UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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AutoImmune Inc.

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AUTOIMMUNE INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 18, 2006

The Annual Meeting of Stockholders of AutoImmune Inc. will be held on Thursday, May 18, 2006 at 11:00 o’clock in the morning Eastern Time at the offices of Nutter, McClennen & Fish, LLP, World Trade Center West, 155 Seaport Boulevard, Boston, Massachusetts, for the following purposes:

1. To elect a Board of Directors to serve for the ensuing year and until their successors are duly elected and qualified; and

2. To consider and act upon such other business and matters or proposals as may properly come before the Annual Meeting or any adjournment thereof.

Stockholders of record at the close of business on March 31, 2006 are entitled to receive notice of and to vote at the Annual Meeting.

By Order of the Board of Directors

Suzanne Glassburn

Secretary

April 13, 2006

YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING AND WISH YOUR SHARES OF CAPITAL STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.

AUTOIMMUNE INC.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

May 18, 2006

AutoImmune is furnishing this proxy statement and accompanying proxy card to you in connection with the solicitation by and on behalf of the Board of Directors of AutoImmune Inc. of proxies to be voted at AutoImmune’s Annual Meeting of Stockholders and at any adjournment or adjournments thereof (the “Annual Meeting”). Action will be taken at the Annual Meeting to elect a Board of Directors to serve for the ensuing year and until their successors are duly elected and qualified.

You are cordially invited to attend the Annual Meeting, which is to be held, pursuant to the accompanying Notice of Annual Meeting, on Thursday, May 18, 2006 at 11:00 a.m. at the offices of Nutter, McClennen & Fish, LLP, World Trade Center West, 155 Seaport Boulevard, Boston, Massachusetts.

Shares of AutoImmune common stock, par value $0.01 (“Common Stock”), represented by a properly executed proxy received by AutoImmune prior to the Annual Meeting, will, unless revoked, be voted as directed in the proxy.

AutoImmune’s principal executive offices are located at 1199 Madia Street, Pasadena, CA 91103.

AutoImmune is mailing this proxy statement and the related proxy on or about April 13, 2006 to its stockholders of record at the close of business on March 31, 2006.

ANNUAL REPORT AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AutoImmune’s Annual Report to Stockholders for the fiscal year ended December 31, 2005, including AutoImmune’s financial statements and PricewaterhouseCoopers LLP’s report on the financial statements, is being mailed with this proxy statement to each of AutoImmune’s stockholders of record at the close of business on March 31, 2006. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting where they will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

VOTING AT THE ANNUAL MEETING

Stockholders Entitled to Vote

Stockholders of record at the close of business on March 31, 2006 may vote at the Annual Meeting. On March 31, 2006, there were 16,919,623 shares of Common Stock outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter listed in the Notice of Annual Meeting.

How to Vote Your Shares

Stockholders of record may vote their shares by signing, dating and returning the enclosed proxy card. Each proxy that is properly received by AutoImmune prior to the Annual Meeting will, unless revoked, be voted in accordance with the instructions given on such proxy. Votes may be cast in favor of a nominee for director or withheld. Votes that are withheld and broker non-votes will have no effect on the outcome of the election of directors. (Broker non-votes occur when brokers or nominees holding stock in “street name” indicate on proxies that they do not have discretionary authority to vote the shares on a particular matter.) If no instructions are

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indicated, the shares represented by the proxy will be voted FOR the election of the nominees for director listed in this proxy statement and in such manner as the named proxies shall decide on any other matters that may properly come before the Annual Meeting. Any stockholder of record attending the Annual Meeting may vote in person, whether or not a proxy has been previously given, but the mere presence of a stockholder at the Annual Meeting will not constitute revocation of a previously given proxy. In addition, stockholders whose shares of Common Stock are not registered in their own name will need to obtain a legal proxy from the record holder of such shares to vote in person at the Annual Meeting.

How to Revoke or Change Your Vote

Any stockholder giving a proxy prior to the Annual Meeting has the power to revoke it at any time before it is exercised by (i) sending a written revocation that is received by the Secretary of AutoImmune, (ii) executing and returning another proxy bearing a later date, or (iii) attending the Annual Meeting and voting in person. Any stockholder of record attending the Annual Meeting may vote in person, whether or not he or she has previously given a proxy.

Quorum Needed to Hold Meeting

A quorum of stockholders is necessary to take action at the Annual Meeting. The holders of issued and outstanding shares of Common Stock that represent a majority of the votes entitled to be cast at the Annual Meeting, present in person or represented by proxy, will constitute a quorum.

Vote Required to Elect Directors

If a quorum is present at the Annual Meeting, the directors will be elected by a plurality of the votes cast at the Annual Meeting by the holders of shares entitled to vote.

ELECTION OF DIRECTORS

AutoImmune’s By-laws provide that the number of directors that shall constitute the Board of Directors shall be determined by the Board of Directors from time to time, but in no event shall the number of directors be less than three. AutoImmune’s Board of Directors has set the number of directors to serve on the Board of Directors for the ensuing year at four.

It is the intention of the persons named as proxies in the accompanying form of proxy (unless authority to vote therefor is specifically withheld) to vote for the election of the persons named in the following table, all of whom are now directors of AutoImmune, to serve for the ensuing year and until their successors are elected and qualified. In the event that any of the nominees becomes unavailable, the persons named as proxies have discretionary authority to vote for a substitute person. The Board of Directors has no reason to believe that any of the nominees will be unwilling or unable to serve if elected.

Each of the following directors has been nominated by AutoImmune’s Board of Directors for re-election at the Annual Meeting:

Name	Age	Director Since
Robert C. Bishop, Ph.D.	63	1992
Hugh A. D’Andrade	67	1994
Allan R. Ferguson	63	1988
R. John Fletcher	60	1991

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Robert C. Bishop, Ph.D.—Dr. Bishop has served as President and Chief Executive Officer of AutoImmune since he joined AutoImmune in May 1992 and as Chairman of the Board since May 1999. Prior to joining AutoImmune, Dr. Bishop held senior management positions at Allergan, Inc., an eye and skin care company, including President of Allergan Medical Optics from 1986 to 1988, Senior Vice President of Corporate Development from December 1988 to August 1989, President of Allergan Pharmaceuticals, Inc. from August 1989 to February 1991 and Group President of Allergan Therapeutics Group from February 1991 to May 1992. Dr. Bishop is also a director of Millipore Corporation, Caliper Life Sciences Corporation and Optobionics Corporation. Additionally, Dr. Bishop is a Manager/Trustee of MFS/Sun Life Series Trust and Compass Funds Complex (a series of three funds/forty portfolios advised by MFS Investment Management).

Hugh A. D’Andrade—Mr. D’Andrade is currently retired. Mr. D’Andrade was Vice Chairman and Chief Administrative Officer of Schering-Plough Corporation from January 1996 until December 2000.

Allan R. Ferguson—Mr. Ferguson has been Managing Director of 3i Technology Partners, an international venture capital group, since July 1999, and is currently head of its United States operations. From April 1993 to July 1999, Mr. Ferguson was a General Partner of Atlas Venture, an international venture capital fund which invests in early stage health care companies, and leader of its Life Science team. Mr. Ferguson is also a director of Amphora Discovery Corporation, TransMedics, Inc., Ulthera Inc., Small Bone Innovations, Inc. and ZONARE Medical Systems, Inc.

R. John Fletcher—Mr. Fletcher is the founder, Chief Executive Officer and a director of Fletcher Spaght, Inc., a management consulting firm founded in 1983 which specializes in strategy development for high technology and health care businesses. Mr. Fletcher is Managing Partner of Fletcher Spaght Ventures, a venture capital fund. Mr. Fletcher is also a director of Axcelis Technologies, Inc., Panacos Pharmeuticals, Inc. and Spectranetics, Inc.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE.

CORPORATE GOVERNANCE

Board of Directors

AutoImmune’s Board of Directors met four times in 2005. The Board of Directors has determined that Messrs. D’Andrade, Ferguson and Fletcher are independent directors, as defined in Rule 4200 of the National Association of Securities Dealers’ listing standards. There are no family relationships among any of the directors or executive officers of AutoImmune. Each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees of the Board of Directors on which he served.

Committees of the Board of Directors

The Board of Directors currently has the following three standing committees:

(1) Audit Committee.    The Audit Committee consists of Messrs. Fletcher, Ferguson, and D’Andrade. The function of the Audit Committee is to oversee the accounting and financial reporting processes of AutoImmune and the audits of the financial statements of AutoImmune. The Board of Directors has adopted a written charter for the Audit Committee. A copy of the charter is available on AutoImmune’s website at http://www.autoimmuneinc.com. Each Audit Committee member is able to read and understand fundamental financial statements. The Board of Directors has determined that Messrs. Ferguson and Fletcher are audit committee financial experts, as defined under the federal securities laws. Each member of the Audit Committee is independent, as defined in the National Association of Securities Dealers’ listing standards. The Audit Committee met two times in 2005.

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(2) Compensation Committee.    The Compensation Committee consists of Messrs. Ferguson, Fletcher, and D’Andrade. The function of the Compensation Committee is to determine and oversee the compensation practices and policies of AutoImmune. The Board of Directors has adopted a written charter for the Compensation Committee. A copy of the charter is available on AutoImmune’s website at http://www.autoimmuneinc.com. Each member of the Compensation Committee is independent, as defined in the National Association of Securities Dealers’ listing standards. The Compensation Committee did not meet in fiscal year 2005. The Board of Directors, as a whole, addressed the Compensation Committee’s responsibilities during 2005.

(3) Nominating and Governance Committee.    The Nominating and Governance Committee consists of Messrs. D’Andrade, Ferguson and Fletcher. The function of the Nominating and Governance Committee is to focus on issues involving the composition and operation of the Board of Directors and the development of good corporate governance practices. The Board of Directors has adopted a written charter for the Nominating and Governance Committee. A copy of the charter is available on AutoImmune’s website at http://www.autoimmuneinc.com. Each member of the Nominating and Governance Committee meets the independence requirements under the National Association of Securities Dealers’ listing standards. The Nominating and Governance Committee met once in fiscal year 2005.

Director Nomination Process

The Nominating and Governance Committee will consider director candidates recommended by stockholders. Stockholders who wish to recommend to the Nominating and Governance Committee candidates for election to the Board of Directors must do so in writing. The recommendation should be sent to AutoImmune, care of the Secretary, Suzanne Glassburn, Esq., Nutter McClennen & Fish LLP, World Trade Center West, 155 Seaport Boulevard, Boston, Massachusetts 02210-2604, who will, in turn, forward the recommendation to the Committee. The recommendation must set forth (i) the name and address as they appear on AutoImmune’s books of the stockholder making the recommendation and the class and number of shares of capital stock of AutoImmune beneficially owned by such stockholder and (ii) the name of the candidate and all information relating to the candidate that is required to be disclosed in solicitations of proxies for election of directors under the federal proxy rules. The recommendation must be accompanied by the candidate’s written consent to being named in AutoImmune’s proxy statement as a nominee for election to the Board and to serving as a director, if elected. Stockholders must also comply with all requirements of AutoImmune’s By-laws with respect to nomination of persons for election to the Board of Directors.

The Nominating and Governance Committee believes that persons nominated for election to the Board of Directors should possess sufficient business or financial experience and a willingness to devote the time and effort necessary to discharge the responsibilities of a director. This experience can include, but is not limited to, service on other boards of directors, active involvement with other boards of directors and experience in the industry in which AutoImmune conducts its business. The Nominating and Governance Committee believes that the qualifications and strengths of an individual in totality, rather than any one specific factor, should be considered, with a view to nominating persons for the election to the Board of Directors whose backgrounds, integrity, and personal characteristics indicate that they will make a positive contribution to the Board of Directors.

If additional director candidates are necessary or desired, the Nominating and Governance Committee intends to identify candidates for election to the Board of Directors through the personal knowledge and experience of the members of the Committee and third-party recommendations. Candidates will be evaluated based upon their backgrounds and/or interviews with members of the Nominating and Governance Committee.

Stockholder Communication Policy

Stockholders may send communications to the Board of Directors or individual members of the Board of Directors by writing to them, care of the Secretary, Suzanne Glassburn, Esq., Nutter McClennen & Fish LLP, World Trade Center West, 155 Seaport Boulevard, Boston, Massachusetts 02210-2604, who will forward the

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communication to the intended director or directors. If the stockholder wishes the communication to be confidential, then the communication should be provided in a form that will maintain confidentiality.

Attendance at Annual Meeting of Stockholders

AutoImmune does not have a specific policy with regard to board members’ attendance at annual meetings of stockholders. All of the directors, other than Allan Ferguson, attended last year’s annual meeting of stockholders.

Code of Ethics

Autoimmune has adopted a Code of Ethics in compliance with the federal securities laws. The Code of Ethics applies to all directors, officers and employees of AutoImmune and is posted on AutoImmune’s website at http://www.autoimmuneinc.com.

CERTAIN ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS

Pursuant to the Stock Option Plan for Nonemployee Directors (the “Nonemployee Director Plan”), each director who is not an employee of AutoImmune automatically receives an option to purchase 25,000 shares of Common Stock immediately following the annual meeting of stockholders at which he is first elected. Each year thereafter, if the individual is still a member of the Board of Directors, the director receives an option to purchase 6,500 shares of Common Stock. Each nonemployee director who is a member of a standing committee of the Board of Directors automatically receives an additional option to purchase 1,000 shares of Common Stock immediately following his first election to a standing committee of the Board of Directors. An option to purchase an additional 1,000 shares of Common Stock is automatically granted every four years to a director who continues to be a member of the standing committee. The exercise price of options granted under the Nonemployee Director Plan is equal to the closing price of a share of AutoImmune’s Common Stock on the Nasdaq OTC Bulletin Board on the date the option is granted. The options become exercisable in four equal annual installments commencing one year after the date of grant, provided that the director continues to be eligible under the terms of the Nonemployee Director Plan. During 2005, options to purchase 22,500 shares of Common Stock were granted to nonemployee directors under the Nonemployee Director Plan.

In addition, each nonemployee director is eligible to receive options to purchase shares of Common Stock under the terms of AutoImmune’s 1998 Stock Option Plan. During 2005, options to purchase 4,000 shares of Common Stock were granted to non-employee directors under the 1998 Stock Option Plan.

Each nonemployee director receives an annual retainer of $10,000 plus $1,000 for each committee of which he is a member. In addition, members of the Board of Directors are reimbursed for expenses they incur in attending meetings.

Directors hold office until the next meeting of the stockholders of AutoImmune and until their successors are elected and qualified.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Fletcher, a director of AutoImmune, is the founder and Chief Executive Officer of Fletcher Spaght, Inc., a management consulting firm. In January 2000, AutoImmune entered into an agreement with Fletcher Spaght under which Fletcher Spaght agreed to assist AutoImmune with the potential launch of COLLORAL^® as a dietary supplement. Under the agreement, Fletcher Spaght received monthly retainers of $10,000 from January 2000 until May 2000, and is entitled to receive a payment of (i) 2.5% of the amount, if any, that AutoImmune receives for any U.S. rights to COLLORAL as a nutritional product in a transaction consummated on or before December 31, 2002 less (ii) the $50,000 in retainer fees previously paid to Fletcher Spaght. In August 2002, AutoImmune entered into a joint-venture with Deseret Laboratories, Inc. to manufacture, market and sell

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COLLORAL as a nutritional product. If AutoImmune receives distributions from the joint venture, Fletcher Spaght will be entitled to receive payments under its agreement with AutoImmune. As of March 31, 2006, Fletcher Spaght had received no payment under those agreements, other than the $50,000 of retainer fees.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table contains a summary of the annual, long-term and other compensation paid or accrued during the fiscal years ended December 31, 2003, 2004 and 2005 to AutoImmune’s Chief Executive Officer and the Treasurer and Director of Finance (the only other executive officer of AutoImmune) (collectively, the “Named Executive Officers”).

Name and Principal Position	Year	Annual Compensation		Other Annual Compensation ($)	Long-Term Compensation
					Awards			Payouts
		Salary($)	Bonus($)		Restricted Stock Awards($)	Securities Underlying Options (#)		LTIP Payouts ($)	All Other Compensation ($)
Robert C. Bishop President and Chief Executive Officer(1)	2003 2004 2005	102,146 99,274 103,646	—   —   —	—   —   —	—   —   —	—   —   —		—   —   —	—   —   —
Heather A. Ellerkamp Treasurer and Director of Finance(2)	2003 2004 2005	59,098 58,424 33,781	—   —   —	—   —   —	—   —   —	—   4,500 2,100	(3) (3)	—   —   —	—   —   —
Diane M. McClintock Treasurer and Director of Finance(4)	2003 2004 2005	—   —   19,945	—   —   —	—   —   —	—   —   —	—   —   60,000	(5)	—   —   —	—   —   —

(1) Dr. Bishop’s full-time employment by AutoImmune terminated on December 31, 1999. He is still an executive officer of AutoImmune and continues to provide services to AutoImmune on a part-time basis.

(2) Ms. Ellerkamp served as Treasurer and Director of Finance from June 1997 to August 2005. Her full-time employment by AutoImmune terminated on November 19, 1999. Effective August 18, 2005, Ms. Ellerkamp resigned from the position of Treasurer and Director of Finance and her agreement with the company was restructured to provide for her continued availability as a non-officer employee through the end of March 2006.

(3) On May 20, 2004, Ms. Ellerkamp received an option to purchase 4,500 shares of AutoImmune’s Common Stock under AutoImmune’s 1998 Stock Option Plan. This grant replaced Ms. Ellerkamp’s initial grant of 4,500 shares which expired on February 22, 2004. On March 1, 2005, Ms. Ellerkamp received an option to purchase 2,100 shares of AutoImmune’s Common Stock under AutoImmune’s 1998 Stock Option Plan. This grant replaced Ms. Ellerkamp’s initial grant of 2,100 shares which expired on February 28, 2005.

(4) Ms. McClintock was appointed the Company’s Treasurer and Director of Finance on August 18, 2005, following the resignation of Ms. Ellerkamp from those positions. She joined the Company as an employee in June 2005.

(5) On July 1, 2005, Ms. McClintock received an option to purchase 60,000 shares of AutoImmune’s Common Stock under AutoImmune’s 1998 Stock Option Plan.

AutoImmune did not grant any restricted stock awards or stock appreciation rights or make any long term incentive plan payouts in 2005.

Effective November 19, 1999 and December 31, 1999, Ms. Ellerkamp and Dr. Bishop, respectively, ceased being full-time employees of AutoImmune, became part-time employees and entered into agreements with AutoImmune pursuant to which they agreed to provide services similar to those they provided as full-time employees. Dr. Bishop’s agreement was amended effective March 1, 2000 and effective July 1, 2004. Ms. Ellerkamp’s agreement was amended effective January 1, 2003 and effective July 1, 2004. Ms. Ellerkamp entered into a new agreement with AutoImmune effective August 18, 2005. Effective August 18, 2005, Ms McClintock entered into an agreement pursuant to which she agreed to provide services as the Company’s Treasurer and Director of Finance. Under the agreements, Dr. Bishop receives compensation of $221 per hour for his services, Ms. Ellerkamp receives compensation of $110 per hour for her services, and Ms. McClintock receives compensation of $100 per hour for her services.

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OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information with respect to options granted to the Named Executive Officers during fiscal year 2005.

Name	Number of Securities Underlying Options Granted (#)	Percent of Total Options Granted to Employees in Fiscal Year		Exercise Price		Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
							5%($)		10%($)
Heather A. Ellerkamp	2,100	3.4	%	$	1.05	3/1/2015	$	2,814	$	3,551
Diane M. McClintock	60,000	96.6	%	$	0.87	7/1/2015	$	66,622	$	84,069

According to the terms of the options, the options become exercisable in four equal installments commencing on the first anniversary of the date of the grant. Any vesting of the shares that are subject to the options is conditioned upon Ms. Ellerkamp and Ms. McClintock being employees of AutoImmune on the vesting date.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR

AND FISCAL YEAR-END OPTION VALUES

There were no options exercised by any Named Executive Officer during the fiscal year ended December 31, 2005. The following table sets forth information as of December 31, 2005 concerning exercisable and unexercised stock options held by the Named Executive Officers.

	Number of Securities Underlying Unexercised Options at Fiscal Year End(#)		Value of Securities Underlying Unexercised In- the-Money Options at Fiscal Year End($)(1)
Name	Exercisable	Unexercisable	Exercisable		Unexercisable
Robert C. Bishop	744,000	—	$	200,000	$	—
Heather A. Ellerkamp	117,125	5,475	$	31,100	$	—
Diane M. McClintock	—	60,000	$	—	$	3,000

(1) Based upon a fair market value of $0.92 per share of AutoImmune’s Common Stock, which was the closing price per share on December 31, 2005.

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column(a))
Equity compensation plans approved by security holders:
Options	1,262,600	$	1.32	620,400
Warrants	750,000	$	1.93	—
Equity compensation plans not approved by security holders	—		—	—
Total	2,012,600	$	1.55	620,400

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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors is comprised of three nonemployee directors who are all independent as defined in Rule 4200 of the National Association of Securities Dealers listing standards.

Responsibilities

The Compensation Committee is responsible for assisting the Board of Directors in determining and overseeing the compensation practices and policies of AutoImmune. In addition, the Compensation Committee is responsible for the administration of and the granting of awards under AutoImmune’s 1998 Stock Option Plan and AutoImmune’s Stock Option Plan for Nonemployee Directors.

Executive Compensation

There are two principal components of the compensation provided to AutoImmune’s executive officers: base salary and equity incentive compensation. The Compensation Committee is responsible for recommending to the Board for determination by the Board the compensation for AutoImmune’s executive officers. The Compensation Committee’s basic policy in setting compensation for AutoImmune’s executive officers is to ensure that compensation is (i) designed to align the interests of executive management with the long-term interests of the stockholders and (ii) competitive with the compensation paid by other development stage biotechnology companies in order to attract and retain executives. The Compensation Committee also endeavors to base compensation on each individual’s contribution to AutoImmune’s success. The Compensation Committee’s objective is to have each executive’s compensation package contingent on AutoImmune’s operational and, ultimately, financial success. The Compensation Committee believes that long term equity-based incentive compensation (in the form of stock options) that is performance driven constitutes a fundamental element of each executive officer’s total compensation package. The Compensation Committee’s policy generally is that executive officers should have a compensation package that places greater emphasis and dependence upon AutoImmune’s success and stock appreciation than on base salary.

Base Salary.    In late 1999, the two remaining executive officers of AutoImmune, Dr. Bishop and Ms. Ellerkamp, ceased being full-time employees of AutoImmune and began working in the same capacity on a part-time basis. Effective August 18, 2005, Ms. Ellerkamp resigned her position as Treasurer and Director of Finance and was replaced by Ms. McClintock. Dr. Bishop, Ms. Ellerkamp and Ms. McClintock are paid on an hourly basis at the rate of $221 per hour, $110 per hour and $100 per hour, respectively. The hourly rates are based on their most recent base salaries and on rates charged currently by consultants or part-time employees providing similar services.

Stock Options.    In March 2005, the Compensation Committee recommended, and the Board of Directors approved, one grant of incentive stock options to the then Treasurer and Director of Finance, Ms. Ellerkamp, under AutoImmune’s 1998 Stock Option Plan. The grant to Ms. Ellerkamp replaced the initial grant made to Ms. Ellerkamp which expired in February 2005. In July 2005, the Compensation Committee recommended, and the Board of Directors approved, one grant of incentive stock options to the current Treasurer and Director of Finance, Ms. McClintock, under AutoImmune’s 1998 Stock Option Plan. The grant to Ms. McClintock is designed to provide an incentive for Ms. McClintock to work to achieve the long-term goals of AutoImmune. According to the terms of the options, the options become exercisable in four equal installments commencing on the first anniversary of the date of the grant. Any vesting of the shares subject to the options is conditioned upon Ms. Ellerkamp and Ms. McClintock being employees of AutoImmune on the vesting date.

Respectfully submitted,

The Compensation Committee

Allan R. Ferguson, Chair

Hugh A. D’Andrade

R. John Fletcher

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AUDIT COMMITTEE REPORT

The Audit Committee is appointed by the Board of Directors and currently consists of three directors each of whom is independent as defined in the National Association of Securities Dealers’ listing standards. The Audit Committee operates under a written charter adopted by the Board of Directors of AutoImmune.

On behalf of the Board of Directors, the Audit Committee oversees AutoImmune’s financial reporting process and AutoImmune’s system of internal accounting and financial controls. Management is responsible for the development and maintenance of AutoImmune’s financial statements, financial reporting process and system of internal controls. In order to discharge its oversight role effectively, the Audit Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of AutoImmune and has the power to retain outside legal counsel, auditors or other experts for this purpose.

AutoImmune’s independent registered public accounting firm, PricewaterhouseCoopers LLP, is responsible for performing an audit of AutoImmune’s financial statements, expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles and issuing a report thereon. Their opinion, titled “Report of Independent Registered Public Accounting Firm,” may be found in AutoImmune’s Annual Report on Form 10-K. The Audit Committee reviewed with the independent auditors their judgments as to the quality and acceptability of AutoImmune’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. Additionally, the Audit Committee discussed with the independent auditors the auditors’ independence from management and from AutoImmune, including the matters in the written disclosures required by the Independence Standards Board Standard No. 1. Although the Audit Committee is responsible for overseeing these processes, it does not prepare or audit AutoImmune’s financial statements or certify that they are complete or accurate.

In fulfilling its oversight responsibilities for the fiscal year ended December 31, 2005, the Audit Committee reviewed the financial statements published in AutoImmune’s Annual Report on Form 10-K with management by examining and discussing the quality and acceptability of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. In addition, the Audit Committee discussed with AutoImmune’s independent auditors the overall scope of and plans for its audit. The Audit Committee met with the independent auditors, with and without management present, to discuss the results of its examination, its evaluation of AutoImmune’s internal controls and the overall quality for AutoImmune’s financial reporting.

The Audit Committee has determined that the provision of non-audit services provided by the independent auditors in fiscal year 2005 was compatible with maintaining PricewaterhouseCoopers LLP’s independence.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2005 for filing with the Securities and Exchange Commission. The Audit Committee intends to select PricewaterhouseCoopers LLP as AutoImmune’s independent registered public accounting firm for the fiscal year ending December 31, 2006.

Respectfully submitted,

The Audit Committee

R. John Fletcher, Chair

Hugh A. D’Andrade

Allan R. Ferguson

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

PricewaterhouseCoopers LLP served as AutoImmune’s principal independent registered public accounting firm for the fiscal year ended December 31, 2005. The Audit Committee intends to select PricewaterhouseCoopers LLP as AutoImmune’s independent registered public accounting firm for the fiscal year ending December 31, 2006.

Fees Billed by the Independent Registered Public Accounting Firm

Aggregate fees billed to AutoImmune for the fiscal years ended December 31, 2005 and 2004 by PricewaterhouseCoopers LLP for services are as follows:

	2005			2004
Audit Fees	$	90,600		$	64,700
Audit-Related Fees		—			—
Tax Fees		13,600	(1)		13,500	(1)
All Other Fees		—			—
Total Fees	$	104,200		$	78,200

(1) Consists of fees billed for domestic tax consulting and compliance.

The Audit Committee (or one or more designated members of the Audit Committee) pre-approves all auditing and non-audit services (except de minimus non-audit services and services within the scope of an approved engagement of the auditor) provided to AutoImmune by its independent registered public accounting firm in accordance with the Audit Committee’s charter. There were no de minimus non-audit services or auditing services provided to AutoImmune in 2005 that were not approved by the Audit Committee or the designated member(s) thereof.

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COMPARATIVE STOCK PERFORMANCE

Comparison of Total Return Among AutoImmune Inc.,

Nasdaq Pharmaceutical Index and

the Nasdaq Composite Index

The following graph compares, for the five year period commencing on December 31, 2000 and ending on December 31, 2005, the cumulative total return of AutoImmune’s Common Stock with the Nasdaq Pharmaceutical Index and the Nasdaq Composite Index, assuming the investment of $100 on December 31, 2000 and the reinvestment of any dividends.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of AutoImmune’s Common Stock as of March 23, 2006 by (i) those persons known to AutoImmune to be the beneficial owners of more than five percent of the outstanding shares of Common Stock, (ii) each director of AutoImmune, (iii) the Named Executive Officers and (iv) all directors and executive officers of AutoImmune as a group. This information has been furnished by the persons named in the table below or in filings made with the Securities and Exchange Commission. Where the number of shares set forth below includes shares beneficially owned by spouses and minor children, the named persons disclaim any beneficial interest in the shares so included.

Name and Address of Beneficial Owners	Amount and Nature of Beneficial Ownership		Percent of Common Stock(2)
Five Percent or Greater Stockholders
Eastbourne Capital Management, L.L.C. 1101 Fifth Avenue, Suite 160 San Rafael, CA 94901	1,042,800	(3)	6.2	%
Andrew H. Tisch and others 667 Madison Avenue New York, NY 10021	1,386,600	(4)	8.2	%
BVF Partners L.P. 227 West Monroe Street, Suite 4800 Chicago, IL 60606	3,589,097	(5)	21.2	%
Directors
Robert C. Bishop	803,339	(6)	4.5	%
Hugh A. D’Andrade	137,250	(7)	*
Allan R. Ferguson	116,453	(8)	*
R. John Fletcher	96,560	(9)	*
Named Executive Officers
Robert C. Bishop	803,339	(6)	4.5	%
Diane M. McClintock	—		*
Directors and officers as a group (5 persons)	1,153,602	(10)	6.3	%

 * Less than 1%

(1) Except as otherwise noted, each person referenced in the table has sole voting and investment power with respect to such person’s shares.

(2) Percentages in the table are based upon 16,919,623 shares of common stock outstanding as of March 23, 2006.

(3) This information is based on information in an Amendment to a Schedule 13G filed with the Securities and Exchange Commission on February 9, 2006 by Eastbourne Capital Management, L.L.C. and Richard Jon Barry. Richard Jon Barry is the controlling member of Eastbourne Capital Management, L.L.C.

(4) Includes 325,200 shares of Common Stock held by Andrew H. Tisch, 325,200 shares of Common Stock held by Daniel R. Tisch, 325,200 shares of Common Stock held by James S. Tisch, 325,200 shares of Common Stock held by Thomas J. Tisch, 59,700 shares of Common Stock held by FBB Associates, 13,050 shares of Common Stock held by Baker/Tisch Investments, L.P. and 13,050 shares of Common Stock held by Baker Bros. Investments, L.P. Each of Andrew H. Tisch, Daniel R. Tisch, James S. Tisch and Thomas J. Tisch have shared voting and investment power with respect to all of the 325,200 shares of Common Stock held by each other person. Julian C. Baker and Felix G. Baker may be deemed to be beneficial owners of shares owned by Baker/Tisch Investments, L.P., Baker Bros. Investments, L.P. and FBB Associates, a general partnership, and have shared voting and investment power with respect to 85,800 shares of Common Stock. This information is provided pursuant to an Amendment to a Schedule 13G filed with the Securities and Exchange Commission on February 13, 2004.

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(5) Includes 1,403,529 shares of Common Stock held by Biotechnology Value Fund, L.P., 603,163 shares of Common Stock held by Biotechnology Value Fund II, L.P., and 1,406,905 shares of Common Stock held by BVF Investments, L.L.C. Each of Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P. and BVF Investments, L.L.C. share with BVF Partners L.P. voting and investment power with respect to the shares of Common Stock each such entity beneficially owns. BVF Partners L.P. and BVF Inc. share voting and investment power with respect to 3,589,097 shares of Common Stock with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., and BVF Investments, L.L.C. This information is provided pursuant to an Amendment to a Schedule 13D filed with the Securities and Exchange Commission on June 14, 2002.

(6) Includes 744,000 shares of Common Stock issuable upon the exercise of options that are exercisable or will become exercisable within 60 days.

(7) Includes 10,000 shares of Common Stock held by a trust of which Mr. D’Andrade is a trustee and 84,750 shares of Common Stock issuable upon the exercise of options that are exercisable or will become exercisable within 60 days.

(8) Includes 12,403 shares of Common Stock owned by Mr. Ferguson, 100,000 shares of Common Stock issuable upon the exercise of options that are exercisable or will become exercisable within 60 days, 3,250 shares of Common Stock owned jointly by Mr. Ferguson and his spouse and 800 shares of Common Stock owned by Mr. Ferguson’s spouse. Mr. Ferguson has shared voting and investment power with respect to all such shares of Common Stock except that Mr. Ferguson has sole voting and investment power with respect to the 12,403 shares of Common Stock owned by him and the 100,000 shares of Common Stock issuable pursuant to options exercisable within 60 days and no voting and investment power with respect to the 800 shares held by his spouse.

(9) Includes 60 shares of Common Stock owned by Mr. Fletcher’s minor children and 93,500 shares of Common Stock issuable upon the exercise of options that are exercisable or will become exercisable within 60 days.

(10) Includes 1,022,250 shares of Common Stock issuable upon the exercise of options that are exercisable or will become exercisable within 60 days.

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SECTION 16(a) BENEFICIAL OWNERSHIP

REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires AutoImmune’s directors, executive officers and persons who beneficially own more than ten percent of a registered class of AutoImmune’s equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of AutoImmune. Officers, directors and greater than ten percent beneficial owners are required to furnish AutoImmune with copies of all Section 16(a) forms they file.

To AutoImmune’s knowledge, based solely on review of the copies of Section 16(a) reports furnished to AutoImmune and written representations that no other reports were required, during the fiscal year ended December 31, 2005, the Section 16(a) filing requirements applicable to AutoImmune’s executive officers, directors and greater than ten percent beneficial owners were timely satisfied, except that Ms. Ellerkamp, while serving as Treasurer and Director of Finance, did not timely file a Form 4 with respect to one transaction.

STOCKHOLDER PROPOSALS FOR NEXT YEAR’S ANNUAL MEETING

Stockholder proposals intended to be presented at the next annual meeting of stockholders must be received by AutoImmune at its principal executive offices by December 14, 2006 for inclusion in the proxy statement and form of proxy relating to that meeting and must comply with the applicable requirements of the federal securities laws.

The By-laws of AutoImmune specify when a stockholder must submit proposals (including nominees for election to the Board of Directors) for consideration at a stockholders’ meeting in order for those proposals to be considered at the meeting. In order for a proposal to be considered at a stockholders’ meeting, the stockholder making the proposal must have given timely notice in writing to the Secretary of AutoImmune. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal mailing address of AutoImmune Inc., 1199 Madia Street, Pasadena, CA 91103, not less than 60 days nor more than 90 days prior to the meeting, except that in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received no later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.

OTHER MATTERS

The Board of Directors knows of no business which will be presented for consideration at the Annual Meeting other than that shown above. However, if any such other business should come before the Annual Meeting, it is the intention of the persons named as proxies in the enclosed form of proxy to vote the proxies in respect of any such business in accordance with their best judgment.

SOLICITATION OF PROXIES

The Company will bear the costs of soliciting proxies from its stockholders. In addition to soliciting proxies by mail, directors, officers and employees of the Company, without receiving additional compensation therefor, may solicit proxies by telephone or otherwise.

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AUTOIMMUNE INC.

ANNUAL MEETING OF STOCKHOLDERS — May 18, 2006

Proxy Solicited On Behalf of the Board of Directors

The undersigned stockholder hereby appoints Robert C. Bishop and Diane M. McClintock, and each of them individually, proxies for the undersigned, with full power of substitution and re-substitution, to represent the undersigned and to vote all shares of common stock of AUTOIMMUNE INC. (“AutoImmune”) that the undersigned is entitled to vote at the Annual Meeting of Stockholders of AutoImmune to be held on Thursday, May 18, 2006 and at any and all adjournments thereof (the “Meeting”), as follows:

1. Election of Directors. Nominees:

Robert C. Bishop, Ph.D.            Hugh A. D’Andrade            Allan R. Ferguson            R. John Fletcher

¨ FOR                                                                             ¨ WITHHELD

¨    FOR, except vote withheld for the following nominee(s), if any:

2. Authorizing proxyholders to vote in their discretion as to such matters as may properly come before the Meeting, other than proposals of which AutoImmune has received proper notice in accordance with its By-laws.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES FOR DIRECTOR AND SHALL BE DEEMED TO AUTHORIZE THE PROXYHOLDERS TO VOTE IN THEIR DISCRETION AS TO ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING TO THE EXTENT PERMITTED BY APPLICABLE LAW.

PLEASE SIGN ON REVERSE

Signature(s)

Date:                                                                                          , 2006

NOTE: Please sign exactly as name or names appear above. When signing as Attorney, Executor, Trustee, Guardian, or Officer of a corporation, please give your title. For joint accounts, all named holders should sign.

PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.