Hemispherx Announces Deal with Convicted Former-NCI Researcher.

On Monday, September 21, 1998, Hemispherx Biopharma, Inc. (AMEX symbols: HEB and HEBWS) (Price: $6.375) 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.” The price, form of payment, percent acquired, and the financing of the acquisition have not been disclosed. Nor did Hemispherx provide any information concerning CIMM’s financial condition. We believe that Hemispherx issued this statement solely to create a distraction from criticism of its fraudulent stock promotion and its false statements concerning Ampligen’s Chronic Fatigue Syndrome (“CFS”) trials and its Food and Drug Administration filing status. In fact, we have found that CIMM is a one-year-old company with no known business, and that one of CIMM’s co-founders pleaded guilty to defrauding the National Cancer Institute.

The chairman of Hemispherx, Dr. William A. Carter, is quoted in the September 21, 1998, announcement as stating, “We have admired Dr. Salahuddin’s outstanding scientific achievements over an extended time.” Dr. Carter also calls Mr. Salahuddin a “world-class researcher.” In fact, Mr. Salahuddin, according to an April 2, 1990, Washington Business Journal’s (“WBJ”) article uses the title “doctor” although he does not have a doctorate or MD degree, violated federal conflict of interest laws and was the subject of congressional public hearings to examine charges of theft of government property. Mr. Salahuddin was a researcher in the National Cancer Institute Laboratory of Tumor Cell Biology from 1982 until he was suspended in the spring of 1990. Mr. Salahuddin was indicted by the U.S. Attorney’s Office in Baltimore, Maryland on July 24, 1990, on counts of conflict of interest and accepting an illegal gratuity while on staff at the National Cancer Institute. According to articles in the WBJ, American Association for the Advancement of Science and the Chicago Tribune, 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 also acknowledged receiving illegal payments from Pan Data to paint his house and pay off a second mortgage.

In its press release, Hemispherx cited that Mr. Salahuddin discovered the HHV-6 virus. Hemispherx claims HHV-6 is associated with CFS and that Ampligen has demonstrated antiviral activity against HHV-6. We believe that Hemispherx’s mention of Mr. Salahuddin’s HHV-6 discovery is an attempt to make investors believe that its alleged CIMM acquisition advances its capacity to develop a treatment for CFS. There is no proven connection between HHV-6 and CFS. In fact, the Centers for Disease Control and Prevention (“CDC”) has specifically concluded that HHV-6 cannot be used to diagnose CFS. The CDC has also stated that claims that CFS is characterized by some underlying immune dysfunction are simply unsubstantiated theory.

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