Edgar Filing: HEMISPHERX BIOPHARMA INC

As filed with the Securities and Exchange Commission on April 1, 2003

Registration No. 333-

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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HEMISPHERX BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

52-0845822
(I.R.S. Employer Identification No.)

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1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080

(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

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William A. Carter, M.D., Chief Executive Officer
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies of all communications to:
Richard Feiner, Esq.
Silverman Sclar Byrne Shin & Byrne P.C.
381 Park Avenue South, Suite 1601
New York, New York, 10016
(212) 779-8600
Fax (212) 779-8858

Approximate date of proposed sale to the public: From time to time or at one
time after the effective date of this Registration Statement.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 ("Securities Act"), other than securities offered only in connection
with dividend or reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.[ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE
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Title of Each
Class of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered (1) Share Price Registration Fee
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Common Stock 6,971,256(2) $1.465(3) $10,212,890 $826.22
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Common Stock 834,473 $1.465(3) $1,222,503 $ 98.90
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Total Registration Fee $925.12
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(1) Pursuant to Rule 416 of the Securities Act of 1933, there are also being
registered an indeterminate number of additional shares of common stock as
may become offered, issuable or sold to prevent dilution resulting from
stock splits, stock dividends or similar transactions.

(2) Pursuant to an agreement with the beneficial holders of these shares,
represents 135% of the shares of common stock that are issuable upon the
(a) conversion, prepayment or otherwise relating to Hemispherx's 6% Senior
Convertible Debentures due 2005 issued in a private placement on March 12,
2003 and as payment of interest thereon and (b) exercise of warrants
issued by Hemispherx in the private placement.

(3) Estimated solely for the purpose of computing the registration fee in
accordance with Rules 457(c) of the Securities Act on the basis of $1.465
per share, which was the average of the high and low sales prices of the
shares of common stock of the Registrant reported on the American Stock
Exchange on March 27, 2003.

The Registrant hereby amends this registration statement on the date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on a date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

iii

The information in this prospectus is not complete and may be amended. Neither
we nor the selling stockholders may sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where an offer or sale is not
permitted.

Subject to Completion
Preliminary Prospectus Dated April 1, 2003

HEMISPHERX BIOPHARMA, INC.

7,805,729 Shares of Common Stock

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The Offering:

This prospectus relates to the resale of 7,805,729 shares of common stock,
which consist of 135% of 4,420,605 shares of common stock issuable upon the
conversion, redemption or other payments relating to our 6% Senior Convertible
Debentures Due 2005 ("Debentures") and as payment of interest thereon, 135% of
743,288 shares of common stock issuable upon the exercise of the related
warrants ("Warrants") and 834,473 shares of common stock that are currently
outstanding. All of these shares and warrants were issued and sold pursuant to
private placements to the selling stockholders listed on page 18 of this
prospectus. We are registering these shares of common stock pursuant to
commitments to register the shares with the selling stockholders.

We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders, other than payment of the exercise price of
the Warrants.

Our common stock is listed on the American Stock Exchange under the symbol
HEB. The reported last sale price on the American Stock Exchange on March 27,
2003 was $1.45.

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Please see the risk factors beginning on page 4 to read about certain
factors you should consider before buying shares of common stock.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The date of this prospectus is ______ __, 2003

PROSPECTUS SUMMARY

In the following summary, we have highlighted information that we believe
is the most important about us. However, because this is a summary, it may not
contain all information that may be important to you. You should read this
entire prospectus, including the information incorporated by reference and the
financial data and related notes, before making an investment decision. When
used in this prospectus, the terms "we," "our" and "us" refer to Hemispherx and
not to the selling stockholders.

ABOUT HEMISPHERX

In the course of almost three decades, we have established a strong
foundation of laboratory, pre-clinical and clinical data with respect to the
development of nucleic acids to enhance the natural antiviral defense system of
the human body and the development of therapeutic products for the treatment of
chronic diseases. Our strategy is to obtain the required regulatory approvals
which will allow the progressive introduction of Ampligen(R) (our proprietary
drug) for treating Myalgic Encephalomyelitis/ Chronic Fatigue Syndrome
("ME/CFS"), HIV, Hepatitis C ("HCV") and Hepatitis B ("HBV") in the U.S., Canada
Europe and Japan. Ampligen(R) is currently in phase III clinical trials in the
U.S. for use in treatment of ME/CFS and is in Phase IIb Clinical Trials in the
U.S. for the treatment of newly emerged multi-drug resistant HIV, and for the
induction of cell mediated immunity in HIV patients that are under control using
potentially toxic drug cocktails.

Our proprietary drug technology utilizes specifically configured
ribonucleic acid ("RNA") and is protected by more than 350 patents worldwide,
with over 80 additional patent applications pending to provide further
proprietary protection in various international markets. Certain patents apply
to the use of Ampligen(R) alone and certain patents apply to the use of
Ampligen(R) in combination with certain other drugs. Some compositions of matter
patents pertain to other new medications, which have a similar mechanism of
action.

We have obtained from Interferon Sciences, Inc. all of its raw materials,
work-in-progress and finished product Alferon N(R), together with an exclusive
license to sell Alferon N(R) in a natural alpha interferon that has been
approved for commercial sale for the treatment of genital warts. We intend to
market the Alferon N(R) in the United State through sales facilitated via third
party marketing agreements. Additionally, we intend to implement studies testing
the efficacy of Alferon N(R) in multiple sclerosis and other chronic viral
diseases.

We were incorporated in Maryland in 1966 under the name HEM Research,
Inc., and originally served as a supplier of research support products. Our
business was redirected in the early 1980's to the development of nucleic acid
pharmaceutical technology and the commercialization of RNA drugs. We were
reincorporated in Delaware and changed our name to HEM Pharmaceutical Corp., in
1991 and to Hemispherx Biopharma, Inc., in June 1995. We have three domestic
subsidiaries `BioPro Corp., BioAegean Corp., and Core BioTech Corp., all of
which are incorporated in Delaware. Our foreign subsidiaries include Hemispherx
Biopharma Europe N.V./S.A. established in Belgium in 1998 and Hemispherx
Biopharma Europe S.A. incorporated in Luxembourg in 2002.

Recent Developments

On March 20, 2002, our European Subsidiary Hemispherx Biopharma Europe,
S.A. ("Hemispherx, S.A.") entered into a Sales and Distribution agreement with
Laboratorios Del Dr. Esteve S.A. ("Esteve"). Pursuant to the terms of the
agreement, Esteve was granted the exclusive right to market Ampligen(R) in
Spain, Portugal and Andorra for the treatment of Myalgic/Chronic Fatigue
Syndrome ("ME/CFS"). In addition to other terms and other projected payments,
Esteve paid an initial and non-refundable fee of 625,000 Euros (approximately
$545,000) to Hemispherx S.A. on April 24, 2002. Esteve is to pay a fee of
1,000,000 Euros after U.S. Food and Drug Administration approval of Ampligen(R)
for the treatment of ME/CFS and a fee of 1,000,000 Euros upon Spain's approval
of the final marketing authorization for using Ampligen(R) for the treatment of
ME/CFS.

The agreement runs for the longer of 10 years from the date of first
arms-length sale in the territory, the expiration of the last Hemispherx patent
exploited by Esteve or the period of regulatory data protection for the product
in the applicable territory. Esteve is required to purchase certain minimum
annual amounts of the product. The agreement is terminable by either party if
the product is withdrawn form the territory for a specified period due to
serious adverse health or safety reasons; bankruptcy, insolvency or related
issues of one of the parties; or material breach of the agreement. Hemispherx
may transform the agreement into a non-exclusive agreement or terminate the
agreement in the event that Esteve does not meet specified percentages of its
annual minimum purchase requirements under the agreement. Esteve may terminate
the agreement in the event that Hemispherx fails to supply the product to the
territory for a specified period of time or certain clinical trials being
conducted by Hemispherx are not successful.

Also, Esteve purchased 1,000,000 Euros of Hemispherx S.A.'s convertible
preferred equity certificates. These securities paid a 7% dividend and were to
be converted into .00114% of the outstanding common stock of Hemispherx S.A.
upon the earlier of the completion of an initial public offering ("IPO") on a
European stock exchange or September 30, 2003. However, at our request, on
January 9, 2003, Esteve agreed to convert the preferred equity certificates into
shares of our common stock and, on March 13, 2003, we issued 347,445 shares of
our common stock to Provesan SA, an affiliate of Esteve, in exchange for the
1,000,000 Euros of convertible preferred equity certificates owned by Esteve. We
agreed to register the shares issued to Provesan SA, and we have registered
these shares for public sale in this prospectus.

Our principal executive offices are located at One Penn Center, 1617 JFK
Boulevard, Philadelphia, Pennsylvania 19103, and its telephone number is
215-988-0080.

RISK FACTORS

Special Note Regarding Forward-Looking Statements

Certain statements in this document constitute "forwarding-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1995
(collectively, the "Reform Act"). Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
All statements other than statements of historical fact, included in this
prospectus regarding our financial position, business strategy and plans or
objectives for future operations are forward-looking statements. Without
limiting the broader description of forward-looking statements above, we
specifically note that statements regarding potential drugs, their potential
therapeutic effect, the possibility of obtaining regulatory approval, our
ability to manufacture and sell any products, market acceptance or our ability
to earn a profit from sales or licenses of any drugs or our ability to discover
new drugs in the future are all forward-looking in nature.

Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, including but not limited to, the risk factors
discussed below, which may cause the actual results, performance or achievements
of Hemispherx and its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements and other factors referenced in this prospectus. We
do not undertake and specifically declines any obligation to publicly release
the results of any revisions which may be made to any forward-looking statement
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.

The following cautionary statements identify important factors that could
cause our actual result to differ materially form those projected in the
forward-looking statements made in this Prospectus. Among the key factors that
have a direct bearing on our results of operations are:

No assurance of successful product development

Ampligen(R) and related products. The development of Ampligen(R) and our
other related products is subject to a number of significant risks. Ampligen(R)
may be found to be ineffective or to have adverse side effects, fail to receive
necessary regulatory clearances, be difficult to manufacture on a commercial
scale, be uneconomical to market or be precluded from commercialization by
proprietary right of third parties. Our products are in various stages of
clinical and pre-clinical development and, require further clinical studies and
appropriate regulatory approval processes before any such products can be
marketed. We do not know when, or if ever, Ampligen(R) or our other products
will be generally available for commercial sale

for any indication. Generally, only a small percentage of potential therapeutic
products are eventually approved by the U.S. Food and Drug Administration
("FDA") for commercial sale.

ALFERON N Injection(R). Although ALFERON N Injection is approved for
marketing for the treatment of genital warts, to date it has not been approved
for other applications. We face many of the risks discussed above, with regard
to developing this product for use to treat other ailments such as multiple
sclerosis and cancer.

Our drug and related technologies are investigational and subject to regulatory
approval. If we are unable to obtain regulatory approval, our operations will be
significantly affected.

All of our drugs and associated technologies other than ALFERON N
Injection are investigational and must receive prior regulatory approval by
appropriate regulatory authorities for general use and are currently legally
available only through clinical trials with specified disorders. At present,
ALFERON N Injection is only approved for the treatment of genital warts. Use of
ALFERON N Injection for other applications will require regulatory approval. In
this regard, Interferon Sciences, Inc., the Company from which we obtained our
rights to ALFERON N Injection, conducted clinical trials related to use of
ALFERON N Injection for treatment of HIV and Hepatitis C. In both instances, the
FDA determined that additional studies were necessary. Our principal development
efforts are currently focused on Ampligen(R), which has not been approved for
commercial use. Our products, including Ampligen(R), are subject to extensive
regulation by numerous governmental authorities in the U.S. and other countries,
including, but not limited to, the FDA in the U.S., the Health Protection
Branch("HPB") of Canada, and the European Medical Evaluation Agency ("EMEA") in
Europe. Obtaining regulatory approvals is a rigorous and lengthy process and
requires the expenditure of substantial resources. In order to obtain final
regulatory approval of a new drug, we must demonstrate to the satisfaction of
the regulatory agency that the product is safe and effective for its intended
uses and that we are capable of manufacturing the product to the applicable
regulatory standards. We require regulatory approval in order to market
Ampligen(R) or any other proposed product and receive product revenues or
royalties. We cannot assure you that the drug will ultimately be demonstrated to
be safe or efficacious. In addition, while Ampligen(R) is authorized for use in
clinical trials in the United States and other countries, we cannot assure you
that additional clinical trial approvals will be authorized in the United States
or in other countries, in a timely fashion or at all, or that we will complete
these clinical trials. If Ampligen(R) or one of our other products does not
receive regulatory approval in the U.S. or elsewhere, our operations will be
materially adversely effected.

We may continue to incur substantial losses and our future profitability is
uncertain.

We began operations in 1966 and last reported net profit from 1985 through
1987. Since 1987, we have incurred substantial operating losses, as we pursued
our clinical trial effort and expanded our efforts in Europe. As of December 31,
2002 our accumulated deficit was approximately $100,000,000. We have not yet
generated significant revenues from our products and may incur substantial and
increased losses in the future. We cannot assure that we will ever achieve
significant revenues from product sales or become profitable. We require, and

will continue to require, the commitment of substantial resources to develop our
products. We cannot assure that our product development efforts will be
successfully completed or that required regulatory approvals will be obtained or
that any products will be manufactured and marketed successfully, or
profitability.

We may require additional financing which may not be available.

The development of our products will require the commitment of substantial
resources to conduct the time-consuming research, preclinical development, and
clinical trials that are necessary to bring pharmaceutical products to market.
Based upon our current operating plan, we anticipate that we will need
approximately $5,400,000 over the next 12 months, inclusive of revenues and
financing, to sustain our operations. In March 2003, we received $2,873,000 in
initial net proceeds from the sale of the Debentures and Warrants and, if and
when we close on the second Interferon Sciences asset acquisition, we will
receive additional net proceeds of $1,550,000. We anticipate receipt of revenues
and proceeds from the sales of Ampligen(R) under the Cost Recovery Clinical
Programs, sales of ALFERON N Injection and, possibly, from the exercise of
outstanding non-public warrants. We believe these proceeds and the cash on hand
will be sufficient to meet our capital requirements through the next 12 months.
We may need to raise additional funds through additional equity or debt
financing or from other sources in order to complete the necessary clinical
trials and the regulatory approval processes and begin commercializing its
products. There can be no assurances that we will raise adequate funds from
these or other sources, which may have a material effect on our ability to
develop our products.

If we do not complete the second Interferon Sciences asset acquisition, our
ability to generate revenues from the sale of ALFERON N Injection and our
financial condition will be adversely affected.

Although we acquired Interferon Sciences' inventory of ALFERON N Injection
and a limited license for the production, manufacture, use, marketing and sale
of this product, our ability to develop additional applications for the product
and generate sustained revenues from sales of this product is dependent, among
other things, on our completing the acquisition from Interferon Sciences of the
balance of its rights to this product and other assets related to the product
including, but not limited to, Interferon Science's facility for purifying the
drug concentrate utilized in the formulation of ALFERON N Injection.. In
addition, pursuant to the terms of the Debentures, $1,550,000 of the proceeds
from the sale of the Debentures have been held back and, if we do not acquire
Interferon Sciences' facility, we will not receive these funds. Accordingly, if
we do not complete the second Interferon Sciences asset acquisition, our
financial condition will be adversely affected.

The limited number of unissued and unreserved authorized shares of Common Stock
severely restricts our ability to raise funds through the sale of our
securities.

We have a limited number of shares of Common Stock authorized but not
issued or reserved for issuance upon conversion or exercise of outstanding
convertible and exercisable

securities such as debentures, options and warrants. As of March 31, 2003, only
approximately 300,000 shares of our authorized shares of Common Stock will not
be issued or reserved for issuance. Unless and until we are able to increase the
number of authorized shares of Common Stock, our ability to raise funds through
the sale of Common Stock or instruments that are convertible into or exercisable
for Common Stock will be severely restricted. Although we intend to ask our
stockholders at our next annual meeting to approve an amendment to our
Certificate of Incorporation to increase the shares of Common Stock we are
authorized to issue, we cannot assure you that we will be able to obtain this
approval.

We may not be profitable unless we can protect our patents and/or receive
approval for additional pending patents.

We need to preserve and acquire enforceable patents covering the use of
Ampligen(R) for a particular disease in order to obtain exclusive rights for the
commercial sale of Ampligen(R) for such disease. If and when we obtain all
rights to ALFERON N Injection, we will need to preserve and acquire enforceable
patents covering its use for a particular disease too. Our success depends, in
large part, on our ability to preserve and obtain patent protection for our
products and to obtain and preserve our trade secrets and expertise. Certain of
our know-how and technology is not patentable, particularly the procedures for
the manufacture of our drug product which are carried out according to standard
operating procedure manuals. We have been issued certain patents including those
on the use of Ampligen(R) and Ampligen(R) in combination with certain other
drugs for the treatment of HIV. We also have been issued patents on the use of
Ampligen(R) in combination with certain other drugs for the treatment of chronic
hepatitis B virus, chronic hepatitis C virus, and a patent which affords
protection on the use of Ampligen(R) in patients with chronic fatigue syndrome.
We have not yet been issued any patents in the United States for the use of
Ampligen(R) as a sole treatment for any of the cancers which we have sought to
target. With regard to ALFERON N Injection, Interferon Sciences, Inc. has a
patent for Natural Alpha Interferon produced from human peripheral blood
leukocytes and its production process and has additional patent applications
pending. We will acquire this patent and related patent applications if and when
we close on the second Interferon Sciences asset acquisition We cannot assure
you that any of these applications will be approved or that our competitors will
not seek and obtain patents regarding the use of our products in combination
with various other agents, for a particular target indication prior to us. If we
cannot protect our patents covering the use of our products for a particular
disease, or obtain additional pending patents, we may not be able to
successfully market our products.

The patent position of biotechnology and pharmaceutical firms is highly
uncertain and involves complex legal and factual questions.

To date, no consistent policy has emerged regarding the breadth of
protection afforded by pharmaceutical and biotechnology patents. There can be no
assurance that new patent applications relating to our products or technology
will result in patents being issued or that, if issued, such patents will afford
meaningful protection against competitors with similar technology. It is
generally anticipated that there may be significant litigation in the industry
regarding patent and intellectual property rights. Such litigation could require
substantial

resources from us and we may not have the financial resources necessary to
enforce the patent rights that we hold. No assurance can be made that our
patents will provide competitive advantages for our products or will not be
successfully challenged by competitors. No assurance can be given that patents
do not exist or could not be filed which would have a materially adverse effect
on our ability to develop or market our products or to obtain or maintain any
competitive position the we may achieve with respect to our products. Our
patents also may not prevent others from developing competitive products using
related technology.

There can be no assurance that we will be able to obtain necessary licenses if
we cannot enforce patent rights we may hold. In addition, the failure of third
parties from whom we currently license certain proprietary information or may be
required to obtain such licenses in the future, to adequately enforce their
rights to such proprietary information, could adversely affect the value of such
licenses to us.

If we cannot enforce the patent rights we currently hold we may be
required to obtain licenses from others to develop, manufacture or market our
products. There can be no assurance that we would be able to obtain any such
licenses on commercially reasonable terms, if at all. We currently license
certain proprietary information from third parties, some of which may have been
developed with government grants under circumstances where the government
maintained certain rights with respect to the proprietary information developed.
No assurances can be given that such third parties will adequately enforce any
rights they may have or that the rights, if any, retained by the government will
not adversely affect the value of our license.

There is no guarantee that our trade secrets will not be disclosed or known by
our competitors.

To protect our rights, we require certain employees and consultants to
enter into confidentiality agreements with us. There can be no assurance that
these agreements will not be breached, that we would have adequate and
enforceable remedies for any breach, or that any trade secrets of ours will not
otherwise become known or be independently developed by competitors.

If our distributors do not market our product successfully, we may not
generate significant revenues or become profitable.

We have limited marketing and sales capability. We need to enter into
marketing agreements and third party distribution agreements for our products in
order to generate significant revenues and become profitable. To the extent that
we enter into co-marketing or other licensing arrangements, any revenues
received by us will be dependent on the efforts of third parties, and there is
no assurance that these efforts will be successful. Our agreement with Gentiva
Health Services offers the potential to provide significant marketing and
distribution capacity in the United States while licensing and marketing
agreements with certain foreign firms should provide an adequate sales force in
South America, Africa, United Kingdom, Australia and New Zealand, Canada,
Austria, Spain and Portugal.

We cannot assure that our domestic or our foreign marketing partners will
be able to successfully distribute our products, or that we will be able to
establish future marketing or third

party distribution agreements on terms acceptable to us, or that the cost of
establishing these arrangements will not exceed any product revenues. The
failure to continue these arrangements or to achieve other such arrangements on
satisfactory terms could have a materially adverse effect on us.

No Guaranteed Source Of Required Materials.

A number of essential materials are used in the production of ALFERON N
Injection, including human white blood cells, and we have a limited number of
sources from which to obtain such materials. We do not have long-term agreements
for the supply of any of such materials. There can be no assurance we can enter
into long-term supply agreements covering essential materials on commercially
reasonable terms, if at all. If we are unable to obtain the required raw
materials, we may be required to scale back our operations or stop manufacturing
ALFERON N Injection. The costs and availability of products and materials we
need for the commercial production of ALFERON N Injection and other products
which we may commercially produce are subject to fluctuation depending on a
variety of factors beyond our control, including competitive factors, changes in
technology, and FDA and other governmental regulations and there can be no
assurance that we will be able to obtain such products and materials on terms
acceptable to us or at all.

There is no assurance that successful manufacture of a drug on a limited scale
basis for investigational use will lead to a successful transition to
commercial, large-scale production.

Small changes in methods of manufacturing may affect the chemical
structure of Ampligen(R) and other RNA drugs, as well as their safety and
efficacy. Changes in methods of manufacture, including commercial scale-up may
affect the chemical structure of Ampligen(R) and, can, among other things,
require new clinical studies and affect orphan drug status, particularly, market
exclusivity rights , if any, under the Orphan Drug Act. The transition from
limited production of pre-clinical and clinical research quantities to
production of commercial quantities of our products will involve distinct
management and technical challenges and will require additional management and
technical personnel and capital to the extent such manufacturing is not handled
by third parties. There can be no assurance that our manufacturing will be
successful or that any given product will be determined to be safe and
effective, capable of being manufactured economically in commercial quantities
or successfully marketed.

We have limited manufacturing experience and capacity.

Ampligen(R) is currently produced only in limited quantities for use in
our clinical trials and we are dependent upon certain third party suppliers for
key components of our products and for substantially all of the production
process. The failure to continue these arrangements or to achieve other such
arrangements on satisfactory terms could have a material adverse affect on us.
Also, to be successful, our products must be manufactured in commercial
quantities in compliance with regulatory requirements and at acceptable costs.
To the extent we are involved in the production process, our current facilities
are not adequate for the production of our proposed products for large-scale
commercialization, and we currently do not have adequate

personnel to conduct commercial-scale manufacturing. We intend to utilize
third-party facilities if and when the need arises or, if we are unable to do
so, to build or acquire commercial-scale manufacturing facilities. We will need
to comply with regulatory requirements for such facilities, including those of
the FDA and HPB pertaining to current Good Manufacturing Practices ("cGMP")
regulations. There can be no assurance that such facilities can be used, built,
or acquired on commercially acceptable terms, or that such facilities, if used,
built, or acquired, will be adequate for our long-term needs.

The purified drug concentrate utilized in the formulation of ALFERON N
Injection is manufactured in Interferon Science's facility and ALFERON N
Injection is formulated and packaged at a production facility operated by
Abbott. if and when we close on the second Interferon Sciences asset
acquisition, we will acquire this facility. We still will be dependent upon
Abott or another third party for product formulation and packaging.

We may not be profitable unless we can produce Ampligen(R) or other products in
commercial quantities at costs acceptable to us.

We have never produced Ampligen(R) or any other products in large
commercial quantities. Ampligen(R) is currently produced for use in clinical
trials. We must manufacture our products in compliance with regulatory
requirements in large commercial quantities and at acceptable costs in order for
us to be profitable. We intend to utilize third-party manufacturers and/or
facilities if and when the need arises or, if we are unable to do so, to build
or acquire commercial-scale manufacturing facilities. If we cannot manufacture
commercial quantities of Ampligen(R) or enter into third party agreements for
its manufacture at costs acceptable to us, our operations will be significantly
affected.

Rapid technological change may render our products obsolete or non-competitive.

The pharmaceutical and biotechnology industries are subject to rapid and
substantial technological change. Technological competition from pharmaceutical
and biotechnology companies, universities, governmental entities and others
diversifying into the field is intense and is expected to increase. Most of
these entities have significantly greater research and development capabilities
than us, as well as substantial marketing, financial and managerial resources,
and represent significant competition for us. There can be no assurance that
developments by others will not render our products or technologies obsolete or
noncompetitive or that we will be able to keep pace with technological
developments.

Our products may be subject to substantial competition.

Ampligen(R). Competitors may be developing technologies that are, or in
the future may be, the basis for competitive products. Some of these potential
products may have an entirely different approach or means of accomplishing
similar therapeutic effects to products being developed by us. These competing
products may be more effective and less costly than our products. In addition,
conventional drug therapy, surgery and other more familiar treatments may offer
competition to our products. Furthermore, many of our competitors have
significantly

greater experience than us in pre-clinical testing and human clinical trials of
pharmaceutical products and in obtaining FDA, HPB and other regulatory approvals
of products. Accordingly, our competitors may succeed in obtaining FDA,HPB or
other regulatory product approvals more rapidly than us. There are no drugs
approved for commercial sale with respect to treating ME/CFS and we have no
knowledge of any ME/CFS drugs being developed by others. The dominant
competitors with drugs to treat HIV diseases include Gilead Pharmaceutical,
Pfizer, Bristol-Myers, Abbott Labs and Schering-Plough Corp. ("Shering"). These
potential competitors are among the largest pharmaceutical companies in the
world, are well known to the public and the medical community, and have
substantially greater financial resources, product development, and
manufacturing and marketing capabilities than we have. Although we believe our
principal advantage is the unique mechanism action of Ampligen(R) on the immune
system, we cannot assure that we will be able to compete.

ALFERON N Injection. Many potential competitors are among the largest
pharmaceutical companies in the world, are well known to the public and the
medical community, and have substantially greater financial resources, product
development, and manufacturing and marketing capabilities than we have. ALFERON
N Injection currently competes with Schering's injectable recombinant alpha
interferon product (INTRON(R) A) for the treatment of genital warts. 3M
Pharmaceuticals also received FDA approval for its immune-response modifier,
Aldara(R), a self-administered topical cream, for the treatment of external
genital and perianal warts. ALFERON N Injection also competes with surgical,
chemical, and other methods of treating genital warts. We cannot assess the
impact products developed by our competitors, or advances in other methods of
the treatment of genital warts, will have on the commercial viability of ALFERON
N Injection. If and when we obtain additional approvals of uses of this product,
we expect to compete primarily on the basis of product performance. Our
potential competitors have developed or may develop products (containing either
alpha or beta interferon or other therapeutic compounds) or other treatment
modalities for those uses. In the United States, two recombinant forms of beta
interferon have been approved for the treatment of relapsing-remitting multiple
sclerosis. There can be no assurance that, if we are able to obtain regulatory
approval of ALFERON N Injection for the treatment of new indications, we will be
able to achieve any significant penetration into those markets. In addition,
because certain competitive products are not dependent on a source of human
blood cells, such products may be able to be produced in greater volume and at a
lower cost than ALFERON N Injection. Currently, Interferon Sciences' wholesale
price on a per unit basis of ALFERON N Injection is substantially higher than
that of the competitive recombinant alpha and beta interferon products.

General. Other companies may succeed in developing products earlier than
we do, obtaining approvals for such products from the FDA more rapidly than we
do, or developing products that are more effective than those we may develop.
While we will attempt to expand our technological capabilities in order to
remain competitive, there can be no assurance that research and development by
others or other medical advances will not render our technology or products
obsolete or non-competitive or result in treatments or cures superior to any
therapy we develop

Possible side effects from the use of Ampligen(R) or ALFERON N Injection could
adversely effect potential revenues and physician/patient acceptability of our
product.

Ampligen(R). We believe that Ampligen(R) has been generally well tolerated
with a low incidence of clinical toxicity, particularly given the severely
debilitating or life threatening diseases that have been treated. A mild
flushing reaction has been observed in approximately 15% of patients treated in
our various studies. This reaction is occasionally accompanied by a rapid heart
beat, a tightness of the chest, urticaria (swelling of the skin), anxiety,
shortness of breath, subjective reports of "feeling hot," sweating and nausea.
The reaction is usually infusion-rate related and can generally be controlled by
slowing the infusion rate. Other adverse side effects include liver enzyme level
elevations, diarrhea, itching, asthma, low blood pressure, photophobia, rash,
transient visual disturbances, irregular heart rate, decreased visual activity
in platelets and white blood cell counts, anemia, dizziness, confusion,
elevation of kidney function tests, occasional temporary hair loss and various
flu-like symptoms, including fever, chills, fatigue, muscular aches, joint
pains, headaches, nausea and vomiting. These flu-like side effects typically
subside within several months. One or more of the potential side effects might
deter usage of Ampligen(R) in certain clinical situations and therefore, could
adversely effect potential revenues and physician/patient acceptability of our
product.

ALFERON N Injection. At present, ALFERON N Injection is only sold for the
intralesional (with in the lesion) treatment of refractory or recurring external
genital warts in adults. In clinical trials conducted for the treatment of
genital warts with ALFERON N Injection, patients did not experience serious side
effects; however, there can be no assurance that unexpected or unacceptable side
effects will not be found in the future for this use or other potential uses of
ALFERON N Injection which could threaten or limit such product's usefulness.

We may be subject to product liability claims from the use of Ampligen(R) or
other of our products which could negatively affect our future operations.

We face an inherent business risk of exposure to product liability claims
in the event that the use of Ampligen(R) or other of our products results in
adverse effects. This liability might result from claims made directly by
patients, hospitals, clinics or other consumers, or by pharmaceutical companies
or others manufacturing these products on our behalf. Our future operations may
be negatively effected from the litigation costs, settlement expenses and lost
product sales inherent to these claims. While we will continue to attempt to
take appropriate precautions, we cannot assure that we will avoid significant
product liability exposure. Although we currently maintain worldwide product
liability insurance coverage, there can be no assurance that this insurance will
provide adequate coverage against product liability claims. A successful product
liability claim against us in excess of our $1,000,000 in insurance coverage or
for which coverage is not provided could have a negative effect on our business
and financial condition.

The loss of Dr. Carter's services could hurt our chances for success.

Our success is dependent on the continued efforts of Dr. William A. Carter
because of his position as a pioneer in the field of nucleic acid drugs, his
being the co-inventor of Ampligen(R), and his knowledge of our overall
activities, including patents, clinical trials. The loss of Dr. Carter's
services could have a material adverse effect on our operations and chances for
success. While we have an employment agreement with Dr. Carter, and have secured
key man life insurance in the amount of $2 million on the life of Dr. Carter,
the loss of Dr. Carter or other personnel, or the failure to recruit additional
personnel as needed could have a materially adverse effect on our ability to
achieve our objectives.

Uncertainty of health care reimbursement for our products.

Our ability to successfully commercialize our products will depend, in
part, on the extent to which reimbursement for the cost of such products and
related treatment will be available from government health administration
authorities, private health coverage insurers and other organizations.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products, and from time to time legislation is proposed, which, if
adopted, could further restrict the prices charged by and/or amounts
reimbursable to manufacturers of pharmaceutical products. We cannot predict
what, if any, legislation will ultimately be adopted or the impact of such
legislation on us. There can be no assurance that third party insurance
companies will allow us to charge and receive payments for products sufficient
to realize an appropriate return on our investment in product development.

There are risks of liabilities associated with handling and disposing of
Hazardous materials.

Our business involves the controlled use of hazardous materials,
carcinogenic chemicals and various radioactive compounds. Although we believe
that our safety procedures for handling and disposing of such materials comply
in all material respects with the standards prescribed by applicable
regulations, the risk of accidental contamination or injury from these materials
cannot be completely eliminated. In the event of such an accident or the failure
to comply with applicable regulations, we could be held liable for any damages
that result, and any such liability could be significant. We do not maintain
insurance coverage against such liabilities.

The market price of our stock may be adversely affected by market volatility.

The market price of our common stock has been and is likely to be
volatile. In addition to general economic, political and market conditions, the
price and trading volume of our stock could fluctuate widely in response to many
factors, including:

o announcements of the results of clinical trials by us or our
competitors;

o adverse reactions to products;

o governmental approvals, delays in expected governmental approvals or
withdrawals of any prior governmental approvals or public or
regulatory agency concerns regarding the safety or effectiveness of
our products;

o changes in U.S. or foreign regulatory policy during the period of
product development;

o developments in patent or other proprietary rights, including any
third party challenges of our intellectual property rights;

o announcements of technological innovations by us or our competitors;

o announcements of new products or new contracts by us or our
competitors;

o actual or anticipated variations in our operating results due to the
level of development expenses and other factors;

o changes in financial estimates by securities analysts and whether
our earnings meet or exceed the estimates;

o conditions and trends in the pharmaceutical and other industries;

o new accounting standards; and

o the occurrence of any of the risks described in these "Risk
Factors."

Our common stock is listed for quotation on the American Stock Exchange.
For the 12-month period ended December 31, 2002, the price of our common stock
has ranged from $0.74 to $4.95. We expect the price of our common stock to
remain volatile. The average daily trading volume in our common stock varies
significantly. Our relatively low average volume and low average number of
transactions per day may affect the ability of our stockholders to sell their
shares in the public market at prevailing prices and a more active market may
never develop.

In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action litigation has
often been instituted against companies in our industry. If we face securities
litigation in the future, even if without merit or unsuccessful, it would result
in substantial costs and a diversion of management attention and resources,
which would negatively impact our business.

Our stock price may be adversely affected if a significant amount of shares,
primarily those registered herein, are sold in the public market.

As of March 31, 2003, approximately 834,473 shares of our common stock,
constituted "restricted securities" as defined in Rule 144 under the Securities
Act of 1933. In addition, we have registered 5,967,820 shares issuable upon the
conversion of 135% of the Debentures and as payment of interest thereon. All of
these shares are registered herein pursuant to agreements between us and the
purchasers in our recent private placements, requiring us to register their
shares for resale under the Securities Act. This permits the sale of registered
shares of common stock in the open market or in privately negotiated
transactions without compliance with the requirements of Rule 144. In addition,
as of March 31, 2003, we had options and warrants outstanding for the purchase
of an aggregate of approximately 9,265,914 shares of our common stock, which
includes 135% of the shares issuable upon exercise of the Warrants. To the
extent the exercise price of the options and warrants is less than the market
price of the common stock, the holders of the options and warrants are likely to
exercise them and sell the underlying shares of common stock and to the extent
that the conversion price and exercise price of these securities are adjusted
pursuant to anti-dilution protection, the securities could be exercisable or
convertible for even more shares of common stock. Moreover, we anticipate that
we will be issuing and registering for public resale 1,068,789 shares if and
when we acquire additional assets from Interferon Sciences, Inc. and, possibly,
additional shares to raise funding or compensate employees, consultants and/or
directors We are unable to estimate the amount, timing or nature of future sales
of outstanding common stock. Sales of substantial amounts of our common stock in

the public market could cause the market price for our common stock to decrease.
Furthermore, a decline in the price of our common stock would likely impede our
ability to raise capital through the issuance of additional shares of common
stock or other equity securities.

Provisions of our Certificate of Incorporation and Delaware law could defer a
change of our management which could discourage or delay offers to acquire us.

Provisions of our Certificate of Incorporation and Delaware law may make
it more difficult for someone to acquire control of us or for our stockholders
to remove existing management, and might discourage a third party from offering
to acquire us, even if a change in control or in management would be beneficial
to our stockholders. For example, our Certificate of Incorporation allows us to
issue shares of preferred stock without any vote or further action by our
stockholders. Our Board of Directors has the authority to fix and determine the
relative rights and preferences of preferred stock. Our Board of Directors also
has the authority to issue preferred stock without further stockholder approval.
As a result, our Board of Directors could authorize the issuance of a series of
preferred stock that would grant to holders the preferred right to our assets
upon liquidation, the right to receive dividend payments before dividends are
distributed to the holders of common stock and the right to the redemption of
the shares, together with a premium, prior to the redemption of our common
stock. In addition, our Board of Directors, without further stockholder
approval, could issue large blocks of preferred stock.

Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Our research in clinical efforts
may continue for the next several years and we may continue to incur losses due
to clinical costs incurred in the development of Ampligen(R) for commercial
application. Possible losses may fluctuate from quarter to quarter as a result
of differences in the timing of significant expenses incurred and receipt of
licensing fees and/or cost recovery treatment revenues in Europe, Canada and in
the United States.

LEGAL PROCEEDINGS

On September 30, 1998, we filed a multi-count complaint against Manuel P.
Asensio, Asensio & Company, Inc. ("Asensio"). The action included claims of
defamation, disparagement, tortuous interference with existing and prospective
business relations and conspiracy, arising out of the Asensio's false and
defamatory statements. The complaint further alleged that Asensio defamed and
disparaged us in furtherance of a manipulative, deceptive and unlawful
short-selling scheme in August and September, 1998. In 1999, Asensio filed an
answer and counterclaim

alleging that in response to Asensio's strong sell recommendation and other
press releases, we made defamatory statements about Asensio. We denied the
material allegations of the counterclaim. In July 2000, following dismissal in
federal court for lack of subject matter jurisdiction, we transferred the action
to the Pennsylvania State Court. In March 2001, the defendants responded to the
complaints as amended and a trial commenced on January 30, 2002. A jury verdict
disallowed the claims against the defendants for defamation and disparagement
and the court granted us a directed verdict on the counterclaim. On July 2, 2002
the Court entered an order granting us a new trial against Asensio for
defamation and disparagement. Thereafter, Asensio appealed the granting of a new
trial. This appeal is now pending in the Superior Court of Pennsylvania.

In June 2002, a former ME/CFS clinical trial patient and her husband filed
a claim in the Superior Court of New Jersey, Middlesex County, against us, one
of our clinical trial investigators and others alleging that she was harmed in
the ME/CFS clinical trial as a result of negligence and breach of warranties. We
believe the claim is without merit and we are defending the claim against us
through our product liability insurance carrier.

In June 2002, a former ME/CFS clinical trial patient in Belgium filed a
claim in Belgium, against Hemispherx Biopharma Europe, NV/SA, our Belgian
subsidiary, and one of our clinical trial investigators alleging that she was
harmed in the Belgium ME/CFS clinical trial as a result of negligence and breach
of warranties. We believe the claim is without merit and we are defending the
claim against us through our product liability insurance carrier.

In July 2002, we filed suit against Federal Insurance Company ("Federal")
seeking (1) a judicial order declaring our rights and the obligations of Federal
under the insurance policy Federal sold to us (2) monetary damage for breach of
contract resulting from Federal's refusal to fully defend us in connection with
the Asensio litigation (3) monetary damages to compensate us for Federal's
breach of its fiduciary duty faith and dealing and (4) monetary damages,
interest, costs, and attorneys fees to compensate us for Federal's violation of
the Pennsylvania Bad Faith Statute. Our suit against Federal is now pending in
the United States District Court for the Eastern District of Pennsylvania.

In March 2003, the law firm of Schnader, Harrison, Segal & Lewis, LLP
filed a complaint in the Court of Common Pleas of Philadelphia County against us
for alleged legal fees in the sum of $65,051. We believe the claim is without
merit and we are defending the claim.

DIVIDEND POLICY

We have not paid any cash dividends since our inception and do not
anticipate paying cash dividends in the foreseeable future.

SELLING STOCKHOLDERS

We are registering all 7,805,729 shares of common stock covered by this
prospectus on behalf of the selling stockholders named in the table below. We
issued the shares, the Debentures convertible into shares, and the Warrants
exercisable for shares to the selling stockholders in private placements. We
have registered the shares to permit the selling stockholders and their
respective transferees, assignees or other successors-in-interest that receive
their shares from a selling stockholder to resell the shares, from time to time,
when they deem appropriate.

The table below identifies the selling stockholders and other information
regarding the beneficial ownership of the common stock held by each of the
selling stockholders. For the Debenture holders (the first two stockholders
listed below), the second column lists the number of shares of common stock
beneficially owned by each selling stockholder as of March 31, 2003, based on
each selling stockholder's ownership of Debentures and Warrants, and assumes the
conversion of all the Debentures, the exercise of all Warrants and the payment
of all interest on the Debentures in the form of common stock ("Interest
Shares") rather than cash. Because the conversion price of the Debentures and
the exercise price of the Warrants are subject to adjustment for anti-dilution
protection, the interest on the Debentures may be paid in cash or common stock,
and the value attributed to any Interest Shares paid to the investors depends
the average closing price of the common stock during the five consecutive
business days ending on the third business day immediately preceding the
applicable interest payment date, and the number of repayment shares relating to
cash collateral payments depends on the amount of our consolidated revenues, the
numbers listed in the second column may change. For the other selling
stockholders, the second column lists the number of shares of common stock
beneficially owned by each selling stockholder as of March 31, 2003, based on
each selling stockholder's ownership of shares of common stock, and does not
assume the conversion of any of the Debentures, the exercise of any Warrants or
the payment of any interest on the Debentures in the form of common stock rather
than cash.

The third column lists each selling stockholder's portion, based on
agreements with us, of the 7,805,729 shares of common stock being offered by
this prospectus. With regard to the first two selling stockholders, the number
of shares being offered by this prospectus was determined in accordance with the
terms of the registration rights agreement with them, in which we agreed to
register the resale of 135% of the number of shares of common stock issuable
upon conversion of the Debentures, plus the number of shares of common stock
issuable upon exercise of the related Warrants, plus an estimate of the number
of Interest Shares that may be issued to the selling stockholders as interest
payments on the Debentures (assuming interest is paid exclusively in Interest
Shares over the full term of the Debentures, rather than in cash). As we stated
above, the number of shares that will actually be issued may be more or less
than the 7,805,729 shares being offered by this prospectus.

Under the terms of the Debentures and the Warrants, no selling stockholder
who owns Debentures or Warrants may convert such Debentures or exercise its
Warrants to the extent that the conversion or exercise would cause the selling
stockholder, together with its affiliates, to beneficially own more than 4.99%
of the shares of our then outstanding common stock following such conversion or
exercise. For purposes of making this determination, shares of common stock
issuable upon conversion of the Debentures which have not been converted and
upon exercise of the related Warrants which have not been exercised are
excluded. The number of shares in the second and third columns does not reflect
this limitation.

Any selling stockholder may sell all, some or none of its respective
shares in this offering. See "How The Shares May Be Distributed" below.

Common Stock Common Stock
Owned Prior No. of Shares Owned After
Selling Stockholder To Offering Being Offered The Offering
------------------- ----------- ------------- ------------
--------------------------------------------------------------------------------
Portside Growth &
Opportunity Fund 3,485,628(1) 3,485,628 --
--------------------------------------------------------------------------------
Leonardo L.P. 3,485,628(2) 3,485,628 --
--------------------------------------------------------------------------------
Interferon Sciences, Inc. 487,028 487,028 --
--------------------------------------------------------------------------------
Provesan SA 347,445 347,445 --
--------------------------------------------------------------------------------

================================================================================

(1) Represents (a) up to 2,983,909 shares of common stock issuable upon
conversion of the Debentures and as payment of interest thereon and (b) up
to 501,719 shares of common stock issuable upon exercise of the Warrants.
Ramius Capital Group, LLC ("Ramius Capital") is the investment adviser of
Portside Growth & Opportunity Fund ("Portside") and consequently has
voting control and investment discretion over securities held by Portside.
Ramius Capital disclaims beneficial ownership of the shares held by
Portside. Peter A. Cohen, Morgan B. Stark and Thomas W. Strauss are the
sole managing members of C4S& Co., LLC, the sole managing member of Ramius
Capital. As a result, Messrs. Cohen, Stark and Strauss may be considered
beneficial owners of any shares deemed to be beneficially owned by Ramius
Capital. Messrs. Cohen, Stark and Strauss disclaim beneficial ownership of
these securities.

(2) Represents (a) up to 2,983,909 shares of common stock issuable upon
conversion of the Debentures and as payment of interest thereon and (b) up
to 501,719 shares of common stock issuable upon exercise of the Warrants.
Angelo, Gordon & Co., L.P. ("Angelo, Gordon") is the sole director of the
general partner of Leonardo, L.P. ("Leonardo") and consequently has voting
control and investment discretion over securities held by Leonardo.
Angelo, Gordon disclaims beneficial ownership of the shares held by
Leonardo. Mr. John M. Angelo, the Chief Executive Officer of Angelo,
Gordon, and Mr. Michael L. Gordon, the Chief Operating Officer of Angelo,
Gordon, are the sole general partners of AG Partners, L.P., the sole
general partner of Angelo, Gordon. As a result, Messrs. Angelo and Gordon
may

be considered beneficial owners of any shares deemed to be beneficially
owned by Angelo, Gordon. Messrs. Angelo and Gordon disclaim beneficial
ownership of these securities.

The selling stockholders have not been employed by, held office in, or had
any other material relationship with us or any of our affiliates within the past
three years except as described below.

March 2003 Issuance Of 6% Senior Convertible Debentures Due January 31, 2005.

On March 12, 2003, We issued an aggregate of $5,426,000 in principal
amount of 6% Senior Convertible Debentures due January 31, 2005 and an aggregate
of 743,288 Warrants to investors in a private placement for aggregate
anticipated gross proceeds of $4,650,000. The investors include Portside Growth
& Opportunity Fund and Leonardo, L.P. The Debentures mature on January 31, 2005
and bear interest at 6% per annum, payable quarterly in cash or, subject to
satisfaction of certain conditions, common stock. Any shares of common stock
issued to the investors as payment of interest shall be valued at 95% of the
average closing price of the common stock during the five consecutive business
days ending on the third business day immediately preceding the applicable
interest payment date.

The Debentures are convertible at the option of the investors at any time
through January 31, 2005 into shares of our common stock. The conversion price
under the Debentures is fixed at $1.46 per share, subject to adjustment for
anti-dilution protection for issuance of common stock or securities convertible
or exchangeable into common stock at a price less than the conversion price then
in effect.

The investors also received Warrants to acquire at any time through March
12, 2008 an aggregate of 743,288 shares of common stock at a price of $1.68 per
share. On March 12, 2004, the exercise price of the Warrants will reset to the
lesser of the exercise price then in effect or a price equal to the average of
the daily price of the common stock between March 13, 2003 and March 11, 2004
(but in no event less than $1.176 per share). The exercise price (and the reset
price) under the Warrants also is subject to similar adjustments for
anti-dilution protection.

We entered into a registration rights agreement with the investors in
connection with the issuance of the Debentures and the Warrants. The
registration rights agreement requires that we register the shares of common
stock covered by this registration statement. If the registration statement is
not filed within the time period required by the agreement, not declared
effective within the time period required by the agreement or, after it is
declared effective and subject to certain exceptions, sales of all shares
required to be registered thereon cannot be made pursuant thereto, then we will
be required to pay to the investors their pro rata share of $3,635 for each day
any of the above conditions exist with respect to this registration statement.

March 2003 Acquisition of Assets From Interferon Sciences, Inc.

On March 11, 2003, we acquired from Interferon Sciences, Inc. ("ISI"),
ISI's inventory of ALFERON N Injection(R), a pharmaceutical product used for the
treatment of certain types of genital warts, and a limited license for the
production, manufacture, use, marketing and sale of this product. As partial
consideration, we issued 487,028 shares of our common stock to ISI Pursuant to
our agreements with ISI, we have registered the foregoing shares for public sale
in this prospectus.

Except for 62,500 of the shares issued to ISI, we have guaranteed the
market value of the shares retained by ISI as of March 11, 2005 to be $1.59 per
share. ISI is permitted to periodically sell certain amounts of its shares.

On March 11, 2003, we also entered into an agreement to purchase from ISI
all of its rights to the product and other assets related to the product
including, but not limited to, real estate and machinery. For these assets, we
have agreed to issue to ISI an additional 487,028 shares and to issue 314,465
shares and 267,296 shares, respectively to The American National Red Cross and
GP Strategies Corporation, two creditors of ISI. We have guaranteed the market
value of all but 62,500 of these shares on terms substantially similar to those
for the initial acquisition of the ISI assets. Pursuant to our agreements with
ISI and these two creditors, we have registered the foregoing shares for public
sale in this prospectus.

March 2003 Issuance of Our Shares in Exchange for Outstanding Preferred Equity
Certificates of Our Luxembourg Subsidiary.

On March 13, 2003, we issued 347,445 shares of our common stock to
Provesan SA, an affiliate of Laboratorios Del Dr. Esteve S.A. ("Esteve"), in
exchange for 1,000,000 Euros of convertible preferred equity certificates of our
Luxembourg subsidiary, Hemispherx Biopharma Europe, S.A., owned by Esteve. We
agreed to register the shares issued to Provesan SA, and we have registered
these shares for public sale in this prospectus.

Our European subsidiary, Hemispherx Biopharma Europe, S.A. ("Hemispherx,
S.A.") entered into a Sales and Distribution agreement with Esteve, pursuant to
which Esteve was granted the exclusive right to market Ampligen(R) in Spain,
Portugal and Andorra for the treatment of Myalgic/Chronic Fatigue Syndrome
("ME/CFS"). In addition to other terms and other projected payments, Esteve paid
an initial and non-refundable fee of 625,000 Euros (approximately $545,000) to
Hemispherx S.A. on April 24, 2002. Esteve is to pay a fee of 1,000,000 Euros
after U.S. Food and Drug Administration approval of Ampligen(R) for the
treatment of ME/CFS and a fee of 1,000,000 Euros upon Spain's approval of the
final marketing authorization for using Ampligen(R) for the treatment of ME/CFS.

HOW THE SHARES MAY BE DISTRIBUTED

The shares to be sold in this offering have been listed on the American
Stock Exchange [ADDITIONAL LISTING APPLICATION FILED. WAITING FOR CONFIRMATION
OF LISTING FROM AMEX], subject to official notice of issuance. The selling
stockholders may sell their shares of common stock from time to time in various
ways and at various prices. The common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions that may involve crosses or block
transactions. Some of the methods by which the selling stockholders may sell the
shares include:

o on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale;

o in the over-the-counter market;

o in transactions otherwise than on these exchanges or systems or in
the over-the-counter market;

o through the writing of options, whether such options are listed on
an options exchange or otherwise;

o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;

o privately negotiated transactions;

o block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;

o purchases by a broker or dealer as principal and resale by that
broker or dealer for the selling stockholder's account under this
prospectus;

o sales under Rule 144 rather than by using this prospectus; o through
the settlement of short sales;

o a combination of any of these methods of sale;

o or any other legally permitted method.

In connection with sales of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock to close out short positions,
provided that the selling stockholders may not close out short positions entered
into prior to the effective date of the registration statement of which this
prospectus is a part with any shares of common stock included in this
prospectus. The selling stockholders may also pledge their shares as collateral
for a margin loan under their customer agreements with their brokers. If there
is a default by the selling stockholders, the brokers may offer and sell the
pledged shares from time to time under this prospectus or an amendment to this
prospectus under Rule 424(b)(3) or other applicable provisions of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.

Brokers or dealers may receive commissions or discounts from the selling
stockholders (or, if the broker-dealer acts as agent for the purchaser of the
shares, from that purchaser) in amounts to be negotiated. These commissions may
exceed those customary in the types of transactions involved.

We cannot estimate at the present time the amount of commissions or
discounts, if any, that will be paid by the selling stockholders in connection
with sales of the shares.

The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In that event, any commissions received by the broker-dealers or agents
and any profit on the resale of the shares purchased by them may be

deemed to be underwriting commissions or discounts under the Securities Act. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares of common stock. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling stockholders. In addition, each of the investors has
advised us that:

o it purchased the shares in the ordinary course of business; and

o at the time of the purchase of the shares to be resold, it had no
agreements or understandings, directly or indirectly, with any
person to distribute the shares.

Under the securities laws of certain states, the shares may be sold in
those states only through registered or licensed broker-dealers. In addition,
the shares may not be sold unless the shares have been registered or qualified
for sale in the relevant state or unless the shares qualify for an exemption
from registration or qualification.

We do not know whether any selling stockholder will sell any or all of the
shares of common stock registered by the shelf registration statement of which
this prospectus forms a part.

We have agreed to pay all fees and expenses incident to the registration
of the shares, including certain fees and disbursements of counsel to the
selling stockholders. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

Certain of the selling stockholders have also agreed to indemnify us, our
directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act.

The selling stockholders and other persons participating in the
distribution of the shares offered under this prospectus are subject to the
applicable requirements of Regulation M promulgated under the Exchange Act in
connection with sales of the shares.

We have agreed with the selling stockholders to keep the registration
statement of which this prospectus is a part effective until all the shares
registered under the registration statement have been resold.

USE OF PROCEEDS

Proceeds from stockholders exercising some or all of the Warrants will be
used to fund our research and development efforts and possible acquisitions.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Many of our Securities and Exchange Commission
filings are also available to the public from the Securities and Exchange
Commission's Website at "http://www.sec.gov."

We have filed with the Securities and Exchange Commission a registration
statement (which contains this prospectus) on Form S-3 under the Securities Act
of 1933. The registration statement relates to the securities offered by the
selling stockholders. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits and schedules to the
registration statement. Please refer to the registration statement and its
exhibits and schedules for further information with respect to us, the common
stock and the Warrants. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, we refer you to the copy of that contract or document filed as an
exhibit to the Registration Statement. You may read and obtain a copy of the
registration statement and its exhibits and schedules from the SEC, as described
in the preceding paragraph.

INFORMATION INCORPORATED BY REFERENCE

The Commission allows us to "incorporate by reference" the information
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later information
that we file with the Commission will automatically update and supercede this
information. We incorporate by reference the following documents and any future
filing made with the Commission under Sections 13(a), 14 or 15(d) of the
Securities Exchange Act of 1934 until we and the selling stockholders sell all
the securities included in this prospectus:

(a) Our annual report on Form 10-K for our fiscal year ended December 31,
2001.

(b) Our quarterly report on Form 10-Q for the quarterly period ended March 31,
2002.

(d) Our quarterly report on Form 10-Q for the quarterly period ended September
30, 2002.

(e) Our registration statement on Form 8-A filed with the Commission on
November 20, 2002.

(f) Our Current Report on Form 8-K filed on March 13, 2003.

(g) Our proxy statement on schedule 14A for our 2002 annual meeting.

(h) A description of our common stock contained in our registration statement
on Form S-1, File No. 33-93314, and any amendment or report filed for the
purpose of updating this description filed subsequent to the date of this
prospectus and prior to the termination of this offering.

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Hemispherx Biopharma, Inc., 1617 JFK
Boulevard, Philadelphia, Pennsylvania 19103, telephone number 215-988-0080.

You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We and the selling stockholders
will not make offers to these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other that the date on the front of those
documents.

DESCRIPTION OF SECURITIES

The following section does not purport to be complete and is qualified in
all respects by reference to the detailed provisions of our certificate of
incorporation and by-laws, as amended, copies of which have been filed with the
Securities and Exchange Commission.

Our authorized capital stock consist of: (i) 50,000,000 shares of common
stock, $.001 par value; and (ii) 5,000,000 shares of preferred stock, .01 par
value. 33,633,459 shares of common stock were issued and outstanding as of the
date of this prospectus. As of this date, there were approximately 259 record
holders of our common stock not including holders in street name. We estimate
that there are some 3,300 holders if you include shares held in street name.

Common Stock

Shares of our common stock are entitled to one vote per share, either in
person or by proxy, on all matters that may be voted upon by the owners of our
shares at meetings of our stockholders. There is no provision for cumulative
voting with respect to the election of directors by the holders of common stock.
Therefore, the holder of more than 50% of our shares of outstanding common stock
can, if they choose to do so, elect all of our directors. In this event, the
holders of the remaining shares of common stock will not be able to elect any
directors.

The holders of common stock:

o have equal rights to dividends from funds legally available
therefore, when and if declared by our board of directors;

o are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; and

o do not have preemptive rights, conversion rights, or redemption of
sinking fund provisions.

The outstanding shares of our common stock are duly authorized, validly
issued, fully paid and nonassessable.

Preferred Stock.

Under our certificate of incorporation, as amended, our board of directors
is authorized, subject to certain limitations prescribed by law, without further
stockholder approval, from time to time to issue up to an aggregate of 5,000,000
shares of preferred stock. At this time, there are no preferred shares
outstanding.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock and warrants is
Continental Stock Transfer and Trust Co., 17 Battery Place, 8th Floor, New York,
New York 10004.

LEGAL MATTERS

The validity of the common stock offered in this prospectus has been
passed upon for us by Silverman Sclar Byrne Shin & Byrne P.C., 381 Park Avenue
South, Suite 1601, New York, New York 10016.

EXPERTS

The consolidated financial statements incorporated by reference in this
prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in the report of such
firm incorporated herein by reference and, are incorporated herein in reliance
upon such report given upon the authority of such firm as experts in auditing
and accounting.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission this indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for indemnification against these
liabilities, other than our payment of expense incurred or paid by one of our
directors, officers, or

controlling persons in the successful defense of any
action, suit or proceeding, is asserted by that director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
this indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of these issues.

--------------------------------------------------------------------------------

================================================================================

No dealer, salesman or any other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
these securities and it is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted. The
information contained in this Prospectus is current only as of this date.

TABLE OF CONTENTS

Page

Prospectus Summary ........................................................ 2
About Hemispherx .......................................................... 2
Risk Factors .............................................................. 4
Legal Proceedings ......................................................... 15
Dividend Policy ........................................................... 16
Selling Stockholders ...................................................... 17
How the Shares May
Be Distributed ............................................................ 21
Use of Proceeds ........................................................... 23
Where you can find
More information .......................................................... 24
Information Incorporated
By Reference .............................................................. 24
Description of Securities ................................................. 25
Transfer Agent ............................................................ 26
Legal Matters ............................................................. 26
Experts ................................................................... 26
Disclosure of the
Commissions Position ...................................................... 26

================================================================================

7,805,729 SHARES OF
COMMON STOCK

HEMISPHERX BIOPHARMA, INC.

---------------------------

PROSPECTUS

----------------------------

_______, 2003

================================================================================

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

SEC Filing Fees ................................................ $ 925.00
American Stock Exchange Listing Fee* ........................... $17,500.00
Printing and Engraving Expenses* ............................... $ 2,500.00
Accounting Fees and Expenses* .................................. $10,000.00
Legal Fees and Expenses* ....................................... $12,500.00
Transfer Agent and Registrar Fees* ............................. $ 1,500.00
Miscellaneous* ................................................. $ 3,075.00

Total Expenses* ............................................ $48,000.00

----------
* Estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Our Amended and Restated Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except for liability
for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or (iv) any transaction from which
the director derives an improper personal benefit.

ITEM 16. EXHIBITS.

Exhibit No. Description

2.1 First Asset Purchase Agreement dated March 11, 2003, by and between
the Company and ISI.*

2.2 Second Asset Purchase Agreement dated March 11, 2003, by and between
the Company and ISI.*

5.1 Opinion of Silverman Sclar Byrne Shin & Byrne PC, legal counsel.**

10.1 Forbearance Agreement dated March 11, 2003, by and between ISI, the
American National Red Cross and the Company.*

10.2 Forbearance Agreement dated March 11, 2003, by and between ISI, GP
Strategies Corporation and the Company.*

10.3 Securities Purchase Agreement, dated March 12, 2003, by and among
the Company and the Buyers named therein.*

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10.4 Form of 6% Convertible Debenture of the Company.*

10.5 Form of Warrant for Common Stock of the Company.*

10.6 Registration Rights Agreement, dated March 12, 2003, by and among
the Company and the Buyers named therein.*

23.1 Consent of BDO Seidman, LLP, independent certified public
accountants.**

23.2 Consent of Silverman Sclar Byrne Shin & Byrne PC, legal counsel
(included in Exhibit 5.1).**

24.1 Powers of Attorney (included in Signature Pages to this Registration
Statement on Form S-3).

----------
* Incorporated by reference from the exhibits to the Company's Current
Report on Form 8-K filed on March 13, 2003.

** To be filed by amendment.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registrant Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;

(ii) Reflect in the prospectus any facts or events arising after the effective
date of the Registration

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Statement (or the most recent post-effective amendment thereof) that
individually or in the aggregate represent a fundamental change in the
information set forth in the Registration Statement; and

(iii) Include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;

provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

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SIGNATURES

Pursuant to the requirement of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on the
31st day of March, 2003.

HEMISPHERX BIOPHARMA, INC.
(Registrant)

By: /s/ William A. Carter
----------------------------------
William A. Carter, M.D.,
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints William A. Carter acting alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person in his name, place and stead, in any and all capacities, in
connection with the Registrant's Registration Statement on Form S-3 under the
Securities Act of 1933, including, without limiting the generality of the
foregoing, to sign the Registration Statement in the name and on behalf of the
Registrant or on behalf of the undersigned as a director or officer of the
Registrant, and any and all amendments or supplements to the Registration
Statement, including any and all stickers and post-effective amendments to the
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-regulatory
body, granting unto said attorney-in-fact and agents, each acting alone, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ William A. Carter Chairman of the Board, March 31, 2003
----------------------------- Chief Executive Officer
William A. Carter, M.D. (Principal Executive)
and Director

/s/ Richard Piani Director March 31, 2003
-----------------------------
Richard Piani

/s/ Robert E. Peterson Chief Financial Officer and March 31, 2003
----------------------------- Chief Accounting Officer
Robert E. Peterson

/s/ Ransom Etheridge Secretary And Director March 31, 2003
-----------------------------
Ransom Etheridge

/s/ William Mitchell Director March 31, 2003
-----------------------------
William Mitchell, M.D., Ph.D.

Director
-----------------------------
Iraj-Eqhbal Kiani, M.D.

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Hemispherx Biopharma, Inc.
Form S-3
Index to Exhibits

Exhibit No. Description
----------- -----------
24.1 Powers of Attorney (included in Signature Pages to this
Registration Statement on Form S-3).

II-5