 
investment banking services, to be provided through October 23, 1997.  The 
shares have "piggy back" registration rights.  The Company recorded consulting 
expense of $232,000 of which $116,000 is deferred as of March 31, 1997 and 
will be recognized over the remaining term of the consulting agreement.

                                        10
<PAGE>
AAM Group, Inc.

Effective November 1, 1996, the Company entered into a four-month agreement 
with AAM Group, Inc. ("AAM") whereby AAM provided consulting services, 
consisting primarily of introducing the Company to potential business 
partners, in exchange for 30,000 shares of the Company's registered Common 
Stock.  The Company recorded consulting expense of $72,300 during the six 
months ended March 31, 1997 related to this agreement.

(8)  SUBSEQUENT EVENTS

On April 2, 1997, the Company redeemed 1,500 shares of Series C Preferred 
Stock for $2,000,000 which was $748,550 greater than the carrying amount of 
the preferred stock.  The excess over the carrying amount of the Series C 
Preferred Stock of $748,550 was calculated and paid in accordance with the 
redemption provisions of the Series C Preferred Stock terms and conditions, 
and has been reflected as an increase in the net loss applicable to common 
shares in the accompanying 1997 statements of operations.

Effective April 1, 1997, the Company entered into a one-year consulting 
agreement with Milton G. Adair, the former President of the Company, whereby 
Mr. Adair has agreed to provide consulting services, in exchange for a monthly 
fee of $5,000.  

In April 1997, the Company entered into a consulting agreement with Laidlaw & 
Co. ("Laidlaw"), whereby  Laidlaw has agreed to provide consulting services, 
consisting primarily of financial advisory and investment banking services, in 
exchange for a monthly retainer of $10,000 and warrants to purchase 1,000,000 
shares of Common Stock at an exercise price of $1.25 per share.  The term of 
this agreement is for twelve months.  













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                                        11
<PAGE>
PART I - ITEM 2

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

The following information includes forward-looking statements, the realization 
of which may be impacted by certain important factors discussed below.

OVERVIEW

     Biomune Systems, Inc. and subsidiaries (collectively, the "Company") is a 
development stage nutraceutical and biopharmaceutical company that is engaged 
in the business of research, development, production and marketing of 
nutraceutical food supplements and biologic pharmaceutical products derived 
from the Biomune Whey Protein Technology (the "BWPT").  The Company is 
conducting its nutraceutical operations through its wholly-owned subsidiary 
Optim Nutrition, Inc.  ("Optim Nutrition"), while the pharmaceutical product 
research and development is being conducted by Biomune Systems, Inc. 
("Biomune").  Nutraceutical products are food supplements that are derived 
from a food base and marketed as a beneficial source of nutrients to promote 
good health in humans.  The Company's primary emphasis and focus to date has 
been on commercializing one or more nutraceutical products and on the research 
and development of biologic pharmaceutical products, with the goal of 
commercializing one or more pharmaceutical products.  The Center for Biologics 
Evaluation and Research at the United States Food and Drug Administration (the 
"FDA") has notified companies doing research in the biologics area that it 
would like such companies to conduct additional studies on their products to 
identify which component is responsible for the biological activity of their 
product, to the extent such data was not developed during preclinical 
investigations.  Because the FDA strongly encourages companies to provide such 
data in order to support their potency claims, the Company is currently in the 
process of compiling this data for submission to the FDA and will continue 
with the clinical trials on its BWPT-301[TM] and BWPT-302[TM] product 
candidates.  While a several month delay in the clinical trials on 
BWPT-301[TM] and BWPT-302[TM] will result from the FDA's request, the 
Company views that request as routine in nature.  Moreover, while those 
additional studies are being conducted, the Company nevertheless is proceeding 
ahead as planned with the marketing and commercialization of OPTIMUNE[TM], 
its first nutraceutical product.  Management believes that the introduction of 
OPTIMUNE[TM] will allow the Company to begin generating cash flow in the 
short-term while it continues with the research and development of its 
pharmaceutical products.

     Nutraceutical Products.  Based upon the results of and the information 
obtained from clinical trials and other studies involving the Company's 
protein whey concentrate (the "Base Product") and BWPT-301[TM], the 
Company, through Optim Nutrition, developed and began marketing 
OPTIMUNE[TM] in July 1996, and is now marketing that product in the United 
States and certain regions of Africa.  OPTIMUNE[TM], which is based on the 
BWPT, is being marketed to nutritionally-stressed individuals with 
immune-compromised conditions as a product to improve immune function and 
assist with weight gain and the maintenance of a healthy weight.  Optim 
Nutrition generated limited revenues from the sale of OPTIMUNE[TM] during 
the first six months of fiscal year 1997.  Optim Nutrition is conducting 
nutritional studies on OPTIMUNE[TM] at various sites for its effect against 
chronic weight loss in immune compromised humans.  A study at two sites in the 
San Francisco bay area (St. Francis Memorial Hospital and the East Bay AIDS 
Clinic) has been completed.  Twenty-nine subjects out of 35 



                                        12
<PAGE>
completed the six week study.  Overall patient weight for all 29 subjects
increased an average 1.5 pounds during the study.  Body weight increased for 
22 patients (75.9%), decreased for five patients (17.2%) and remained constant 
for two patients (6.9%).  In total, 83% of the individuals in the study either 
gained weight or maintained the weight they had upon entry into the study.  
Gaining and maintaining weight were both considered advantageous by the 
Company because the patient population had a history of losing weight, and 
were each at least 10% below their ideal body weight prior to entering the 
study.  Out of the 22 patients who gained weight, the average increase was 3.5 
pounds, with the highest gain being 13 pounds.  A quality of life profile was 
taken at the conclusion of the study, and 83% of the subjects reported feeling 
better.  In addition, the investigators believed that 87% of the subjects had 
improvement over the course of the six week study.  Out of the 22 patients who 
gained weight, 13 gained body cell mass (muscle), with an average increase of 
1.45 pounds, with the highest gain being 7.1 pounds.  In addition,  Dr. Donald 
P. Kotler at St. Lukes-Roosevelt Hospital Center in New York City, New York is 
studying the metabolic activity in people with AIDS.  Other sites located in 
California, Florida, New York and Oklahoma have begun less rigorous studies.  
These studies are designed to yield anecdotal corroborating data of the 
previous studies and to provide new data that may encourage the Company to 
engage in additional expanded rigorous studies and to introduce potential 
customers to OPTIMUNE[TM].  There can be no assurance that this or any 
other nutraceutical study will be successful or will be successfully completed 
in a timely manner.

     While FDA approval is not required to commence the marketing and sale of 
nutraceutical products, in order to make broad and non-specific claims 
regarding the benefits of using a particular nutraceutical product, studies 
must be conducted to substantiate those claims.  In addition, the Company's 
products must be appropriately labeled in accordance with the Dietary 
Supplement Health and Education Act of 1994 (the "Dietary Supplement Act").  
At any time subsequent to a company's commencement of marketing of a 
nutraceutical product, both the FDA and the United States Federal Trade 
Commission (the "FTC") have the right to review the accuracy of the product clai
ms being made by requiring the production of the study results.  A company 
marketing nutraceutical products cannot make claims such as the ability of a 
product to cure a particular disease.  Rather, claims must be broadly made and 
may not be made with respect to diagnoses, treatment, cure, mitigation or 
prevention of a specific disease.

     Pharmaceutical Products.  The Company also believes that the BWPT may be 
utilized to develop pharmaceutical products to treat various gastrointestinal 
and infectious diseases in humans.  The Company has filed Investigational New 
Drug Applications ("IND") with the FDA, the United States government agency 
that regulates drugs for humans, on two biological pharmaceutical candidates 
developed from the BWPT: (a) BWPT-301[TM], which the Company believes may 
prevent and/or treat cryptosporidiosis, a gastrointestinal disease caused by 
the cryptosporidium parvum microorganism that causes acute and severe diarrhea 
in humans, and (b) BWPT-302[TM], which the Company believes may be used in 
the treatment of infection by the life-threatening bacteria coli, strain 
0157:H7 ("E. coli, strain 0157:H7"), a disease that causes severe bloody 
diarrhea, and in children, a hemolytic uremic syndrome associated with a high 
risk of  permanent kidney damage.  At the FDA's request, the Company is 
currently conducting additional clinical studies on BWPT-301[TM] in order 
to identify which component is responsible for the distinctive biological 
activity in that product candidate.  The FDA has told the Company that an 
important aspect of the licensure process is the evaluation of the potency of 
the product and the test or tests that are used to assess 



                                        13
<PAGE>
potency.  "Potency" refers to the specific ability of a product to effect a
given result.  The Company anticipates continuing its Phase II clinical trials 
on its BWPT-301[TM] product candidate upon the completion of the potency 
studies currently being conducted, and now anticipates that those Phase II 
clinical trials will be completed in approximately 1998.  Assuming those Phase 
II clinical trials are successful, the Company anticipates that it will 
commence Phase III clinical trials on BWPT-301[TM] possibly as early as 
mid-1999.  In addition, the Company had concluded its Phase I clinical trials 
on its BWPT-302[TM] product candidate and, after the analysis of the data 
from those trials, is planning to commence a Phase I/II clinical trial in 
approximately mid-1998 to continue gathering data on the safety and tolerance 
of that product and to begin evaluating the efficacy of BWPT-302[TM].  The 
Company has generated no revenues from the sale of any biological 
pharmaceutical drug candidate to date and does not anticipate any revenues 
from any pharmaceutical product until approximately 1999 at the earliest.  
There is no assurance that the Company will ever receive revenues from these 
drug candidates or other products in development.

     Based on the results of Phase I and Phase II clinical trials that were 
conducted using the Company's BWPT-301[TM] product candidate, the Company 
believes that products developed based on the BWPT may be successful in 
improving and promoting gastrointestinal health, especially in (i) people who 
are HIV positive or have AIDS, (ii) immune-compromised patients such as those 
undergoing high-dose antibiotic or chemotherapy treatment and (iii) 
post-surgical and chronic care patients.  Some of the other diseases or 
microbial infections that the Company believes may be preventable and/or 
treatable include certain infectious bacteria known to be enteric pathogens 
(including, for example, Helicobacter pylori, Clostridium difficile, 
Campylobacter jejuni, Yersinia enterocolitica and Staphylococcus aureus, and 
possibly certain non-infectious immunologically-based syndromes, diseases and 
other conditions (including, for example, certain cancers, such as prostate 
cancer,  arthritis, irritable bowel syndrome and acne).

     The Company has a variety of studies and clinical trials on its 
pharmaceutical products underway and planned, although the timing of certain 
of those studies will be delayed as the Company continues to focus its efforts 
on OPTIMUNE[TM] and other possible nutraceutical products.  These studies 
include studies to further the basic knowledge about the BWPT and to fully 
characterize the activities of the Base Product and parameters for formulation 
and use.  At least one study will address pharmacokinetics.  Studies at 
universities and hospital sites are testing for various activities against 
selected disease organisms.  Several human clinical trials have been completed 
to test the safety and tolerance of the BWPT.  Other clinical trials are 
assessing dose ranges and effects.  Still others will measure the efficacy of 
BWPT-301[TM] against cryptosporidiosis in people who are also infected with 
HIV virus or have AIDS.  Additional clinical trials are anticipated to be 
undertaken in the future to conclude the dose ranging considerations and 
prepare for the clinical trials that will assess the efficacy of 
BWPT-302[TM] against E. coli, strain 0157:H7.  Additional studies on E. 
coli, strain 0157:H7, are also anticipated for the future.

Other Products and Technology

     Through the Company's wholly owned subsidiary, Volu-Sol, Inc. 
("Volu-Sol") , the Company is engaged in the manufacture and distribution of 
medical diagnostic stains.  On February 25, 1997, the board of directors 
approved, subject to finalization and execution of a separation and 
distribution agreement, the spin-off of Volu-Sol to the 



                                        14
<PAGE>
stockholders of record of the Company's common stock as of March 5, 1997.  The
Company expects to seek shareholder approval of the transaction, although such 
approval is not required.  The spin-off is expected to occur during fiscal 
1997.  The stockholders are expected to received one share of Volu-Sol, Inc. 
common stock for every ten shares of the Company's common stock owned.  The 
Company intends to account for the spin-off as discontinued operations once a 
definitive separation and distribution agreement can be finalized and once a 
resolution as to stockholder approval has been determined.

     The spin-off of Volu-Sol is designed to separate the Company's interests 
in the medical diagnostic stain and reagent business from its nutritional, 
pharmaceutical and nutraceutical research, development, marketing and 
distribution businesses.  The medical diagnostic stain and reagent business 
conducted by Volu-Sol uses a distinct distribution network from that employed 
by Biomune for its nutraceutical products.  The separation of the two 
businesses will permit each entity to focus on its primary markets without 
concern for the objectives of or distractions caused by the business needs and 
activities of the other entity.  The separation of the business activities 
will allow investors in the Company to evaluate the merits and outlooks of the 
Company's research and development, nutritional supplements and 
pharmaceutical/nutraceutical activities apart from the medical diagnostic 
stain business conducted by Volu-Sol.  Management believes, although there is 
no assurance, that by separating the Company from Volu-Sol and allowing the 
market to establish a separate valuation for Volu-Sol, the spin-off should 
result in an increase in the long-term value of the Company's shareholders' 
current investment in Volu-Sol.  The spin-off would also give current and 
potential investors the opportunity to direct future investment to their 
specific area of interest, or to continue to retain an interest in both 
entities.  The separate market valuation for Volu-Sol should also enhance 
Volu-Sol's ability to attract, motivate and retain high quality employees by 
designing effective incentive-based compensation programs based solely on 
Volu-Sol's performance.  Finally, as part of the Company's organization, 
Volu-Sol is one of several business activities competing for allocation of the 
Company's financial resources.  As a separate public company, however, 
Volu-Sol would be able to issue its own securities and seek to raise capital 
and effect acquisitions using its own securities and other resources.  
Following the spin-off, the Company will not own any interest in Volu-Sol.
  
     The Company owns the right to certain medical waste technologies, which 
consist of (a) a device for the sterilization and decontamination of medical 
devices and wastes, (b) a bioremediation process to detoxify and degrade 
hazardous substances and (c) a device and process for the safe treatment of 
used medical stains.  During fiscal year 1996, the Company granted a license 
to a third party, Biomed Patent Development L.L.C., to use the technology 
related to the medical sterilization and decontamination device in return for 
certain royalties.

     All forward-looking statements contained herein are deemed by the Company 
to be covered by and to qualify for the safe harbor protection provided by the 
Private Securities Litigation Reform Act of 1995 and section 27A of the 
Securities Act of 1933, as amended (the "Act").  For purposes of this report, 
words or phrases such as "will likely result," "expects," "intends," "will 
continue," "is anticipated," "estimates," "projects," and similar expressions 
are intended to identify forward-looking statements within the meaning of the 
Act.  Investors and prospective investors in the Company should understand 
that several factors could cause actual results to differ materially from 
those projected herein.  Investors and prospective investors are referred to 
the 


                                        15
<PAGE>
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1996 for a more detailed discussion of the factors that could cause actual 
results to differ.  These forward-looking statements include plans and 
objectives of management for future operations, including plans and objectives 
relating to the products and the future economic performance of the Company 
and its subsidiaries, Optim Nutrition and Volu-Sol.  The forward-looking 
statements and associated risks set forth herein relate to (i) the 
commercialization of OPTIMUNE[TM] or any other nutraceutical product by 
Optim Nutrition; (ii) the Company's current plans to spin-off Volu-Sol; (iii) 
the total research and development, general and administrative and other 
direct costs associated with obtaining final FDA approval on BWPT-301[TM] 
and BWPT-302[TM]; (iv) the dollar amount to be expended during fiscal years 
1997 and 1998 on the BWPT-301[TM] and BWPT-302[TM]; (v) the estimated 
date of receipt of final FDA approval on BWPT-301[TM] and BWPT-302[TM] 
(vi) the estimated commencement date of Phase III clinical trials and the 
completion of those clinical trials on BWPT-301[TM]; and (vii) the Company 
having sufficient cash to fund its projected operations and budgeted research 
and development for fiscal 1997.  The forward- looking statements included 
herein are based on current expectations that involve a number of risks and 
uncertainties.  These forward-looking statements are based on assumptions, 
among others, (a) that the efficacy of BWPT-301[TM] will be established 
during the ongoing Phase II clinical trials and the contemplated Phase III 
clinical trials; (b) that the Company will be able to successfully undertake 
and complete clinical trials on BWPT-302[TM]; (c) that the Company will be 
able to continue to market and successfully commercialize OPTIMUNE[TM]; (d) 
that the Company will be able to successfully develop and commercialize the 
BWPT; (e) that the Company will need to conduct additional Phase II clinical 
trials on BWPT-301[TM] and may need to conduct clinical trials that are 
different from those that have been conducted to date or that are currently 
contemplated by the Company; and (f) that the Company will be able to timely 
and properly quantify and analyze the data derived from its on going clinical 
trials on its pharmaceutical product candidates and the studies on its 
nutraceutical product candidates.  Assumptions relating to the foregoing 
involve judgments with respect to, among other things, future economic, 
competitive and market conditions, future business decisions, and the results 
of the clinical trials and product studies, and the time and money required to 
successfully complete those clinical trials and studies, all of which are 
difficult or impossible to predict accurately and many of which are beyond the 
control of the Company and its management.  Although the Company believes that 
the assumptions could prove inaccurate and, therefore, there is and can be no 
assurance that the results contemplated in any such forward-looking statement 
will be realized.  This is particularly true given the dynamic nature of the 
process in which the Company is involved with respect to OPTIMUNE[TM], 
BWPT-301[TM] and BWPT-302[TM]. Budgeting and other management decisions 
are subjective in many respects and thus susceptible to interpretations and 
periodic revision.  Based on actual experience and business developments, the 
impact of which may cause the Company to alter its marketing, capital 
expenditure plans or other budgets, the Company's results of operations could 
be adversely impacted.  In light of the significant uncertainties inherent in 
the forward-looking statement included herein, the inclusion of any such 
statements should not be regarded as a representation by the Company or any 
other person that the objectives or plans of the Company or of either of its 
subsidiaries will be achieved.   







                                        16
<PAGE>
Results of Operations

Comparison of the three months ended March 31, 1997 with the three months 
ended March 31, 1996

During the three months ended March 31, 1997, the Company had revenues of 
$135,353 compared to $124,272 for the comparable three month period ended 
March 31, 1996.  Of the total revenues generated for the three months ended 
March 31, 1997, $124,675 were from Volu-Sol and $10,678 were from Optim 
Nutrition.  All of the revenues generated for the three months ended March 31, 
1996 were derived from Volu-Sol.  Cost of sales for Volu-Sol was $93,952 and 
cost of sales for Optim Nutrition was $6,809 for the three months ended March 
31, 1997 compared to cost of sales of $67,164 for Volu-Sol for the same period 
in 1996.

Management, consulting and research fees were $763,809 for the three months 
ended March 31, 1997, as compared to $807,097 for the three months ended March 
31, 1996.  General and administrative expenses increased from $790,876 for the 
three months ended March 31, 1996 to $851,010 for the three months ended March 
31, 1996 primarily due to the Company's efforts to further develop and market 
OPTIMUNE[TM].

Interest income was $70,201 for the three months ended March 31, 1997 and 
resulted from the investment of the Company's cash proceeds from the sale of 
Series C Preferred Stock.

The net loss applicable to common shares increased from $1,522,335 for the 
three months ended March 31, 1996 to $2,368,856 for the three months ended 
March 31 ,1997.  The increase in the net loss applicable to common shares was 
attributable to the increased preferred stock dividends and the $748,550 
premium to be paid upon the redemption of certain shares of Series C Preferred 
Stock.

Comparison of the six months ended March 31, 1997 with the six months ended 
March 31, 1996

During the six months ended March 31, 1997, the Company had revenues of 
$431,520 compared to $240,530 for the comparable six month period ended March 
31, 1996.  Of the total revenues generated for the six months ended March 31, 
1997, $235,437 were from Volu-Sol, $151,083 were from Optim Nutrition and 
$45,000 in royalties were received from the license of the medical 
sterilization and decontamination device.  All of the revenues generated for 
the six months ended March 31, 1996 were derived from Volu-Sol.  Cost of sales 
for Volu-Sol was $173,523 and cost of sales for Optim Nutrition was $58,331 
for the six months ended March 31, 1997 compared to cost of sales of $143,835 
for Volu-Sol for the same period in 1996.

Management, consulting and research fees were $1,485,164 for the six months 
ended March 31, 1997, as compared to $1,650,192 for the six months ended March 
31, 1996.  This decrease resulted from two individuals who were consultants 
during the six months ended March 31, 1996 and were hired as employees for 
fiscal 1997.  The payroll costs of these employees are currently included in 
general and administrative expenses.  General and administrative expenses 
increased from $1,363,312 for the six months ended March 31, 1996 to 
$1,889,501 for the six months ended March 31, 1997 as a result of new 
employees who were previously consultants and the Company's continued efforts 
to further develop and market OPTIMUNE[TM].



                                        17
<PAGE>
Interest income was $145,486 for the six months ended March 31, 1997 and
resulted from the investment of the Company's cash proceeds from the sale of 
Series C Preferred Stock.

The net loss applicable to common shares increased from $2,857,869 for the six 
months ended March 31, 1996 to $3,968,816 for the six months ended March 31 
,1997.  The increase in the net loss applicable to common shares was 
attributable to the increased level of activity in developing and marketing 
OPTIMUNE[TM], the increase in preferred stock dividends and the $748,550 
premium to be paid upon the redemption of certain shares of Series C Preferred 
Stock.  The Company expects to incur a net loss for fiscal year 1997.  While 
the Company is not at this time able to forecast the expected net loss for 
fiscal 1997, that net loss could exceed the net loss incurred for fiscal 
1996.  The factors that will dictate the size of the Company's net loss for 
fiscal 1997 include the  cost of further developing the BWPT, required 
expenditures for clinical trials on BWPT-301[TM], required expenditures for 
the clinical trials on BWPT-302[TM], required expenditures for the 
nutritional studies on OPTIMUNE[TM] and the associated development and 
marketing costs related to OPTIMUNE[TM].

Liquidity and Capital Resources

The Company is currently unable to finance its operations from its cash flows 
from operating activities.  Substantial funds and time will be required to 
complete clinical trials on BWPT-301[TM] (assuming efficacy is established 
during the Phase II clinical trials), to undertake and complete the necessary 
clinical trials on BWPT-302[TM] (assuming efficacy is established during 
the clinical trials), to obtain regulatory approval for and to commercialize 
products derived from the BWPT and to achieve profitability in Optim 
Nutrition's operations by marketing and selling OPTIMUNE[TM].  Because 
revenue-generating activities are not in place at significant levels and 
because the Company will require significant capital to accomplish the 
objectives set forth above, additional equity and/or debt funding will be 
required, although such funding may not be available or may not be available 
on terms acceptable to the Company and its management.

As of March 31, 1997, the Company had current assets of $6,431,970 and working 
capital of $5,956,386 as compared to current assets of $8,339,394 and working 
capital of $7,713,917 as of September 30, 1996.  This decrease in the 
Company's current assets and working capital was primarily due to the net loss 
for the three months ended March 31, 1997.

During the six months ended March 31, 1997, the Company's operating activities 
used $1,964,617 of cash compared with $1,822,736 of cash used for operating 
activities during the same six month period in 1996.  This increase was the 
result of increased costs associated with the marketing of OPTIMUNE[TM].

Management intends to continue the development of its BWPT, including products 
in both the nutraceutical and pharmaceutical markets.  

The Company currently estimates that the additional research and development, 
general and administrative and other direct costs associated with reaching the 
stage of obtaining final FDA approval on BWPT-301[TM] in treating 
cryptosporidiosis in people with AIDS, in the aggregate, will approximate 
$3-$5 million, some of which will be 




                                        18
<PAGE>
paid in cash and some of which will be paid in shares of the Company's Common
Stock or securities convertible into shares of the Company's Common Stock. As 
of March 31, 1997 approximately $13.1 million had been spent on 
BWPT-301[TM].   An estimated $200,000 to $400,000 will be expended during 
the next twelve months as clinical trials on BWPT-301[TM] continue.  Final 
FDA approval on BWPT-301[TM] is currently estimated to be received as early 
as late calendar 1999.

Currently, it is estimated that the additional research and development, 
general and administrative and other direct costs associated with reaching the 
stage of obtaining final FDA approval on BWPT-302[TM] in treating E. coli, 
strain 0157:H7, will approximate $7.5-$9.5 million, some of which will be paid 
in cash and some of which likely will be paid in shares of the Company's 
Common Stock.  The Company has recently completed initial Phase I clinical 
trials and will continue Phase I clinical trials throughout the remainder of 
fiscal year 1997.  As of March 31, 1997, the Company has spent approximately 
$505,000 relating to BWPT-302[TM] and anticipates spending approximately 
$200,000 over the next twelve months as clinical trials continue.

As of March 31, 1997, the Company had spent approximately $1.1 million 
developing and marketing  OPTIMUNE[TM].  In July 1996, the Company 
introduced OPTIMUNE[TM],  and began marketing efforts through a direct mail 
program. During the next twelve months the Company anticipates incurring 
direct costs of approximately $2-$4 million in conducting additional 
nutritional studies and entering into the private label and wholesale and 
retail markets.

The Company cannot currently predict, however, how much of the above 
referenced expenditures will be paid in cash and how much will be paid in 
shares of Common Stock.  The factors that will impact the actual total 
research and development, general and administrative and other direct costs 
associated with OPTIMUNE[TM], BWPT-301[TM] and BWPT-302[TM] include 
the number of clinical trials or nutritional studies necessary to establish 
efficacy, the results of the continuing clinical trials and nutritional 
studies, possible changes in the FDA's regulations and approval processes, and 
general inflationary factors.

The Company has no credit facility with any lending institution and no current 
or long-term debt obligations.

The Company currently estimates that it has sufficient cash to fund its 
projected operations and budgeted research and development for the remainder 
of fiscal year 1997.  The factors that could cause the forward-looking 
statement contained in the immediately proceeding sentence to differ from that 
projected include catastrophic unanticipated events, dramatic increases in 
research and development costs, the ultimate cost to conduct nutraceutical 
studies and the clinical trials on BWPT-301[TM] and BWPT-302[TM].










                                        19

<PAGE>
PART II.     OTHER INFORMATION

Item 1 - Legal Proceedings

Sterlin v. Biomune Systems, et al., Case no. 2:95-CV-944G (U.S. District Court 
for the District of Utah, Central Division).  On April 2, 1997, the court 
dismissed with prejudice all claims of the plaintiff against the Company and 
the other defendants in the action and assessed the costs of the litigation 
against the plaintiff.  The final judgment on the court's decision and order 
was entered on May 6, 1997.

Item 6 - Exhibits and Reports on Form 8-K

     (a)     Exhibits:

          27          Financial Data Schedule 






















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                                        20
<PAGE>
                                      SIGNATURES

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

                                           BIOMUNE SYSTEMS, INC.
                                           (Registrant)


                                           /S/ DAVID G. DERRICK
Date: May 14, 1997                         ___________________________
                                           David G. Derrick, Chief Executive
                                           Officer and Chairman of the Board
                                             (Principal Executive Officer)

                                           /S/ MICHAEL G. ACTON
Date: May 14, 1997                         ___________________________
                                           Michael G. Acton, Chief Financial
                                           Officer and Controller
                                              (Principal Financial
                                              and Accounting Officer)






























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