Compilation of Hemispherx’s false and fraudulent investor representations.

The following is a not-all-inclusive list in outline form of certain material fraudulent and false statements that are included in Hemispherx Biopharma, Inc.’s (AMEX symbol: HEB) (Price: $7.625) public filings and promotional investor solicitation documents. This list also includes specific negative information that Hemispherx has either failed to disclose or fraudulently denied.

This document is grouped into 4 sections titled: Company Background; Ampligen’s Obsolete Science and Flawed Trials; Chronic Fatigue Syndrome Promotion; and the Financial Fraud. Each section begins with a descriptive paragraph and is followed with numbered points and sub-points. The four sections include a total of 20 numbered points and 107 sub-points.


In documents distributes to investors, Hemispherx claims that it "is an industry leader in the biopharmaceutical sector" and that it "is uniquely positioned for long-term success in international pharmaceutical and consumer health-care markets." Hemispherx claims it has "produced an exciting new portfolio" of drugs. Hemispherx has compared its so-called "patent estate" to those of Thomas Edison and General Electric.

No past event, existing asset or reasonable assessment of any aspect of Hemispherx remotely justifies any of these statements. In fact, Hemispherx’s actual condition shows the company to have been a defunct private company that was converted into a fraudulent public stock promotion based on false statements about the company and a 25 year old, off-patent drug it calls Ampligen.

1. THIRTY-TWO YEAR OLD COMPANY: Hemispherx was incorporated in Maryland in 1966. After 32 years of operations, raising over $78 million and incurring over $61.7 million of losses, Hemispherx has:

  • no sales and only an astonishingly low $181,724 in non-cash tangible assets
  • never created a new drug
  • never received a composite of matter patent
  • no FDA marketing approval for any drug
  • never concluded Phase III trials for any indication
  • never filed an NDA for any drug
  • sold approximately 24.8 million shares to the public based on its fraudulent Ampligen promotion

2. DUPONT TRIALS AND LITIGATION: Hemispherx presented DuPont with pre-clinical trial results that showed Ampligen to be an effective HIV treatment.

  • Hemispherx entered into an agreement with DuPont for a Phase II clinical study of Ampligen as an HIV treatment.
  • The study was terminated when an analysis of interim data showed no clinical benefit over a placebo.
  • DuPont sued Hemispherx for having made false and misleading representations regarding preliminary clinical data, and safety and efficacy data, pertaining to Ampligen.
  • Hemispherx claims that the conflicting trial results were due to the use of plastic bags to hold and transport the Ampligen.
  • No subsequent HIV trials showed Ampligen to be effective.

3. CALIFORNIA INSTITUTE OF MOLECULAR MEDICINE, INC.: Hemispherx announced that it had "signed a letter of intent to acquire a significant equity stake in California Institute of Molecular Medicine, Inc. ("CIMM"), a privately held biotechnology company based in Ventura, California."

  • CIMM is a one-year-old company with no known business.
  • Mr. Salahuddin, one of CIMM’s co-founders, pleaded guilty to defrauding the National Cancer Institute ("NCI").
  • Mr. Salahuddin uses the title "doctor" although he does not have a doctorate or MD degree.
  • Mr. Salahuddin violated federal conflict of interest laws.
  • Mr. Salahuddin was the subject of a congressional public hearing to examine charges of theft of government property.
  • Mr. Salahuddin was suspended in the spring of 1990 from his position as a researcher in the National Cancer Institute Laboratory of Tumor Cell Biology.
  • Mr. Salahuddin pleaded guilty to felony charges that included illegally funneling contracts from the NCI to Pan Data Systems, Inc., a private company partly owned by his wife.
  • Mr. Salahuddin acknowledged receiving illegal payments from Pan Data.

4. DR. CARTER AND PETER M. FROST: Dr. Carter received $1,000,000 for the sale of his own Hemispherx stock to an HIV patient named Peter M. Frost.

  • Mr. Frost sought to enroll in the Ampligen HIV trial.
  • Mr. Frost claimed that he was required to purchase $1 million of Hemispherx’s stock before he was admitted into the trial.
  • Hemispherx’s Board of Directors determined that the fair market value of Hemispherx stock was $1.50 per share.
  • Dr. Carter sold Mr. Frost 4,272 shares at $234 per share.
  • Mr. Frost paid Dr. Carter $1 million supposedly to be used to expand the trials.
  • Mr. Frost was told that Dr. Carter would use the funds to expand the Ampligen HIV trial.


Hemispherx claims that Ampligen is a "double-stranded RNA drug product, which the Company believes has antiviral, anticancer and immune system enhancing properties." Ampligen has been tested as a treatment for two cancers, hepatitis, CFS and HIV, and has never been FDA approved to be marketed as effective in the treatment of any disease. Hemispherx did not develop Ampligen, nor did it ever own a patent on Ampligen’s composition. The Johns Hopkins University in Baltimore, Maryland, developed Ampligen in the early 1970s. The Ampligen composition of matter patent expired in 1994. Hemispherx merely obtained a non-exclusive license for Ampligen from Johns Hopkins. Even this license has now expired.

1. AMPLIGEN: Ampligen is a 25 year old off-patent, extensively researched infusion drug that has never been found to be effective in the treatment of any disease.

  • Ampligen is allegedly an interferon inducing, double stranded RNA that claims broad spectrum activity.
  • Medical RNA research has advanced from toxic, broad spectrum activity drugs to less toxic, highly specific activity drugs.
  • Technology long ago moved passed Ampligen-like substances to antisense and triple-strand RNA with highly specific activity that directly target actual disease-causing viral replication or cell dysfunction.
  • Hemispherx has claimed Ampligen as a potential treatment for venereal warts, hepatitis, HIV infection, herpes, skin cancer, kidney cancer and CFS.
  • Hemispherx has conducted Ampligen clinical trials for skin and kidney cancers, HIV, CFS and Hepatitis.
  • Hemispherx has failed to obtain FDA marketing approval for Ampligen as a treatment for any disease.

2. AMPLIGEN’S FAILED HIV TRIALS: Hemispherx has tested Ampligen as a treatment for HIV and was sued for allegedly making false efficacy claims.

  • In 1986, Hemispherx conducted Phase II HIV trials.
  • In 1987, DuPont conducted a Phase II HIV trial.
  • In 1988, DuPont terminated its Ampligen trials.
  • In 1991, the NIH conducted an Ampligen HIV Phase II trial.
  • In 1993, Hemispherx requested approval to begin Phase III trials.
  • Hemispherx has not concluded Phase III trials and has not filed an HIV NDA.
  • In 1995, Hemispherx claimed in its IPO that Ampligen was being developed as a treatment for HIV.
  • No NDA was ever filed and no HIV trials are being promoted.


  • CFS is not a disease.
  • Many of the CFS doctors and authors involved in Ampligen’s four Phase II CFS trials have Hemispherx connections.
  • Only one of the trials was alleged to be double-blind, placebo controlled.
  • Ampligen’s side effects make placebo-controlled trials useless.
  • CFS symptoms are self-reported subjective, volatile and difficult to quantify.
  • Phase II patients did not meet the 1994 CDC CFS criteria.
  • Phase II trials are over 7 years old and the Company continues to promote their results.
  • The primary endpoints are not commonly accepted to demonstrate CFS treatment efficacy.
  • Hemispherx includes unpublished results in its efficacy claims.
  • The published studies have been found largely inconclusive by CFS researchers.

4. AMPLIGEN’S PHASE III CFS TRIALS: Hemispherx was authorized to begin Ampligen’s Phase III CFS trials over six years ago on October 9, 1992. Almost 6 years after this approval, Hemispherx has failed to conclude any Phase III trials. In fact, Hemispherx has not even finalized patient enrollment.

  • Hemispherx has only signed up 6 clinical sites.
  • Hemispherx has only enrolled 56 patients.
  • Hemispherx has failed to disclose the Phase III protocol.
  • Phase III patients are not being tested separately for Myalgic Encephalomyelitis ("ME"), Fibromyalgia ("FM") or Multiple Chemical Sensitivities ("MCS").

5. AMPLIGEN’S SAFETY PROFILE: Hemispherx claims Ampligen is a safe drug.

  • The Food and Drug Administration notified Hemispherx that its promotion of Ampligen as a safe drug violates federal law.
  • Ampligen’s informed consent forms contain numerous significant, potential adverse side effects.
  • Hemispherx’s SEC filing lists numerous, significant, potential adverse side effects for Ampligen.

6. NOTICE OF AMPLIGEN INFRACTION: Hemispherx received a notice of infraction from the U.S. Food and Drug Administration dated October 15, 1998. This notice informed Hemispherx that its Ampligen claims violated federal law.

  • Hemispherx misled investors into believing that it received FDA’s notification on October 22, 1998 and that it had not received the notice on October 15, 1998.
  • Hemispherx did not disclose the notification until around 6pm on Friday, October 23rd and then distorted the facts surrounding this Notice of Infraction.
  • Hemispherx violated federal law by claiming Ampligen is a safe and effective drug.
  • Hemispherx violated federal law by claiming its CFS Phase II study showed efficacy and safety.  


Hemispherx has claimed Ampligen is a safe and effective treatment for CFS. CFS symptoms are self-reported. Scientific studies have not validated any pathognomonic signs or diagnostic tests for this condition. The number of CFS cases is not known. Hemispherx did not develop Ampligen to treat CFS. In fact, CFS is widely believed to be psychosomatic and has no definitive treatment. Most CFS sufferers symptoms change from day to day and disappear over time.

1. CHRONIC FATIGUE SYNDROME: Hemispherx’s stock promotion is mostly based upon its CFS treatment efficacy claims.

  • Hemispherx started promoting CFS after failing to obtain marketing approval for 5 diseases in over 18 years of tests.
  • CFS is not a disease. CFS is an ill-defined syndrome with no known cause.
  • CFS has no diagnostic test.
  • CFS symptoms are self-reported and cannot be verified.
  • Many doctors believe CFS is a psychosomatic condition.
  • Research and economic benefits are less available for psychosomatic conditions than for organic diseases.
  • CFS medical researchers have failed to show CFS is not psychosomatic or that CFS has any organic cause.

2. CFS PREVALENCE RATES: Hemispherx has claimed that studies from Harvard University and the Centers for Disease Control and Prevention support the belief that 1,000 of 100,000 Americans or 2.5 million people in the United States suffer from CFS.

  • No Harvard CFS prevalence study exists.
  • No CDC study supports Hemispherx’s claimed CFS prevalence rates.
  • Hemispherx has published different and contradictory CFS prevalence rates.
  • Any CFS prevalence test is difficult because there is no CFS diagnostic test.
  • No CFS prevalence study has ever been done on a national basis.
  • The CDC estimates based on small, regional studies about half a million U.S. CFS-like, non CFS, cases.

3. "HARVARD" STUDY: Hemispherx misrepresented a study published in the Annals of Internal Medicine titled "Chronic Fatigue and the Chronic Fatigue Syndrome: Prevalence in a Pacific Northwest Health Care System" by stating that "an independent study from Harvard University School of Medicine, led by eminent Dr. Anthony Komaroff, Professor of Medicine. The Harvard study states that there are between 500,000 and 2,000,000 Americans suffering from Chronic Fatigue Syndrome. Dr. Komaroff’s latest study is published in the August 1995 issue of Annals of Internal Medicine." Hemispherx also stated that this study was the most recent medical CFS prevalence study and that it was consistent with CDC’s most current studies.

  • Harvard University did not sponsor or conduct this study.
  • Dr. Komaroff did not lead the study. Dr. Komaroff is not "the Chief of Medicine at the Harvard Medical School."
  • The study does not state that there are between 500,000 and 2,000,000 Americans suffering from CFS.
  • This study is not published in either of the two August 1995 issues, but in the July 15, 1995 issue of Annals of Internal Medicine.
  • This study is not the most recent medical study on CFS prevalence.
  • The most current CDC studies are not consistent with these estimates.
  • The study only found 3 people who met the CFS 1988 CDC criteria.
  • Any attempt to make a national CFS prevalence estimate from these findings are highly questionable.

4. FDA WHITE PAPER: Hemispherx cited an FDA white paper dated April 29, 1998 that was presented to a Statutory Committee concerning CFS and Ampligen.

  • White papers are very rare research reports.
  • There is no white paper concerning CFS or Ampligen.
  • There was a FDA Update on CFS presented to the Chronic Fatigue Syndrome Coordinating Committee on April 29, 1998. It contained no new or material information on CFS or Ampligen.

5. FRAUDULENT UNAUTHORIZED USE OF COPYRIGHTED MATERIAL: On July 29, 1998, The Oprah Winfrey Show hosted a show entitled "Diseases Doctors Miss Most." This show contained a brief segment on CFS.

  • Hemispherx made unauthorized copies of this CFS segment.
  • Hemispherx edited the unauthorized version of this copyrighted material to promote Ampligen.
  • Hemispherx distributed this fraudulent unauthorized promotional video to investors.

6. HEMISPHERX AT INTERNATIONAL CFS CONFERENCE: Hemispherx presented at the American Association for Chronic Fatigue Syndrome’s Fourth International CFS conference held in Cambridge, Massachusetts, on October 10-12, 1998.

  • Promoted its role in the conference as central.
  • Hemispherx study was merely one of 32 presentations.
  • Claimed that new data would be released. No new data was presented.
  • Presented 7 year old Ampligen data at this conference.
  • None of the medical conference leaders expressed interest in the Hemispherx presentation.


Hemispherx’s misstatements of facts and fraudulent representations have been widely disseminated by management through brokers, management interviews, press releases, the Company’s Internet home page, and company documents. This has allowed Hemispherx’s inside investors to sell shares at fraudulently inflated market values while the company has had no legitimate operation or prospect.

1. STRATTON OAKMONT: In 1995, Hemispherx used Stratton Oakmont, Inc. to take it public. At the time of the IPO:

  • Stratton was the subject of a permanent injunction and an SEC Administrative Order for securities laws violations.
  • Stratton was suspended from doing business in 16 states.
  • SEC had found that Stratton had conducted fraudulent sales practices, made material misrepresentations and omissions, and manipulated stock prices.
  • No legitimate company with any real value or demonstrable business prospects would agree or need to procure financing from such a fraudulent underwriter.


  • Hemispherx has been sued by one of its private investors for failing to convert its 1,500 shares of Series E Convertible Preferred Stock into 750,000 shares of common stock. This prevented the subsequent sale of those shares.
  • Dr. Carter wrote a letter to Hemispherx shareholders suggesting that the shareholders write their broker and demand written confirmation that their Hemispherx stock will not be hypothecated, pledged or borrowed.

3. MILLIONS OF DOLLARS OF INVENTORY AND $150 MILLION INVESTED: Dr. Carter has stated that Hemispherx "has millions of dollars of drug in inventory." Hemispherx claimed that it has invested more than $150 million developing Ampligen.

  • Hemispherx has no inventory according to its most recently available Form 10-Q for the Quarterly Period Ending on June 30, 1998.
  • Hemispherx did not invent Ampligen. It has no asset or other basis to support the $150 million claim.


  • Between September and November 1998, Hemispherx issued over 28 press releases and held 3 stock promotional events that contain the fraudulent, material information outlined above.
  • The primary beneficiaries of Hemispherx’s fraudulent stock promotion are private holders of its low priced warrants.
  • Since 1995, Hemispherx has filed five prospectuses allowing its private warrant holders to sell stock to the public without disclosure.
  • These warrant holders bought over $5.5 million of stock at below market prices between June 30 and August 14, 1998 alone.
  • The warrant holders subsequently sold these "cheap" shares at market prices to unknowing public investors.
  • Since its public offering, Hemispherx has distributed over 8 million shares of its stock to the public using its "back-door" warrant exercise program.

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