Hemispherx’s Ampligen has no medical or economic value.

Asensio & Company, Inc. initiates coverage of Hemispherx Biopharma, Inc. (AMEX Symbol: HEB and HEB/WS) (Price: $8.00) with a Strong Sell and Short Sell recommendation.

Investors may be buying shares of Hemispherx believing that the company has developed a new drug (“Ampligen”) that has shown efficacy in the treatment of Chronic Fatigue Syndrome (“CFS”), that this drug will soon be approved by the U.S. Food and Drug Administration (“FDA”) and that between 400,000 and 2 million people suffer from CFS in the U.S. alone. These product and market size claims are completely false and untrue. In fact, we believe these false claims have been purposefully cultivated by Hemispherx’s management in order to defraud investors. Ampligen is a toxic, 25 year old, off-patent drug that failed as a treatment for several cancers and HIV over 10 years ago, and has never been FDA approved for the treatment of any disease. Hemispherx has not filed a New Drug Application with the FDA for an Ampligen CFS treatment. Hemispherx’s CFS Phase II trials did not show that Ampligen was effective in treating CFS. Any information to the contrary is necessarily false and misleading. Taking the Center for Disease Control’s prevalence rate estimate of 10 cases per 100,000 individuals over 18 years old and applying it to the entire U.S. population only yields at most 26,000 potential sufferers of CFS. The subset of these potential CFS patients who are severely ill is far smaller. We believe that Hemispherx is taking advantage of a highly-publicized but poorly defined illness that has no known cause or diagnostic test in order to promote its stock and defraud investors.

Hemispherx’s only source of financing is its method of disseminating false information and selling stock into the inflated market without public notice. In the two years ended June 30, 1998, Hemispherx issued over 6.1 million shares to its private investors at an average price of $2.52 per share. Since June, Hemispherx has sold at least an additional $5.5 million of stock privately at below market prices. These shares were then resold to the public without notice at market prices that reflected Hemispherx’s fraudulent misrepresentations about Ampligen’s FDA filing status and CFS earnings claims.

Hemispherx is a 32-year-old company with no sales, just $161,521 in tangible assets, excluding cash, and approximately 41 million fully diluted shares outstanding. The Company has been accused of scientific fraud by E.I. du Pont de Nemours & Co. (NYSE: DD) and its current CEO of extorting $1 million from an AIDS patient. It was taken public by Stratton Oakmont, Inc. long after the SEC had commenced proceedings against the underwriter for fraud. At yesterday’s closing price, Hemispherx had a fully diluted market value of approximately $320 million. Hemispherx’s current management has been in control for approximately 20 years, spent over $50 million and has been unable to create any legitimate shareholder value. Instead, we believe management has focused its efforts on fraudulently promoting futile projects that have enabled insiders to sell their otherwise worthless stock to the public. This misguided focus has left the Company with little residual value in excess of its less than $1 per share “shell” value to penny stock promoters. Asensio & Company strongly recommends the sale and the short sale of Hemispherx’s stock.

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.