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CORRESP
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    Unassociated Document

    February
14, 2011

    Jim B.
Rosenberg

    Senior
Assistant Chief Accountant

    Division
of Corporation Finance

    Securities
and Exchange Commission

    100 F
Street, NE

    Washington,
DC 20549

              Re:

              Hemispherx
      Biopharma, Inc.

    Form 10-K
for the year ended December 31, 2009

    Form
10-K/A for the year ended December 31, 2009

    (SEC
filing No. 1-13441)

    Dear Mr.
Rosenberg:

    We hereby
respond to the oral comments received in discussions with the staff on January
24, 2011, January 28, 2011 and February 11, 1011 related to the above referenced
Form 10-K and Form 10-K/A of Hemispherx Biopharma, Inc. (the
"Company").

    The staff
requested clarification of the Company’s valuation of warrants issued in May
2009.  The Company’s response is reflected in the draft revised
sections of its Form 10-K/A-2 set forth on Appendix A attached
hereto.  Please note that revised disclosure in Footnote 18 is
substantially the same as the revised disclosure in the Restatement section of
the MD&A.

    The
Company acknowledges that:

              ·

              the
      Company is responsible for the adequacy and accuracy of the disclosures in
      the filing;

              ·

              the
      Staff comments or changes to disclosure in response to Staff comments do
      not foreclose the Commission from taking any action with respect to the
      filing; and

              ·

              the
      Company may not assert Staff comments as a defense in any proceeding
      initiated by the Commission or any person under the federal securities
      laws of the United States.

              Corporate
    Headquarters

              One
      Penn Center, 1617 JFK Blvd., Philadelphia,
    PA  19103

              t:
      215-988-0080

              f:
      215-988-1739

      Jim B.
Rosenberg

      February
14, 2011

      Page -
2

    The
Company further acknowledges, that the action of the Commission or the staff,
acting pursuant to delegated authority, in reviewing the filing does not relieve
the Company from its full responsibility for the adequacy and accuracy of the
disclosure in the filing.

    If you
have any questions or comments with regard to the filing, please contact me at
the above address.

    Very
truly yours,

    /s/
Charles T. Bernhardt

    Charles
T. Bernhardt

    Chief
Financial Officer

    Appendix
A

    ITEM
7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

    . .
.

    Restatement

    In connection with equity
financings on May 11 and 19, 2009, we issued warrants (the “Warrants”) that are
single compound derivatives containing both an embedded right to obtain stock
upon exercise (a “Call”) and a series of embedded rights to settle the
Warrants for cash upon the occurrence of certain events (each, a
“Put”).  Generally, the Put
provisions allow the Warrant Holders liquidity protection; the right to receive
cash in certain situations where the Holders would not have a means of readily
selling the shares issuable upon exercise of the Warrants (e.g., where there
would no longer be a significant public market for our common
stock).  However, because the contractual formula used to determine
the cash settlement value of the embedded Put requires use of certain
assumptions, the cash settlement value of the embedded Put can differ from the
fair value of the unexercised embedded Call option at the time the embedded
Put option is exercised.  Specifically, the Put rights would be
triggered upon the happening of a “Fundamental Transaction” (as defined below)
that also is (1) an all cash transaction; (2) a “Rule 13e-3 transaction” under
the Exchange Act (where the Company would be taken private); or (3) a
transaction involving a person or entity not traded on a national securities
exchange.  “Fundamental Transactions” include (i) a merger or
consolidation of the Company with or into another person or entity; (ii) a sale,
lease, license, transfer or other disposition of all or substantially all of the
Company’s assets; (iii) any purchase offer, tender offer or exchange offer in
which holders of Company Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property, which offer has been
accepted by the holders of 50% or more of the Company’s outstanding Common
Stock; (iv) a reclassification, reorganization or recapitalization of the Common
Stock pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property; or (v) a stock purchase or
other business combination with another person or entity is effected pursuant to
which such other person or entity acquires more than 50% of the outstanding
shares of Common Stock.  Pursuant to the Warrants, the Put rights
enable the Warrant Holders to receive cash in the amount of the Black-Scholes
value is obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Warrant expiration date, (B) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function on Bloomberg
as of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Warrant expiration date.

        A-1

    Initially, we determined
that these Warrants created a related Liability in accordance with ASC
480-10-55-29 & 30 due to the fact that the Warrants could be settled for
cash as discussed above.  In our estimation of the value of
this Liability, we interpreted and applied the concept of “Fair Value” from ASC
820 (formally SFAS 157).  After reviewing current accounting
literature and the findings and opinion of an independent appraiser in
determining proper accounting treatment, we took into account the extreme
unlikelihood of the occurrence of a Fundamental Transaction triggering a right
to cash settlement as a probability factor in applying a Black-Scholes-Merton
valuation of the Warrants.  As a result, we deemed the fair value of
the Warrants to be immaterial and, therefore, we stated the Warrants’ related
Liability from May 31, 2009 through December 31, 2009 at
zero.

    On
September 15, 2010, we received a comment letter from the Securities and
Exchange Commission (“SEC”) concerning its review of our annual report on Form
10-K, as amended, for the year ended December 31, 2009.  During the
process of resolving the SEC’s comments, the SEC Staff alerted us that they did
not agree with our method of computing the fair value of the Warrants as
discussed above.

    As a result, on December
22, 2010, after discussion with McGladrey & Pullen, LLP, our independent
registered public accounting firm, our Audit Committee determined that
the previously issued financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2009 and in our Forms 10-Q for the
periods ended March 31, 2010, June 30, 2010 and September 30, 2010 and in our
Forms 10-Q for the periods ended June 30, 2009 and September 30, 2009, should
not be relied upon.  We have restated the
financial statements for the year ended December 31, 2009 contained
herein and will restate the financial statements contained in our Forms 10-Q for
the periods ended March 31, 2010, June 30, 2010 and September 30, 2010
(including the comparable periods ended June 30, 2009 and September 30, 2009) to
reflect the revised value of this Liability.

    The
restatements reflect the recalculation of the fair value of the Warrants using a
Monte Carlo Simulation approach, applying critical assumptions provided by
Management reflecting conditions at the valuation date.  The Monte
Carlo Simulation approach incorporates the incremental value of the Put rights
available to the Warrant Holders.  The fair value of Warrants ranged
from $0.37 to $2.14 during 2009 and ranged from $0.37 to $0.38 at December 31,
2009.

    The
Company recomputes the fair value of the Warrants at the end of each quarterly
reporting period.  Such value computation includes subjective input
assumptions that are consistently applied each period.  If the Company
were to alter its assumptions or the numbers input based on such assumptions,
the resulting fair value could be materially different.

    Fair
value at measurement dates during the period from Warrants’ issuances at May 10,
2009, May 18, 2009 and May 21, 2009 to December 31, 2009, were estimated using
the following assumptions:

              Underlying
      price per share

              $0.56
      - $2.54

              Exercise
      price per share

              $1.10
      – $1.65

              Risk-free
      interest rate

              0.19%
      - 2.67%

              Expected
      holding period

              0.122
      - 5.50 years

              Expected
      volatility

              94.99%
      – 226.46%

              Expected
      dividend yield

              None

        A-2

    The
significant assumptions using the Monte Carlo Simulation approach for valuation
of the Warrants are:

    (i)
Risk-Free Interest
Rate.  The risk-free interest rates for the Warrants are based
on U.S Treasury constant maturities for periods commensurate with the remaining
expected holding periods of the warrants.

    (ii)
Expected Holding
Period. The expected holding period represents the period of time that
the Warrants are expected to be outstanding until they are
exercised.  The Company utilizes the remaining contractual term of the
Warrants at each valuation date as the expected holding period.

    (iii)
Expected
Volatility.  Expected stock volatility is based on daily
observations of the Company’s historical stock values for a period commensurate
with the remaining expected holding period on the last day of the period for
which the computation is made.

    (iv)
Expected Dividend
Yield.  Expected dividend yield is based on the Company’s
anticipated dividend payments over the remaining expected holding
period.  As the Company has never issued dividends, the expected
dividend yield is $-0- and this assumption will be continued in future
calculations unless the Company changes its dividend policy.

    (v)
Expected Probability of a
Fundamental Transaction.  The possibility of the occurrence of
a Fundamental Transaction triggering a Put right is extremely
remote.  As discussed above, a Put right would only arise if a
Fundamental Transaction 1) is an all cash transaction; (2) results in the
Company going private; or (3) is a transaction involving a person or entity not
traded on a national securities exchange.  The Company believes such
an occurrence is highly unlikely because:

              a.

              The
      Company only has one product that is FDA
  approved;

              b.

              The
      Company will have to perform additional clinical trials for FDA approval
      of its flagship product;

              c.

              Industry
      and market conditions continue to include a global market recession,
      adding risk to any transaction;

              d.

              Available
      capital for a potential buyer in a cash transaction continues to be
      limited;

              e.

              The
      nature of a life sciences company is heavily dependent on future funding
      and high fixed costs, including Research &
  Development;

              f.

              According
      to Forbes.com, of approximately 17,000 public companies, fewer than 30
      went private in 2008 and less than 100 were completed in 2007,
      representing 0.18% and 0.6%, respectively.  This would be
      further reduced based on the nature of a life sciences company and the
      potential lack of revenues, cash flows and the Company’s funding needs;
      and

              g.

              The
      Company's Rights Agreement makes it less attractive to a potential
      buyer.

    With the
above factors utilized in analysis of the likelihood of the Put's potential
Liability, the Company estimated the range of probabilities related to a Put
right being triggered as:

              Range of
      Probability

              Probability

              Low

              0.5%

              Medium

              1.0%

              High

              5.0%

    The Monte
Carlo Simulation incorporated a 5.0% probability of a Fundamental
Transaction.

        A-3

    (vi)
Expected Timing of
Announcement of a Fundamental Transaction.  As the Company has
no specific expectation of a Fundamental Transaction, for reasons elucidated
above, the Company utilized a discrete uniform probability distribution over the
Expected Holding Period to model in the potential announcement of a Fundamental
Transaction occurring during the Expected Holding Period.

    (vii)
Expected 100 Day Volatility at
Announcement of a Fundamental Transaction.  An estimate of
future volatility is necessary as there is no mechanism for directly measuring
future stock price movements.  Daily observations of the Company’s
historical stock values for the 100 days immediately prior to the Warrants’
grant dates, with a floor of 100%, were utilized as a proxy for the future
volatility.

    (viii)
Expected Risk-Free Interest
Rate at Announcement of a Fundamental Transaction.  The Company
utilized a risk-free interest rate corresponding to the forward U.S. Treasury
rate for the period equal to the time between the date forecast for the public
announcement of a Fundamental Transaction and the Warrant expiration date for
each simulation.

    (ix)  Expected Time Between
Announcement and Consummation of a Fundamental
Transaction.  The expected time between the announcement and
the consummation of a Fundamental Transaction is based on the Company’s
experience with the due diligence process performed by acquirers, and is
estimated to be six months.  The Monte Carlo Simulation approach
incorporates this additional period to reflect the delay Warrant Holders would
experience in receiving the proceeds of the Put.

    As a
result of the corrections in the valuation of the Liabilities as of December 31,
2009 described above, we have restated our consolidated financial statements in
this amended report as follows:

        A-4

              HEMISPHERX
      BIOPHARMA, INC. AND SUBSIDIARIES

              Consolidated
      Balance Sheet

              December
      31, 2009

              (in
      thousands)

              December
      31, 2009

              As
      Previously Reported

              Adjustments

              December
      31, 2009

              As

              Restated

              ASSETS

              Current
      Assets:

              Cash
      and cash equivalents

            $
            58,072

            $
            58,072

              Prepaid
      expenses and other current assets

            332

            332

              Total
      current assets

            58,404

            58,404

              Property
      and equipment, net

            4,704

            4,704

              Patent
      and trademark rights, net

            830

            830

              Investment

            35

            35