Hemispherx continues attempts to control its stock trading.

In a Hemispherx Biopharma, Inc. (AMEX: HEB) (Price: $6.25) Securities and Exchange Commission Form S-3 registration statement dated June 23, 1999, Hemispherx has filed to register approximately 2.1 million shares of insider, unregistered common stock and 1.8 million unregistered warrants for sale. The filing contains a brief description of a Selling Stockholder Agreement that discloses the mechanics of yet another attempt by Hemispherx to control the trading of its stock. Each selling shareholder has entered into an agreement to allow Hemispherx or a Hemispherx agent to purchase these shares at a 10% discount from the price set by the selling stockholder. Neither the entire Selling Stockholder Agreement nor its specific terms and conditions were disclosed in the filing.

This is only the latest of Hemispherx’s ongoing efforts to exert control over both the market for its stock and the supply of shares available to be borrowed by short sellers. On September 23, 1998, a Hemispherx preferred shareholder filed a complaint regarding Hemispherx’s refusal to convert 1500 shares of Series E preferred stock into 750,000 shares of HEB common stock. According to a September 25, 1998, Hemispherx press release, Hemispherx had attempted to redeem the preferred shares rather than issue the common stock. In its June 23, 1999 Form S-3 filing, Hemispherx inexplicably maintains that the shares had been properly redeemed and that the plaintiff was not contractually able to effect a proper conversion into common shares, yet also admits that in December 1998 it had agreed to convert the plaintiff’s preferred stock into common stock.

On October 5, 1998, Dr. William Carter, CEO of Hemispherx, wrote to HEB’s shareholders, suggesting they immediately contact their stockbrokers in order to request that the brokers not loan their Hemispherx shares to short sellers. A ready-to-fax form letter was included in order to expedite this request. Hemispherx has also attempted to use the courts to prevent short sellers not only from short-selling HEB but also from exercising their First Amendment right to disseminate opinions and factual information about the company’s fraudulent misrepresentations. On March 12, 1999, however, the United States District Court for the Eastern District of Pennsylvania issued a 39-page Memorandum Decision dismissing four of the six counts in Hemispherx’s complaint against Asensio & Company and all other defendants, including traders, brokerage houses, clearing firms and short sellers. The dismissal included all of Hemispherx’s claims regarding securities-trading violations. Also dismissed were counts alleging violations of the Racketeer Influenced and Corrupt Organizations Act.

We believe that Hemispherx’s actions merely serve to show that the company’s primary if not exclusive activity is managing its fraudulent stock promotion. Furthermore, Hemispherx’s efforts to stifle short sellers with litigation threatens to impart a dangerous chilling effect upon the free and open flow of information, which is essential to fair and efficient markets. We further believe that this action against basic free-market principles creates a far greater need to properly regulate the Hemispherx stock fraud than that of simply reigning in Hemispherx’s fraudulent promoters, who continually flaunt their disregard of the AMEX’s willingness to enforce its securities regulations.

Short selling involves a risk not associated with the purchase of stock including, but not only limited to, unlimited loss and stock borrowing risks. Additional information is available upon request.