Yesterday, Hemispherx Biopharma, Inc. (AMEX: HEB and HEBWS) (Price: $5.875) issued a statement claiming that a study from Harvard University School of Medicine led by Dr. Anthony Komaroff states “that up to 2 million Americans suffer from Chronic Fatigue Syndrome”. This statement is completely false and untrue. There is no Harvard study, no study led by Dr. Komaroff or any studies that have ever been published claiming that there are up to 2 million U.S. CFS cases. We believe that Hemispherx’s statement is an attempt to lead investors to believe that Ampligen has the potential to become a valuable CFS drug. Nothing could be further from the truth. First, Hemispherx’s Ampligen is not approved or recommended to treat CFS or any other illness. Second, there has never been a single, conclusive study published that shows any evidence that Ampligen is a safe and effective CFS treatment. Third, even according to the regional, faulty studies cited by Hemispherx, CFS has a very low incidence rate. Furthermore, the CFS incidence rate of patients who are sufficiently ill to require special treatment is even far smaller.
Hemispherx claims that Ampligen can be used to effectively treat CFS and that the CFS market is 20 times higher than our estimate. In fact, Hemispherx’s estimate is based on a study that found only 3 patients out of 4,000 surveyed that met the old 1988 CDC CFS criteria. Even extrapolating the ratio of 3 CFS cases in a survey of 4,000 members of a single HMO or a single city, Seattle, to the entire U.S. yields only 150,000 CFS cases.
We know of no reason for Hemispherx’s continuing promotion of CFS and Ampligen except to defraud investors. Hemispherx’s stock price and trading volume has risen as a result of its fraudulent CFS promotion, which began with its fraudulent use of Oprah Winfrey’s copyrighted materials. At the same time, Hemispherx’s insiders have been exercising their low-priced warrants, which they mostly received for free, and selling their shares without disclosure. Hemispherx’s insiders have been constant sellers since the IPO. These sellers include Dr. Carter who claimed during a conference call last week not to have sold any stock in ten years. This is an apparent reference to his fraudulent private stock sale to an AIDS patient.
CFS is a controversial condition with no known cause. No CFS diagnosis test exists. CFS is normally treated with psychological consulting, antidepressants and pain relief medicines. Hemispherx possesses no ability to profit from the CFS market except through its fraudulent stock promotion. This makes any debate concerning CFS’s prevalence rate irrelevant to Hemipsherx’s stock value. However, an analysis of Hemispherx’s statement is important to establish its willingness to disseminate completely false information for the purpose of defrauding investors. A complete report and analysis of Hemispherx’s CFS prevalence statement is available here.
We have also conducted a complete analysis of a lawsuit filed against Hemispherx by a holder of its Series E Convertible Preferred Stock. We believe that the complaint and its exhibits provide further details of Hemispherx’s fraudulent stock promotion. A complete report and analysis of this lawsuit is also available at here.
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