Hemispherx analyst makes false Ampligen HIV efficacy claims despite failed test and FDA violation notice.

A Hemispherx Biopharma, Inc. (AMEX: HEB) (Price: $7.9375) report recently issued by Value Management & Research AG (“VMR”), a Germany-based asset-management firm, claims that AIDS researchers are now returning to “immune modulators” because currently used antiviral drugs are becoming “increasingly ineffective.” The report further states that AIDS researchers have “only very recently” reviewed certain Ampligen studies undertaken in the early 1990s that found the drug to be effective as an immune modulator. In fact, Ampligen has been tested and has never been proved effective against HIV in clinical studies.

An October 15, 1998 letter from Ms. Sherrie Shade, a regulatory review officer in the division of Drug Marketing, Advertising and Communications for the Food & Drug Administration, to Dr. William Carter, CEO of Hemispherx, specified that “Hemispherx should immediately discontinue the dissemination of materials that make claims of safety or efficacy for Ampligen.” Hemispherx is aware of VMR’s Ampligen HIV-efficacy claims. It is unlawful for Hemispherx to claim, or participate in the dissemination of claims, that Ampligen is safe or effective as either an AIDS treatment or as an immune modulator.

In 1987, Hemispherx entered into a partnership with E.I. du Pont de Nemours & Co. to study Ampligen as a treatment for HIV. Du Pont terminated the partnership in November 1988, claiming that Hemispherx had misrepresented certain clinical data and safety-and-efficacy data pertaining to Ampligen. Hemispherx claimed that DuPont’s trial failed because DuPont used plastic bags to hold and transport the Ampligen, rather than glass bottles. No subsequent HIV trials have shown Ampligen to be effective.

On April 13, 1999, Hemispherx filed a registration statement with the SEC to allow VMR to sell 750,000 Hemispherx shares plus 250,000 shares underlying warrants. VMR obtained the shares and warrants privately. The SEC filing failed to disclose any reason or purpose for Hemispherx’s private issuance of the warrants to VMR, or the source from which VMR had privately obtained the 750,000 unregistered shares of common stock. In November 1997, VMR released a report on Dynamic Associates Inc. (OTC Bulletin Board: DYAS), then trading at $1.375 per share. The report rated DYAS stock an “outstanding buying opportunity.” DYAS now trades at 11 cents per share. Florian Homm is a principal of VMR and an author of the Hemispherx report. This report did not disclose that since January 7, 1997 Mr. Homm had been a member of Dynamic’s board of directors and had been compensated in 1996 with options to purchase 200,000 shares of the stock at $1 each.

At the time of Mr. Homm’s DYAS board appointment, over 12% of the common stock in that company was held by Harry Moll. According to a March 4, 1995 report in the Vancouver Sun, Mr. Moll once controlled Turbodyne Technologies Inc., a recently exposed stock fraud. The article further stated that “Moll had been involved in so many scandalous stocks that Vancouver Stock Exchange officials blacklisted him.” Mr. Moll was also a principal in Cross Pacific Pearls, which he claimed was breeding clams capable of producing pearls “larger than a fivepin bowling ball.” Mr. Moll’s address in a June 5, 1998 DYAS filing is listed as a post office box in the Cayman Islands.

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