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Article by DailyStocks_admin    (01-13-09 04:07 AM)

Filed with the SEC from Jan 01 to Jan 07:

SciClone Pharmaceuticals (SCLN)
Sigma-Tau Finanziaria nominated four directors to the board of directors of SciClone. The vote will be held at SciClone's 2009 annual stockholders' meeting. The nominees are Roberto Camerini, Trevor Mervyn Jones, Gregg Lapointe and Alberto Mantovani.
Sigma-Tau Finanziaria currently holds 9,853,261 shares (21.3%).

BUSINESS OVERVIEW

OVERVIEW

SciClone Pharmaceuticals, Inc. is a biopharmaceutical company engaged in the development and commercialization of novel therapeutics to treat life-threatening diseases. We are positioned to grow our two assets, a biotechnology business focused on developing late-stage products for cancer and viral infectious diseases for the United States and Europe, and SciClone China, our pharmaceutical business which generates important cash flow to fund its growth and significantly contributes to the funding of our biotechnology business. Our strategy is to in-license late-stage clinical products and develop them for commercialization in the United States, Europe, and the People’s Republic of China, one of the world’s fastest growing pharmaceutical markets.

Our lead product ZADAXIN ® , our brand of thymalfasin, is approved in select international markets and is one of the largest selling imported drugs in China today, measured in revenue. For the U.S. and European markets, we are evaluating thymalfasin in a nearly completed phase 3 clinical trial for the hepatitis C virus (HCV) and are planning the regulatory strategy and design of a phase 3 clinical trial for malignant melanoma. Our other drug development candidates are SCV-07, currently being evaluated in a proof-of-concept phase 2 HCV clinical trial, and RP101, currently being evaluated in an ongoing phase 2 pancreatic cancer clinical trial.

As part of our global product development efforts, we are evaluating thymalfasin in a nearly completed phase 3 clinical trial targeting HCV, which we believe could become a significant component of the multi-billion dollar hepatitis C therapeutic market in the U.S. and Europe. This phase 3 clinical trial is being conducted in Europe by our European partner Sigma-Tau and was designed as a multi-center, double blinded, randomized, controlled trial. In this trial, we are evaluating thymalfasin as an additive therapy to pegylated interferon alpha and ribavirin to treat HCV patients who have failed current therapy, also known as non-responder patients. In February 2008, we reported promising interim blinded results indicating thymalfasin may increase sustained viral response (SVR) rates for non-responder patients and we expect to report final unblinded data in the third quarter of 2008 which may or may not confirm the interim results.

In addition to the HCV opportunity, we are evaluating thymalfasin as a therapy for malignant melanoma, which we estimate is a $200 million market opportunity for thymalfasin worldwide. In June 2007, we reported positive results from a 488-patient phase 2 clinical trial demonstrating thymalfasin in combination with dacarbazine, the standard of care, met its primary endpoint in tumor response and showed promise in extending survival for patients diagnosed with stage IV malignant melanoma. Together with Sigma-Tau, we are planning the design of a phase 3 melanoma trial and a regulatory strategy, including a Special Protocol Assessment (SPA) to be filed with the U.S. Food and Drug Administration (FDA). We plan to determine the development plans for thymalfasin in HCV and malignant melanoma after reporting final HCV data in the third quarter of 2008 and may seek a partner agreement as part of such plan.


DEVELOPING PRODUCTS FOR THE U.S. AND EUROPEAN MARKETS

SciClone’s Lead Product ZADAXIN (Thymalfasin)

ZADAXIN, scientifically referred to as thymalfasin or thymosin alpha 1, is SciClone’s synthetic preparation of thymalfasin, a thymic peptide which circulates in the blood naturally, and is instrumental in the immune response to certain cancers and viral infections. Published scientific and clinical studies have shown that thymalfasin helps stimulate and direct the body’s immune response to eradicate infectious diseases like HCV and HBV, as well as certain cancers. Thymalfasin appears to be well tolerated with few reports of significant side effects or toxicities associated with its use.

Thymalfasin elicits a variety of immune system responses against viruses. One such response is an increase in production of certain subsets of white blood cells and their differentiation into CD-4 helper cells, specifically towards differentiation into the Th1 subset of CD-4 helper cells (Th1 cells secrete cytokines such as interleukin-2 (IL-2) and gamma interferon that can help the immune response). Moreover, as thymalfasin increases differentiation into Th1 cells, it also results in decreased CD-4 cell differentiation into the Th2 subset of CD-4 helper cells that produce cytokines, such as IL-4, which are associated with persistence of viral infection. In addition, thymalfasin stimulates several other components of the immune response that help the body attack and kill virally-infected cells.

Thymalfasin Triple Therapy for HCV

In the third quarter of 2008, SciClone and our European partner Sigma-Tau expect to report final data from a nearly completed phase 3 clinical trial evaluating thymalfasin as part of a triple therapy in treating HCV non-responder patients. We believe thymalfasin could become a significant component of the multi-billion dollar hepatitis C therapeutic market in the U.S. and Europe. The phase 3 triple therapy clinical trial was designed with a well-accepted protocol as a multi-center, double blinded, randomized, placebo-controlled trial. In February 2008, we reported promising interim blinded results indicating thymalfasin may increase sustained viral response (SVR) rates for HCV non-responder patients.

Triple therapy, the addition of another agent to the combination of pegylated interferon alpha and ribavirin, is now an accepted approach in the effort to develop a new therapeutic regimen that may provide HCV patients with a potentially better chance to reach an SVR. We were a pioneer in developing the triple therapy approach, and today several drug developers are combining their drug in a triple therapy regimen for HCV clinical trials, typically after discovering that their drug alone or in combination with only pegylated interferon alpha did not provide satisfactory results in comparison to the standard therapy of pegylated interferon and ribavirin. In 2005 and 2006, SciClone completed two phase 3 clinical trials using thymalfasin in combination with pegylated interferon without ribavirin. Although those trials did not show statistical significance in the thymalfasin treatment arm, a positive thymalfasin-related trend was observed in SVR.

SciClone has patent protection through 2021 in the United States and Europe for the HCV treatment approach using the triple therapy of thymalfasin, pegylated interferon, and ribavirin. Sigma-Tau retains the European rights to thymalfasin while we have retained rights in all other regions of the world, including the United States.

Phase 3 Interim Blinded ETR (48 Weeks)

The interim blinded HCV data from the phase 3 triple therapy trial show that at the end of 48 weeks of therapy, 171 out of 553 total patients achieved an end-of-treatment response (ETR). As blinded results, the 171 patients achieving an ETR include both treatment and control group patients. A response to treatment is defined as having no detectable HCV RNA circulating in the blood at the end of 48 weeks of therapy.

Phase 3 Interim Blinded SVR (72 Weeks)

Of the 171 patients who responded after 48 weeks of therapy, 150 have completed the 24-week follow up period (72 week observation) and 54 have achieved an SVR. Of the remaining 21 patients who responded at the end of therapy, 12 were HCV negative at week 60 (12-week follow up observation period) and 2 had yet to reach the week 60 follow-up point. All patients will complete the observation period by the end of the second quarter 2008.

While these data include both treatment and control group patients, SciClone and Sigma-Tau believe the trend is promising in light of other recent clinical trial results in non-responder HCV patients retreated with only pegylated interferon alpha and ribavirin which demonstrated SVR rates of 3 to 8% at the 72 week observation point. Details of the phase 3 triple therapy study design and preliminary blinded safety data were reported by Professor Rizzetto at the ‘Thymosins in Health and Disease First International Symposium’ in Washington D.C. and also were published in September 2007 in a special edition of the Annals of the New York Academy of Sciences.

If the final results of this nearly completed phase 3 trial are positive, SciClone and Sigma-Tau plan to meet with the regulatory authorities in the United States and Europe to determine the most expeditious process to bring this therapy to the market.

Phase 3 Triple Therapy Trial Protocol

The nearly completed phase 3, multi-center, double-blinded, randomized study enrolled 553 predominately genotype 1 HCV patients who have not responded to previous treatment with pegylated interferon alpha and ribavirin. Patients were randomized, in a one-to-one ratio, to receive either thymalfasin or a placebo, and all patients received pegylated interferon alpha and ribavirin. After completing 48 weeks of treatment, patients are monitored twice during a 24-week observation period at week 60 and week 72.

The primary endpoint of the trial is SVR, defined as the absence of HCV RNA measured at week 72, which is the end of the 24-week observation period. The secondary endpoints are normalization of ALT (an enzyme that when present in increased levels is an indicator of inflammation or damage of the liver) measured at the end of weeks 48 and 72, absence of HCV RNA measured at week 48, and an improvement in liver biopsy.

Triple Therapy Pilot Study Results

The design of this nearly completed phase 3 triple therapy clinical trial is derived from the positive results from a 2005 pilot study conducted by a team led by Jorge L. Poo, M.D., Chief Scientific Officer of CIF-Biotech at the Medica Sur hospital in Mexico City. This study evaluated the use of thymalfasin in combination with pegylated interferon alpha 2a and ribavirin to treat 40 patients who had not responded to prior therapy with the non-pegylated form of interferon and ribavirin. Measured on an intent-to-treat basis, this small study demonstrated a 22% SVR for genotype 1 non-responder patients. By comparison, results from a separate, unrelated clinical trial showed a 5% SVR for genotype 1 non-responder patients re-treated with pegylated interferon and ribavirin.

About HCV

HCV is a blood-borne viral disease which causes inflammation of the liver. The World Health Organization estimates that 170 million people worldwide are infected with HCV, and the Centers for Disease Control estimates that approximately 8 to 10 million people are infected with HCV throughout the U.S. and Europe. Of these patients, more than 5 million are chronically infected, and the persistent liver inflammation in chronically infected patients can develop serious complications including cirrhosis of the liver, liver failure and hepatocellular carcinoma or liver cancer. Each year, approximately 160,000 patients in the United States and Europe are treated for HCV, with only half of those patients achieving an SVR. We estimate that by 2013 nearly 800,000 HCV patients in the United States and Europe will have failed current therapy since it was approved in 2003, making a major market opportunity for thymalfasin as a component of triple therapy for non-responders alone.


How Thymalfasin Works in Melanoma

Suppression of the growth of immune-sensitive tumors such as melanoma has been shown to be dependent on a strong immune response, including a large number of activated effectors such as tumor-infiltrating lymphocyte cells (TILs), and specific anti-melanoma cytotoxic T lymphocytes (CTL). It is also important to increase the presentation of cancer-specific antigens to the immune system through sustained expression of these molecules along with MHC Class I, as cancers can avoid detection by the immune system via suppression of the expression and presentation of these specific antigens.

Thymalfasin’s potential beneficial role in treatment of melanoma derives from its demonstrated broad activation of these various arms of the immune system, including increases in TILs, CTLs, and expression of MHC Class I and tumor-specific antigens. Thymalfasin’s multiple activities arise through activation of Toll-like receptor 9 and signaling through increases in the nuclear factor NfKB through Myd88 and IKKb. Evaluation of thymalfasin’s utility in melanoma animal models has confirmed effective anti-tumor activity.

About Malignant Melanoma

Skin cancer is the most common form of cancer in the United States. In 2008, the American Cancer Society estimated that approximately 8,420 deaths would occur from melanoma and another 62,480 cases of melanoma were expected to be diagnosed in the United States. Melanoma is classified as stage IV, the most advanced form, once the cancer has spread beyond the skin to a distant site. DTIC and interleukin-2 (IL-2) are the only FDA-approved therapies for the treatment of malignant melanoma. However, these other therapeutic agents including alpha interferon, used alone or in combination, are ineffective at extending overall patient survival, which at this stage is typically only about six to nine months. Response to treatment largely depends upon the stage of melanoma, disease site and the extent to which the cancer has spread.

RP101 for Cancer

In January 2008, SciClone dosed its first patient in a phase 2 clinical trial using RP101 as an additive therapy to gemcitabine, the current standard of care, for the treatment of patients with pancreatic cancer. We expect to complete the enrollment of the planned 153 patients in this phase 2 clinical trial in the first half of 2009 and report data in the first half of 2010.

We estimate the potential U.S. market opportunity is $500 million for RP101, a nucleoside analog which may act to enhance the beneficial effect of chemotherapy. In April 2007, we acquired the exclusive rights in the United States and Canada to develop and commercialize RP101 for the treatment of cancer from Resistys, Inc., a wholly owned subsidiary of Avantogen Oncology, Inc. Under the terms of the agreements with Resistys, Inc. and RESprotect GmbH, we paid approximately $1,700,000 in upfront fees, and in the first quarter of 2008 a $1,320,000 milestone payment upon dosage of the first patient in the phase 2 clinical trial. In addition, we may be obligated to pay post phase 3 success-based regulatory and commercial milestone payments of up to $22,000,000 as well as royalties on future sales. We believe this agreement provides an attractive opportunity to develop RP101 for a new indication with significant market potential for small near-term payments and future success-based payments upon developing and commercializing this compound.

RP101 has been granted Orphan Drug Designation for the adjunct treatment of pancreatic cancer by the U.S. FDA. The drug is approved in several European countries for antiviral indications. We believe that the compound’s potential efficacy to combat chemoresistance and improve chemosensitivity constitutes a new clinical use for RP101, which is protected by use patents, the exclusive rights to which we have for the United States and Canada.

Phase 2 Pancreatic Cancer Trial Protocol

This ongoing phase 2 clinical trial is randomized, placebo-controlled, and double-blind and is planned to be conducted at 55 sites throughout the United States, Europe and South America. We plan to enroll a total of 153 late-stage pancreatic cancer patients, randomized with two patients assigned to the treatment arm for each patient assigned to the control arm. Patients will receive either gemcitabine plus RP101 or gemcitabine alone for three weeks, followed by one week of rest, for each of six cycles. The primary endpoint is overall survival, with a secondary endpoint of progression-free survival.

Phase 1 Study Data

In a previous phase 1 clinical study in 22 late-stage pancreatic cancer patients, patients receiving RP101 in combination with gemcitabine had a median survival of 9.3 months, compared to a historical control of approximately 6 months for patients treated with gemcitabine alone. In addition, six and 12-month survival rates for treated patients were 68% and 39%, respectively, compared to historical controls of 47% and 13% for patients treated with gemcitabine alone.

In a separate phase 1 study published in the Journal of Clinical Oncology, patients treated with RP101, gemcitabine and cisplatin had a median survival of 447 days, compared to the historical control of 186 days for patients treated with gemcitabine and cisplatin alone. Median time to progression for the treated patients group was 280 days compared to 104 days for the historical control group.

In both studies, the most common adverse events were nausea, fatigue, vomiting, neutropenia, anorexia, and fever, toxicities consistent with those expected for gemcitabine alone. Although it is difficult to draw conclusions from two separate, unrelated trials, we believe the results from these clinical trials are encouraging.

About RP101

RP101, also known as BVdU, is a nucleoside analog which has shown the potential to prevent the induction of resistance to chemotherapy, suppressing genes involved in development of that resistance, and enhancing sensitivity to chemotherapy. Additionally, RP101 has been shown to induce cell death, or apoptosis, in cancer cells. In several preclinical and clinical studies, RP101 has shown biological activity in various cancer indications and has shown the potential to extend survival for pancreatic cancer patients.

About Pancreatic Cancer

Pancreatic cancer is one of the most deadly forms of cancer. The American Cancer Society estimated in 2008 that approximately 37,680 cases and 34,290 deaths would result from pancreatic cancer in the United States, making it the fourth leading cause of overall cancer death. This disease is difficult to diagnose in its early stages, and most patients have incurable disease by the time they are diagnosed with pancreatic cancer. The overall median survival of patients with pancreatic cancer is only four to six months. Patients with advanced stages of pancreatic cancer are typically treated with chemotherapeutic agents such as gemcitabine, alone or in combination with other addictive therapeutics, with minimal increases in overall survival.

SCV-07 for Viral Infectious Diseases

In the first half of 2008, we expect to report data from a proof-of-concept phase 2 clinical trial in the United States using SCV-07 as a sole agent to treat patients infected with HCV. The trial is designed to evaluate the therapeutic effect of SCV-07 on patients with HCV. Should these results be positive, SCV-07 could be developed as a safe and potentially orally bioavailable HCV therapeutic which could replace or lower the dose of pegylated interferon alpha therapy.

SCV-07 has strong intellectual property protection through “composition of matter” patent claims and is approved already in Russia for tuberculosis. We acquired exclusive worldwide rights outside of Russia from Verta, Ltd.

Phase 2 HCV Trial Protocol

The randomized, placebo-controlled trial is designed to enroll 30 patients infected with the genotype 1 strain of the HCV virus who previously responded to treatment with interferon alpha and ribavirin, but subsequently relapsed. Patients are being randomized into three cohorts of escalating doses and receiving daily subcutaneous injections of SCV-07 or placebo. After completing seven days of therapy all patients are being monitored for 14 days. The primary endpoint of the trial will be a single-log reduction in the hepatitis C viral load.

Preclinical Data

In June 2007, we reported data from an animal model study demonstrating that SCV-07 inhibits melanoma tumor growth, a cancer known to be sensitive to immune modulation. Additional preclinical studies in mucositis, lung cancer and malignant melanoma have demonstrated positive results.



About SCV-07

Our proprietary drug candidate SCV-07 (gamma-D-glutamyl-L-trypt ophan) is a synthetic peptide with proven immune stimulating effects. SCV-07 has shown efficacy in treating bacterial infections. SCV-07 specifically stimulates the immune systems through its effects on T-helper 1 cells, which are essential for clearance of viral infections. SCV-07 has shown safety at varied single and multi-dose levels and is orally bioavailable.

BUILDING A LEADING PHARMACEUTICAL BUSINESS IN CHINA

The Chinese Pharmaceutical Market

The demand for pharmaceutical products in China is fueled by strong economic development, a growing urban middle class, and an aging population with related rising incidences of diseases such as cancer, diabetes, and heart disease. By 2010, approximately 170 million people in China are projected to be over 65 with increasing healthcare needs. Another significant change affecting medical care in China has been the deregulation of the healthcare system. This has resulted in a shift of responsibility for healthcare decisions from the government and the hospital to the physician and the patient, and has allowed patients greater access to healthcare services and novel therapeutic products. The increasing ability of patients to afford private pay healthcare options, such as treatments and services not reimbursable under available insurance plans, also has broadened the market for new therapies.

As China seeks to be a global competitor in the pharmaceutical market, the Chinese government is increasing product requirements for marketing approval and adopting additional manufacturing and clinical trial standards similar to those in the United States and in Europe. While low cost access to important resources, such as clinical trial development and manufacturing, is available to current and potential participants in the Chinese pharmaceutical market, ultimate success is dependent upon sales and marketing efforts and distribution capabilities.

Sales to hospitals account for approximately 80% to 85% of total pharmaceutical sales revenue in China. For sales of novel biopharmaceutical products, we believe that share is even higher. For any pharmaceutical product to be successful, physicians must be familiar with its use, the national medical community must hold it in high regard, and the provider and manufacturer must have a good reputation within the medical community. The detailing of products to physicians and hospital administrators by company medical representatives and sales staff, supported by product focused medical education seminars, are critical for product launches and essential to gain and maintain market share. The acceptance rate of newly introduced pharmaceutical products is lower and longer than is typically observed in the U.S. or European markets. It is estimated that only about 12 pharmaceutical products had sales in China in excess of $50 million in 2007.


SciClone China’s Established Business

In China, we have an established business with growing product revenue and positive cash flow. We have a strong commitment to build on this base and introduce new pharmaceutical products to meet the country’s evolving healthcare needs. After launching ZADAXIN in China in 1996, by 2007 our worldwide sales of this product reached more than $37 million, 92% of which was sales to China. Today, ZADAXIN is one of the top selling imported pharmaceutical products in China, measured by revenue.

Over the past decade, SciClone China has established a strong commercial presence in liver disease, cancer and the intensive care setting. We employ a team of over 140 Chinese medical representatives who are well-trained regarding ZADAXIN’s attributes and understand the changing healthcare environment, the physician’s role and the patient’s needs in this unique culture. These representatives focus their efforts on building strong relationships with physicians, pharmacists and administrators in over 500 hospitals in the major cities in China. As we continue to grow our sales in China, we have begun to expand into second and third tier cities within this country. We are an active participant in, and sponsor of, regional and international medical conferences related to liver disease. Although ZADAXIN is not covered by patents in China, we endeavor to position ZADAXIN as a high-quality, imported, premium-priced product rather than compete with generics based on price.

.

In 2007, Shanghai Lingyun and China National Pharmaceutical Foreign Trade Corporation accounted for 63% and 21% of our product sales, respectively, and one other importer accounted for 8%. In 2006, Shanghai Lingyun and China National Pharmaceutical Foreign Trade Corporation accounted for 66% and 15% of our product sales, respectively, and two other importers accounted for a combined 11%. In 2005, Guang Dong South Pharmaceutical Foreign Trade Co., Ltd, Zhuhai Golden Medicine Co., Ltd and China National Pharmaceutical Foreign Trade Corporation accounted for 57%, 19%, and 15% of our product sales, respectively. No other customers accounted for more than 10% of product sales in those periods. As of December 31, 2007, approximately $11,941,000 or 94% of our accounts receivable were attributable to two customers in China.

Broadening SciClone China’s Product Portfolio

To build on SciClone China’s successful sales and marketing business, we are actively seeking to in-license additional candidates for our product portfolio and drug candidate pipeline. We continue to expand our clinical, regulatory and in-licensing capabilities in the areas of clinical development experience, established relationships with CROs, deep understanding of the regulatory process, and in-licensing expertise targeting the unique needs of the patient population in China.

We believe that our capabilities in China are an advantage in our efforts to secure the marketing rights to development-stage products for either the U.S. or European markets in addition to the China market. Few biotechnology companies in the United States or Europe have efficient access to develop or commercialize their products for the China market. Our strategy is to provide a significant value proposition to U.S. and European biotechnology companies as their collaborative partner for the development and commercialization of their products by offering the following advantages:




Time savings in obtaining regulatory approval for and launch of product into the major pharmaceutical markets and China. Our business in China offers access to large patient populations, providing for rapid enrollment of clinical trials, creating a potential advantage of a “first to market” for new therapeutics in the rapidly growing Chinese pharmaceutical market.




Cost savings in developing a product for the U.S. or European markets as clinical trials in China are cost-effective.




SciClone would provide license fees, milestone payments and royalty stream to their collaborative partners for the rights to develop and commercialize their products.


Attractive opportunity for a biotechnology company to retain the product rights for its home market or until the product reaches a more advanced, and potentially more valuable, stage of development.



GCP- and ICH-standard clinical trials conducted to meet the regulatory requirements of the SFDA and potentially to serve as one of the pivotal trials for FDA and EMEA filings.




Top management attention to a product’s rapid development, successful launch and strong promotion in China.




Proven sales capabilities of our well-trained, experienced and effective marketing force in China.

As the first of such in-license opportunities, in June 2006 we acquired the exclusive Chinese marketing rights to DC Bead and submitted a regulatory application to the SFDA in December 2006. DC Bead is currently approved in Europe and we are targeting approval in China for DC Bead as a treatment for liver cancer. China accounts for one-half of the world’s liver cancer cases and in China more than 300,000 people die annually from this disease, making this an important unmet medical need.

CEO BACKGROUND
Dean S. Woodman

79

Chairman, SciClone Pharmaceuticals, Inc.; Founder, Robertson Stephens; Former Managing Director, ING Barings

2000
John D. Baxter, M.D.

67

Senior Member, Co-Director Diabetes Center, The Methodist Hospital Research Institute

1991
Friedhelm Blobel, Ph.D.

59

President and Chief Executive Officer, SciClone Pharmaceuticals, Inc.

2006
Richard J. Hawkins

59

Chairman, President and Chief Executive Officer, LabNow, Inc.

2004
Rolf H. Henel

70

Partner, Naimark & Associates, Inc.

1997
Ira D. Lawrence, M.D.

54

Senior Vice President, Research and Development, Medicis Pharmaceuticals, Inc. Former President and Chief Executive Officer, SciClone Pharmaceuticals, Inc., Former Senior Vice President of Research and Development at
Astellas Pharma Inc. (formerly Fujisawa Healthcare Inc.)

2005
Jon S. Saxe

71

Former President, PDL BioPharma, Inc. (formerly Protein Design Labs, Inc.); Former Vice President, Hoffmann-LaRoche, Inc.

2000

MANAGEMENT DISCUSSION FROM LATEST 10K

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the “Selected Financial Data” and our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Annual Report on Form 10-K contain forward-looking statements which involve risks and uncertainties. See “Note Regarding Forward-Looking Statements” and “Risk Factors” contained in this Annual Report on Form 10-K.

Overview

SciClone Pharmaceuticals, Inc. is a biopharmaceutical company engaged in the development and commercialization of novel therapeutics to treat life-threatening diseases. Our strategy is to in-license products in the areas of cancer and viral infectious diseases, and to develop them for commercialization in the major pharmaceutical markets with a particular focus on China, one of the world’s fastest growing pharmaceutical markets. ZADAXIN ® , our brand of thymalfasin, is one of the largest imported drugs, as measured by revenue, in China today, and currently is in late-stage clinical development for the treatment of malignant melanoma and hepatitis C virus (HCV). Our proprietary in-licensed compound SCV-07 entered phase 2 clinical development for viral infectious disease in June 2007. We also submitted a regulatory application to the Chinese State Food and Drug Administration (SFDA) in December 2006 related to DC Bead™, a product for the treatment of liver cancer, or hepatocellular carcinoma (HCC), for which we obtained Chinese marketing rights in June 2006.

On April 26, 2007, we announced that we had acquired the exclusive rights in the United States and Canada to develop and commercialize RP101, a clinical-stage compound for the treatment of cancer. Under the terms of the agreements with Resistys, Inc., a wholly-owned subsidiary of Avantogen Oncology, Inc., and with RESprotect GmbH, we paid approximately $1,700,000 in upfront fees, and in the first quarter of 2008 a $1,320,000 milestone payment upon dosage of the first patient in a phase 2 clinical trial. In addition, we may be obligated to pay post phase 3 success-based regulatory and commercial payments up to $22,000,000, and royalties on future sales. We intend to initially develop RP101 for the treatment of pancreatic cancer in a combination therapy with gemcitabine, the standard of care for pancreatic cancer therapy.

In addition to our current product portfolio, we believe we are well-positioned to in-license additional therapeutics for both China and the significantly larger U.S. and European markets, in part because of our opportunity to develop and commercialize such products in China. Also, we intend to use our clinical work in China to support and accelerate regulatory applications in the United States and Europe.

Our European partner, Sigma-Tau, is conducting a triple therapy combination (ZADAXIN plus pegylated interferon alpha and ribavirin) hepatitis C clinical trial in Europe. In a press release dated February 11, 2008, we reported promising interim blinded results indicating thymalfasin may increase sustained viral response (SVR) rates for HCV non-responder patients. We expect the results of the trial in the third quarter of 2008.

In June 2007, we reported positive survival data from a phase 2 trial, also conducted by Sigma-Tau, treating patients with stage IV malignant melanoma indicating that thymalfasin in combination with dacarbazine (DTIC) chemotherapy tripled the overall response rate and extended overall survival by nearly 3 months compared to malignant melanoma patients treated with DTIC, the current standard of care, and interferon alpha. In collaboration with Sigma-Tau, in October 2007, we shared the melanoma clinical data with and received approval from, the United States Federal Food and Drug Administration (FDA) to initiate phase 3 registration trials. We and Sigma-Tau are planning the design of a phase 3 melanoma trial and our regulatory strategy including a Special Protocol Assessment (SPA) to be filed with the FDA. Thymalfasin phase 3 clinical development and commercialization plans for HCV and melanoma have potentially significantly different timelines, costs, and sizes of prospective addressable markets, and the markets for these two products differ in terms of competitive products and other factors. Consequently, before proceeding with a further melanoma trial, we and Sigma-Tau will review the final results for the current HCV clinical trial anticipated in the third quarter of 2008 in order to determine the next steps for an optimal thymalfasin development program for the HCV and malignant melanoma indications.

We manufacture ZADAXIN for sale and for our clinical trials, through third party contract manufacturers, and we conduct our research and development efforts principally through arrangements with clinical research sites, contract research organizations and universities.

As of December 31, 2007, we have an accumulated deficit of approximately $169,000,000. At least over the next few years, we expect net losses due to increased operating expenses as we expand our research and development and clinical testing efforts and our sales and marketing capabilities. Our ability to achieve and sustain operating profitability is dependent on expansion of sales of ZADAXIN and securing regulatory approval for DC Bead in China, the execution and successful completion of ZADAXIN, SCV-07, and RP101 clinical trials and securing regulatory approvals for these products in the major pharmaceutical markets of the United States, Europe and Japan. If regulatory approval is secured in those territories, our ability to achieve and sustain operating profitability will depend on the successful commercialization and marketing of these products. Clinical development involves numerous risks and uncertainties and, in addition to our successes, we have experienced setbacks in clinical development in the past. In particular, in December 2005 and June 2006, we reported results from our two U.S. phase 3 trials evaluating the double therapy combination of ZADAXIN and pegylated interferon alpha to treat HCV patients who had failed previous therapy. The results from these trials did not demonstrate that ZADAXIN in combination with pegylated interferon alpha provides a statistically significant clinical benefit when compared with pegylated interferon alpha alone. In addition, other factors may also impact our ability to achieve and sustain operating profitability, including the pricing of ZADAXIN and its manufacturing and marketing costs, our ability to compete in pharmaceutical markets, the cost of product development and commercialization programs including SCV-07, DC Bead, and RP101, the timing and costs of acquiring rights to additional drugs, our ability to fund our operations and the entrance into and extension of agreements for product development and commercialization, where appropriate.

We expect net sales to increase in 2008 due to increased sales to China. Primarily due to the level of research and development activities and other operations, we expect a net loss and a reduction in cash, cash equivalents and short-term investments for 2008. We believe we will need to raise additional capital in 2008 to fund our operations, including anticipated clinical trials, beyond the first quarter of 2009. We are exploring various alternatives for financing in addition to sales of equity of SciClone, including a line of credit, debt financing and financing of our Chinese operations either through debt, equity or joint venture transactions, but we have not determined the timing or structure of any transaction.

Our operating results may fluctuate from quarter to quarter and these fluctuations may be substantial as a result of, among other factors, the number, timing, costs and results of pre-clinical and clinical trials of our products, market acceptance of ZADAXIN, and potentially of SCV-07, DC Bead, and RP101, and the timing of orders for ZADAXIN from international markets, particularly China, the regulatory approval process, the timing of FDA or international regulatory approvals, and the acquisition of additional product rights and the funding, if any, provided as a result of corporate partnering arrangements.

Critical Accounting Policies and Estimates

General

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the “Notes to our Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Sates, which requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, we evaluate the relevance of our estimates. We base our estimates on historical experience and on various other market specific assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.

Revenue Recognition

We recognize revenue from product sales at the time of delivery. There are no significant customer acceptance requirements or post-shipment obligations on our part. Sales to importing agents or distributors are recognized at time of shipment when title to the product is transferred to them. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, we intend to replace products that have expired or are deemed to be damaged or defective when delivered. We exercise judgment in estimating return reserves and estimate expected returns primarily on historical patterns. Historically, we have had no product returns of damaged, defective or expired product. As such, no amount was accrued for product returns as of December 31, 2007 and 2006 in the respective consolidated balance sheets. Payments by the importing agents and distributors are not contingent upon sale to the end user by the importing agents or distributors.

Contract revenue for research and development is recorded as earned based on the performance requirements of the contract. Nonrefundable contract fees for which no further performance obligations exist, and for which there is no continuing involvement by us, are recognized on the earlier of when the payments are received or when collection is assured.

Revenue associated with substantive performance milestones is recognized based on the achievement of the milestones, as defined in the respective agreements and provided that (i) the milestone event is substantive and its achievement is not reasonably assured at the inception of the agreement and (ii) there are no future performance obligations associated with the milestone payment.

Amounts invoiced relating to arrangements where revenue cannot be recognized are reflected on our balance sheet as deferred revenue and recognized as the applicable revenue recognition criteria are satisfied.

Accounts Receivable

We are required to estimate the collectibility of our trade receivables. We maintain reserves for credit losses, and such losses have been within our expectations. We recognize reserves for bad debts ranging from 25% to 100% of past due accounts receivable based on the length of time the receivables are past due and our collectibility experience. A considerable amount of judgment is required in assessing the ultimate realization of these receivables including, but not limited to, an analysis of the historical payment patterns of our customers, the circumstances of each individual customer and their geographic region including a review of the local economic environment. Our ability to collect outstanding receivables from our customers is critical to our operating performance and cash flows. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers or the economic environment in which they operate were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required which would increase our general and administrative expenses. Conversely, if actual credit losses are significantly less than expected, this would decrease our general and administrative expenses.

Inventories

Our inventories are stated at the lower of cost or realizable market value. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements and compare that with the current inventory levels. If our current assumptions about future production or inventory levels and demand were to change or if actual market conditions are less favorable than those projected by management, inventory write-downs may be required which could negatively impact our gross margins and results of operations.

Impairment of Intangible Assets

At December 31, 2007, we had net intangible assets of $332,000 related to ZADAXIN product rights and have not recorded any impairment losses to-date related to intangible assets. In assessing the recoverability of our intangible assets we must make assumptions regarding estimated future cash flows and other factors. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets.

Research and Development Expenses

Our research and development expenses are principally incurred for our clinical trials including cost sharing of Sigma-Tau’s clinical trial in Europe using ZADAXIN as part of a novel triple therapy combination for the treatment of hepatitis C virus (HCV), our phase 2 clinical trials for RP101 and SCV-07 in 2007, our development plans in 2007 for a phase 3 clinical trial for malignant melanoma, and our phase 3 clinical trials that took place in the United States, primarily in 2005 and 2004. Research and development expenses are charged to operations as incurred. Our cost accruals for clinical trials are based on estimates of the services received and efforts expended pursuant to contracts with numerous institutions that conduct the clinical trials on our behalf. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under the contracts depend on factors such as the achievement of certain events, the successful enrollment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our accrual policy is to match the recording of expenses in our financial statements to the actual services received and efforts expended. Expenses related to grants to the institutions for our U.S. HCV and SCV-07 clinical trials were accrued based on the level of patient enrollment and activity according to the protocol. In general, for these clinical trials, these expenses are higher for the initial and final months of a patient’s scheduled treatment and observation. Expenses relating to clinical research organizations or other entities managing the trials and laboratory and other direct expenses are recognized in the period they are estimated to be incurred and the services performed. We monitor active patient enrollment levels and related activity to the extent possible and adjust our estimates accordingly; however, if management has underestimated activity levels associated with various studies at a given point in time, we could underestimate our actual research and development expenses, requiring the recording of additional expenses and an increase in net loss in the future.

Stock Option Valuation

Effective January 1, 2006, we adopted the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123(R), Share-Based Payment, (“FAS 123R”). Prior to January 1, 2006, we accounted for share-based payments under the recognition and measurement provisions of Accounting Principles Board Opinion 25 (“APB 25”) and related Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (“FAS 123”). Accordingly, we did not recognize compensation expense in accounting for our employee stock purchase plan or our stock option plans for options to employees and directors granted with exercise prices equal to the fair market value of the underlying common stock on the date of grant. We adopted FAS 123R using the modified-prospective transition method. Under this method, compensation cost recognized for the years ended December 31, 2007 and 2006 includes compensation cost for share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of FAS 123. Compensation cost also includes all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of FAS 123R. Compensation cost is calculated on the date of grant using the fair value of the option as determined using the Black Scholes option valuation model and the single option approach. The Company amortizes the compensation cost over the vesting period, which is generally four years, using the straight line attribution method. Results for prior periods have not been restated to reflect the impact of FAS 123R.

Determining the fair value of each option award under FAS 123R using the Black Scholes option valuation model requires the use of certain subjective assumptions. We determined weighted-average valuation assumptions as follows:

Volatility—We believe the historical volatility of our stock price is indicative of expectations about expected future stock price volatility. We estimated volatility using the historical share price performance for a time period equivalent to the expected term of the option. We also considered the implied volatility of market traded puts and calls on our common stock, however, since these puts and calls are thinly traded, the information was not considered representative of their future estimated volatility.

Expected term—When establishing an estimate of the expected term of an award, we consider the vesting period for the option and our historical experience of employee stock option exercises (including forfeitures).

Risk-Free Interest rate—The risk free interest rate is based on the U.S. Treasury constant maturity rates with similar terms to the expected term of the option.

Dividend Yield—The expected dividend yield is 0% as we have not paid and do not expect to pay dividends in the foreseeable future.

Expected Forfeitures—We use historical data regarding forfeitures of our options to estimate pre-vesting option forfeitures. We record stock-based compensation only for those awards that are expected to vest.

The most significant assumptions are our estimates of the expected volatility and the expected term of the award. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual conditions, events or amounts differ significantly from any of these estimates, stock-based compensation expense and its non-cash effect on our results of operations could be materially impacted. As of December 31, 2007, unamortized compensation expense related to unvested options was approximately $3,251,000. The weighted average period over which compensation expense related to these options will be recognized is 3.40 years.

Results of Operations

Product sales were $37,038,000, $32,433,000, and $27,842,000 for the years ended December 31, 2007, 2006 and 2005, respectively, and all were derived from sales of ZADAXIN. Sales to customers in China accounted for approximately 92%, 92% and 91% of this revenue for the years ended December 31, 2007, 2006 and 2005, respectively. Product prices have remained stable throughout this three year period.

For the years ended December 31, 2007, 2006 and 2005, sales in each year to three or four importing agents in China accounted for approximately 92%, 92%, and 91%, respectively of our product sales. In 2007, Shanghai Lingyun and China National Pharmaceutical Foreign Trade Corporation accounted for 63% and 21% of our sales, respectively, and one other importer accounted for 8% of our sales. In 2006, Shanghai Lingyun and China National Pharmaceutical Foreign Trade Corporation accounted for 66% and 15% of our sales, respectively, and two others accounted for a combined 11%. In 2005, Guang Dong South Pharmaceutical Foreign Trade Co., Ltd, Zhuhai Golden Medicine Co., Ltd and China National Pharmaceutical Foreign Trade Corporation accounted for 57%, 19%, and 15% of our sales, respectively. No other customers accounted for more than 10% of sales in those periods. As of December 31, 2007, approximately $11,941,000 or, 94% of our accounts receivable were attributable to two customers in China. We perform on-going credit evaluations of our customers’ financial condition, and generally do not require collateral from our customers.

Contract revenue was $20,000, $229,000, and $492,000 for the years ended December 31, 2007, 2006 and 2005, respectively. During 2007, we recognized $20,000 in contract revenue for a partial license fee for ZADAXIN from a third party. There was no similar revenue for the years ended December 31, 2006 or 2005. Contract revenue recognized in 2006 and 2005 is in connection with the $2,685,000 payment we received from Sigma-Tau in January 2002 and a $50,000 payment we received from Sigma-Tau in December 2006. This revenue was recognized as contract revenue over the course of the ZADAXIN HCV U.S. clinical program and the period of sharing the clinical data from this program with Sigma-Tau in accordance with the performance requirements under our contract with Sigma-Tau.

Gross margin was 82%, 79%, and 83% in 2007, 2006 and 2005, respectively. The decrease in gross margin in 2006 was primarily due to an increase of $929,000 in royalty expense recorded in December 2006 related to annual minimum royalties due to sales of product from 1997 through 2006 according to our license agreement with Wayne State University (WSU). We expect cost of product sales and hence gross margin to vary from year to year, depending upon the level of ZADAXIN sales, the absorption of product-related fixed costs, and any charges associated with excess or expiring finished product inventory.

Research and development (R&D) expenses were $17,446,000, $14,088,000, and $14,406,000 and represented approximately 42%, 41%, and 45% of our total operating costs and expenses for the years ended December 31, 2007, 2006, and 2005, respectively. The increase in R&D expenses from 2006 to 2007 was primarily due to a $2,200,000 increase in acquisition and legal costs incurred in April 2007 related to the acquisition of the exclusive rights in the United States and Canada to develop and commercialize RP101, an increase of approximately $1,893,000 in clinical trial expenses and an increase of $1,131,000 in drug development expenses mainly related to our phase 2 trials for RP101 and SCV-07, and in preparation of the prospective phase 3 trial for melanoma. These increases were offset partially by decreases in R&D including a decrease of $531,000 in stock-based compensation expense and a $377,000 decrease in compensation and benefits related expenses, net of consulting fees, a decrease of $597,000 in preclinical pharmacology expenses, a decrease of $146,000 in rent expense due to lower rents at our new corporate office, and a decrease of $106,000 in computer software expense.

R&D expenses in 2006 included stock-based compensation expense of $771,000 following the adoption of FAS 123R. The overall decrease in R&D expenses from 2005 to 2006 was primarily related to the U.S. phase 3 HCV clinical trials completed in mid-2006.

The major components of R&D expenses consist of clinical studies performed by clinical trial institutions and contract research organizations, related materials and supplies, preclinical work, pharmaceutical development, personnel costs, including salaries and benefits, third party research funding, and overhead allocations consisting of various support and facilities related costs. Our research and development activities are also separated into three main categories: research, clinical development and pharmaceutical development. Research costs typically consist of business development, patent costs, preclinical and toxicology work. Clinical development costs primarily relate to clinical trials. Pharmaceutical development costs consist of product formulation and chemical analysis. During 2007, we recorded approximately $5,320,000 of research, $10,723,000 of clinical development, and $1,403,000 of pharmaceutical development activities. During 2006, we recorded approximately $5,400,000 of research, $6,900,000 of clinical development, and $1,800,000 of pharmaceutical development activities. This compares to expenses in 2005 of approximately $4,300,000 of research, $8,300,000 of clinical development, and $1,800,000 of pharmaceutical development activities. The initiation and continuation of our current clinical development programs has had and is expected to continue to have a significant effect on our research and development expenses. Although it is not possible to determine the total cost expected to be incurred in any particular year for each clinical trial due to the uncertain nature of the clinical trial process, we estimate that our future costs for 2008 relating to research and development will be approximately $27,400,000, including a $1,320,000 milestone payment upon dosage of the first patient in the RP101 phase 2 clinical trial, other RP101, ZADAXIN, and SCV-07 development costs. The actual costs incurred in future periods will vary depending in particular upon timeline and design for a ZADAXIN phase 3 melanoma clinical trial and final decisions regarding the timing and expense sharing arrangements for the trial. If we proceed with all of the current development programs for ZADAXIN, RP101 and SCV-07, we would need to seek additional capital in 2008. An expansion or significant extension of our clinical development programs may require us to seek additional capital resources.

Sales and marketing expenses were $13,928,000, $11,569,000, and $10,237,000 for the years ended December 31, 2007, 2006 and 2005, respectively. The increase in sales and marketing expenses in 2007 and 2006 was partially due to $772,000 and $639,000, respectively, in stock-based compensation expense following the adoption of FAS 123R. The remaining increases in 2007 and 2006 were primarily due to increases in sales and marketing personnel, promotional activities and operating expense related to our expanding sales and marketing efforts. We expect sales and marketing expenses for 2008 to be approximately $2,800,000 higher than those incurred in 2007 due to increased sales efforts.

General and administrative expenses were $10,245,000, $9,040,000, and $7,457,000 for the years ended December 31, 2007, 2006 and 2005, respectively. The increase in general and administrative expenses in 2007 compared to 2006, was primarily related to an increase in compensation and benefits related expenses of $713,000 due to an increase in general and administrative personnel, an increase in stock-based compensation expense of $196,000 mainly related to our chief executive officer’s employment agreement, and a $150,000 increase in office expense related to the relocation of our corporate office. The increase in general and administrative expenses in 2006, compared to 2005, was primarily related to an increase in compensation and benefits related expenses of $410,000, increased consulting fees of $656,000, and an increase in stock-based compensation expense of $564,000 following the adoption of FAS 123R. For 2008, we expect general and administrative expenses to decrease approximately $700,000 compared to general and administrative expenses incurred for 2007 as a result of a reduction in consulting fees.

Interest and investment income was approximately $1,629,000, $1,764,000, and $1,273,000 for the years ended December 31, 2007, 2006 and 2005, respectively. The decrease in 2007 resulted from reduced interest earned on cash balances due to lower cash balances, partially offset by higher interest rates in the 2007 period. The increase in interest and investment income in 2006 is primarily due to cash balances earning higher interest rates in that period. For 2008, we expect a decrease of approximately $900,000 in interest and investment income as a result of lower cash balances.

Interest and investment expense was $20,000, $94,000, and $345,000 for the years ended December 31, 2007, 2006 and 2005, respectively, and the interest expense for 2006 and 2005 primarily related to interest on the Company’s convertible notes payable. The Company repaid $4,000,000 and $1,600,000 of convertible notes in December 2005 and March 2006, respectively, resulting in the decrease in interest expense for those periods.

Other income (expense), net was $40,000, $7,981,000 and $0 for the years ended December 31, 2007, 2006 and 2005, respectively. The increase in other income for the 2006 period, as compared to both 2007 and 2005, was primarily due to a one-time payment of $8,000,000 that we received in April 2006 for the resolution of our dispute with Schering Plough KK regarding the conduct of HBV clinical trials in Japan with ZADAXIN.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on our current expectations, estimates and projections about our business, industry, management’s beliefs and certain assumptions made by us. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe” or similar expressions are intended to identify forward-looking statements including those statements we make regarding our future financial results; anticipated product sales; the sufficiency of our resources to complete clinical trials and other new product development initiatives; the timing and outcome of clinical trials; the timing of completion of therapy and observation for our clinical trials; ZADAXIN’s ability to complement existing therapies; prospects for ZADAXIN and our plans for its enhancement and commercialization; future size of the worldwide hepatitis C virus and other markets; research and development and other expense levels; cash and other asset levels; and the allocation of financial resources to certain trials and programs. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors including, but not limited to, those described under the caption “Risk Factors” in this Quarterly Report on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

SciClone Pharmaceuticals, Inc. is a biopharmaceutical company engaged in the development and commercialization of novel therapeutics to treat life-threatening diseases. Our strategy is to in-license products in the areas of cancer and viral infectious diseases, and to develop them for commercialization in the major pharmaceutical markets with a particular focus on the People’s Republic of China (“China”), one of the world’s fastest growing pharmaceutical markets. ZADAXIN ® , our brand of thymalfasin, is one of the largest imported drugs, as measured by revenue, in China today, and currently is in late-stage clinical development for the treatment of hepatitis C virus (HCV) in Europe. Our proprietary in-licensed compound RP101 entered phase 2 clinical development for the treatment of pancreatic cancer in combination with gemcitabine in January 2008. Our proprietary in-licensed compound SCV-07 entered phase 2 clinical development for viral infectious disease in June 2007. We also submitted a regulatory application to the Chinese State Food and Drug Administration (SFDA) in December 2006 related to DC Bead TM , a product for the treatment of liver cancer, or hepatocellular carcinoma (HCC), for which we obtained Chinese marketing rights in June 2006 from Biocompatibles UK Ltd., a UK-based company.

In addition to our current product portfolio, we believe we are well-positioned to in-license additional therapeutics for both China and the significantly larger U.S. and European markets, in part because of our opportunity to develop and commercialize such products in China. Also, we intend to use our clinical work in China to support and accelerate regulatory applications in the United States and Europe.

Our European partner, Sigma-Tau, recently completed a triple therapy combination (ZADAXIN plus pegylated interferon alpha and ribavirin) hepatitis C clinical trial in Europe. On November 5, 2008, we announced the top-line results from this large, randomized, phase 3 clinical trial evaluating thymalfasin in combination with pegylated interferon alpha-2a (peg-IFN-2a) and ribavirin (RBV) as a treatment for patients with hepatitis C virus (HCV) who have not responded to prior therapy consisting of peg-IFN and RBV alone (current standard of care). The thymalfasin treated group did not achieve statistical significance for the primary end point of sustained virological response (SVR) as assessed in the primary analysis population, i.e. the intent-to-treat population. In the prospectively defined secondary population of patients who completed the full course of 48 weeks of treatment with thymalfasin in addition to peg-IFN-2a and RBV (Completer Population), the primary endpoint was achieved with statistical significance. We plan to further analyze the data in coming weeks and to present a full report at an upcoming clinical conference.

In September 2008, we reported what we believe are promising results from our proof-of-concept phase 2A clinical trial using SCV-07 as a sole agent administered to patients chronically infected with HCV. The trial was designed to evaluate the effect of SCV-07 on hepatitis C viral load, as well as on other measures of immune response. SCV-07 demonstrated activity in some treated patients in the higher dosage groups, and the decrease in viral load in these patients was accompanied by an increase in an immunological biomarker which is usually correlated with response against HCV. Additionally, SCV-07 was shown to be generally safe and well-tolerated with no dose limiting toxicities or serious adverse events reported. During the fourth quarter of our fiscal 2008, we plan to discuss with the FDA the initiation of a follow-up SCV-07 phase 2B trial.

In June 2007, we reported positive data from a phase 2 trial, also conducted by Sigma-Tau, treating patients with stage IV melanoma indicating that thymalfasin in combination with dacarbazine (DTIC) chemotherapy and low dose interferon alpha met its primary endpoint by reaching the tumor response rate required to reject the null hypothesis. In fact, two of the thymalfasin treated groups had a tripled overall response rate compared to stage IV melanoma patients treated with DTIC, the current standard of care, and low dose interferon alpha. In addition, survival, a key secondary endpoint, was extended by nearly 3 months. We and Sigma-Tau are planning the design of a phase 3 melanoma trial and our regulatory strategy including a Special Protocol Assessment (SPA) to be filed with the FDA. Thymalfasin phase 3 clinical development and commercialization plans for HCV and melanoma have potentially significantly different timelines, costs, and sales potential, and the markets for these two products differ in terms of competitive products and other factors. Consequently, before proceeding with a further melanoma trial, we expect that we and Sigma-Tau will review the recently announced results for the HCV clinical trial in order to determine the next steps for an optimal thymalfasin development program.

We manufacture ZADAXIN for sale and for our clinical trials through third party contract manufacturers, and we conduct our research and development efforts principally through arrangements with clinical research sites, contract research organizations and universities.

For the three months ended September 30, 2008 and 2007, product sales were $14,328,000 and $9,421,000, respectively. For the nine months ended September 30, 2008 and 2007, product sales were $38,796,000 and $27,020,000, respectively. Our revenue growth was attributable to further market penetration in China related to ZADAXIN. For the three months ended September 30, 2008 and 2007, product sales in China were $13,637,000 and $8,624,000, respectively. For the nine months ended September 30, 2008 and 2007 product sales in China were $36,696,000 and $24,867,000, respectively.

For the overall consolidated Company, primarily due to the level of research and development activities, we expect a net loss and a reduction in cash, cash equivalents and short-term investments for 2008. However, we believe our cash on hand and ongoing business operations will be sufficient to fund current business activities for the foreseeable future. During this period, we may report quarterly losses. Our ability to sustain operating profitability will be impacted by numerous factors including expansion of sales of ZADAXIN, the regulatory approval process including the timing of FDA or international regulatory approvals, the number, timing, costs and results of pre-clinical and clinical trials of our products, market acceptance of ZADAXIN, and potentially of SCV-07, DC Bead, and RP101, the timing of orders for ZADAXIN from international markets, particularly China, and the acquisition of additional product rights and the funding, if any, provided as a result of corporate partnering arrangements. Although we believe our cash on hand and ongoing business operations will be sufficient to fund current business activities for the foreseeable future, we are considering raising additional funding in the fourth quarter of 2008 and 2009 to provide additional flexibility in financing our operations, including anticipated clinical trials. We are exploring various alternatives for financing in addition to sales of equity of SciClone, including a line of credit, debt financing and financing of our operations in the People’s Republic of China, either through debt, equity or joint venture transactions, but we have not determined the timing or structure of any transaction.

Recent Accounting Pronouncements

Adopted January 1, 2008

Effective January 1, 2008, we adopted Emerging Issues Task Force (“EITF”) Issue No. 07-3 “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development activities” (“EITF 07-3”). EITF 07-3 requires that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. The adoption did not have a material impact on our consolidated results of operations or financial condition.

We adopted the provisions of the Financial Accounting Standards Board (“FASB”) Statement No. 157 “Fair Value Measurements” (“SFAS No. 157”), effective January 1, 2008. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, we deferred adoption of SFAS 157 as it relates to our non financial assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under SFAS No. 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The three levels of input are:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The adoption of this statement did not have a material impact on our consolidated results of operations and financial condition.

Effective January 1, 2008, we adopted SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. We did not elect to adopt the fair value option for any financial assets or liabilities under this Statement.

Not Yet Adopted

In December 2007, EITF Issue No. 07-1, “Accounting for Collaborative Arrangements” (“EITF 07-1”) was issued. EITF 07-1 provides guidance concerning: determining whether an arrangement constitutes a collaborative arrangement within the scope of this Issue; how costs incurred and revenue generated on sales to third parties should be reported in the income statement; how an entity should characterize payments on the income statement; and what participants should disclose in the notes to the financial statements about a collaborative arrangement. EITF 07-1 is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008, which will be our fiscal year beginning January 1, 2009. We are in the process of evaluating the impact, if any, of adopting EITF 07-1 on our financial statements.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. We believe there have been no significant changes in our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2007 other than the adoption of SFAS No. 157.

Results of Operations

Total Revenues

Product sales were $14,328,000 and $38,796,000 for the three and nine-month periods ended September 30, 2008, respectively, as compared to $9,421,000 and $27,020,000 for the corresponding period in 2007. All product sales in each period were derived from sales of ZADAXIN. The increase was attributable to a higher volume of product sold primarily due to continued expansion of our sales and marketing efforts and a slight increase in prices between the 2008 and 2007 periods. Sales to customers in China are denominated in U.S. dollars and accounted for approximately 95% of product sales for both the three and nine-month periods ended September 30, 2008, as compared to approximately 92% of product sales for both the three and nine-month periods ended September 30, 2007.

For the three-month period ended September 30, 2008, sales to two importing agents in China accounted for approximately 69% and 26% of our product sales. For the three-month period ended September 30, 2007, sales to two importing agents in China accounted for approximately 70% and 22% of our product sales. For the nine-month period ended September 30, 2008, sales to two importing agents in China accounted for approximately 68% and 22% of our product sales. For the nine-month period ended September 30, 2007, sales to three importing agents in China accounted for approximately 61%, 21% and 10% of our product sales. The two largest customers were the same importing agents in each of these periods.

Cost of Product Sales and Gross Margin on Product Sales

Gross margin on product sales was 84% and 83% for the three and nine-month periods ended September 30, 2008, as compared to 82% for both the corresponding periods in 2007. We expect cost of product sales, and hence gross margin on product sales, to vary slightly from period to period, depending upon the level of ZADAXIN sales, the absorption of product-related fixed costs, and any charges associated with excess or expiring finished product inventory. During the three months ended June 30, 2008, we recorded a charge of $630,000 associated with our finished goods inventory related to vials made obsolete due to labeling requirements arising from our new import license. No other charges were recorded by us associated with product inventory during the nine months ended September 30, 2008. No charges were recorded by us associated with product inventory during the three or nine month periods ended September 30, 2007.

increase in consulting and travel expenses. These increases were partially offset by a decrease of approximately $2,200,000 of acquisition and legal costs related to the acquisition of exclusive rights for the United States and Canada to develop and commercialize RP101 recorded during the nine months ended September 30, 2007. We expect that our research and development expenses for the fourth quarter of 2008 will increase compared to the third quarter of 2008 related to our clinical trials for RP101 and SCV-07. In general, we expect research and development expenses to vary substantially from quarter to quarter as we pursue our strategy of initiating additional preclinical and clinical trials, acquiring product rights, and expanding regulatory activities.

Sales and Marketing

Sales and marketing expenses were $4,188,000 and $12,328,000 for the three and nine-month periods ended September 30, 2008, respectively, as compared to $3,805,000 and $9,968,000, respectively, for the corresponding period in 2007. The higher level of sales and marketing expenses was primarily due to increases in the number of sales and marketing personnel, and increases in promotional activities, conferences and seminars related to our expanding sales and marketing efforts. We expect that our sales and marketing expenses will increase for the fourth quarter of 2008 compared to the third quarter of 2008 and may increase in future years if we are successful in expanding our commercialization and marketing efforts.

General and Administrative

General and administrative expenses were $2,405,000 for the three months ended September 30, 2008, as compared to $2,594,000 for the three months ended September 30, 2007. The lower levels of general and administrative expenses were primarily due to a reduction in stock-based compensation expense of approximately $94,000 and lower rent expense of approximately $83,000 related to our new main office facility in 2008 as compared with our former facility which we exited in July 2007.

General and administrative expenses were $8,286,000 for the nine months ended September 30, 2008, as compared to $7,648,000 for the nine months ended September 30, 2007. The higher levels of general and administrative expenses were primarily due to increases in severance costs of approximately $322,000, accounting and professional fees of approximately $391,000, and employment recruiting costs of approximately $203,000 recorded during the nine month period ended September 30, 2008, offset partially by a decrease in rent expense of approximately $234,000. We believe that general and administrative expenses for the fourth quarter of fiscal 2008 will increase compared to the third quarter of fiscal 2008 due to the expansion of our office facility and continuing business development efforts.

Interest and Investment Income

Interest and investment income was approximately $116,000 and $501,000, respectively, for the three and nine-month periods ended September 30, 2008, as compared to $408,000 and $1,280,000, respectively, for the corresponding period in 2007. The decrease was primarily due to lower cash and investment balances and lower interest rates in the 2008 period.

Provision for Income Tax

Provision for income tax was approximately $39,000 and $341,000, respectively, for the three and nine-month periods ended September 30, 2008, as compared to $41,000 and $90,000, respectively, for the corresponding period in 2007. The increase in provision for income tax for the nine month period ended September 30, 2008, compared to the corresponding period in 2007, was due to increased net operating income in the People’s Republic of China. The Company’s statutory tax rate in the People’s Republic of China is 18%.

CONF CALL
Friedhelm Blobel
Thank you, Sean. Good morning and thank you for joining us today on our Fourth Quarter and Year End 2007 Conference Call. Today we have included slides in our conference call. It can be accessed through the IR section of our website at www.SciClone.com. Before I begin, I would like to briefly remind you that we'll be making forward-looking statements during this call. These statements are subject to risk factors which include but are not limited to those detailed in our SEC filings.
Looking back at 2007 we achieved many significant milestones as we continue to execute our strategy, focused on growing our two main assets. The first is our late stage biotech business targeting the US and Europe pharmaceutical markets. The second is our valuable revenue and cash generator, SciClone China. We are executing our strategy with a goal of developing late stage products for viral infectious diseases and head for the US and European pharmaceutical markets and building SciClone China's infrastructure and capabilities to capture the opportunities in this rapidly growing pharmaceutical market. Looking forward we are gaining important momentum as we enter 2008, a year in which we expect to generate essential cash flow from SciClone China, report data from both our large Phase 3 and to prove of concept Phase 2 clinical trials for HDV.
I would like to take a minute to review the most important recent highlights for SciClone. Starting with our top line performance our strong revenue growth continues to generate valuable cash flow to fund the late stage development of all products for the US and European pharmaceutical markets. We increased revenue with 18% for the fourth quarter and 14% for the full year 2007 on strong demand for our lead product Zadaxin. Over 90% of our Zadaxin sales are to China where we continue to expand and leverage SciClone China's capabilities in this rapidly growing pharmaceutical market. Second, we are making great strides in the clinical development of our pipeline products. We recently reported promising interim blinded data from the nearly completed Phase 3 triple therapy hepatitis C trial for thymalfasin and look forward to un-blinding final results in the third quarter of this year.
Third, we began a Phase 2 pancreatic cancer clinical trial for RP101, a nucleoside analog which may act to enhance the therapeutic effect of chemotherapy. We also receive all from drug designation for RP101 from the US FDA. And finally we continue our outreach with investors and analysts by presenting our corporate strategy in New York at the BIO CEO and Investor Conference in February and the Susquehanna International Group Healthcare Conference in March. I will give more detail regarding each of these achievements later in the call but first I'd like to turn the call over to Rick Waldron, our Executive Vice President and Chief Financial Officer for a review of our fourth quarter and full year 2007 financials. Rick?
Richard Waldron
Thank you, Friedhelm. We are pleased with our solid financial results for the fourth quarter and full year 2007 and look forward to strong revenue growth for 2008. Our consolidated results for the fourth quarter of 2007 which you can see on Slide #5 if you're viewing the slide pack on the website; we're driven by an 18% increase in revenues to $10 million. For the full year revenues grew 14% to $37 million which exceeded our previous guidance of 35 to $36 million. This growth was fueled by strong demand for Zadaxin in China, a growing pharmaceutical market which accounts for over 90% of our Zadaxin sales.
As we continue to invest in the development of our late stage products, our net loss for the fourth quarter 2007 was $3.6 million, or $0.08 per share, compared to $1.5 million or $0.03 per share for the prior year.
For the full year 2007, net loss was $9.9 million, or $0.22 per share, which is less then our previous guidance of $13 million, or $0.28 per share.
For 2006 net income was $727,000, or $0.02 per share, which included an $8 million settlement received in April of 2006.
Our cash position totaled $35.3 million at December 31, 2007 compared with $37.5 million at September 30. This figure is considerably higher then our guidance of $26 million for the year end. Primarily due to lower then planned fourth quarter R&D expenses resulting from our decision to review interim data from the HCV clinical trial before proceeding with extensive clinical trial development work for thymalfasin for the malignant melanoma indication.
The year end cash position was also augmented by strong accounts receivable collection from China in the fourth quarter.
I would like to note that both R&D expenses and net loss for 2007 were lower due to the January 2008 initiation of the RP101 trial and review of the thymalfasin program, which prompted us to review the Phase 3 results.
Beginning with 2008, we will report quarterly financial information for SciClone China independently, as well as SciClone Corporate on a consolidated basis. We believe that by reporting specific financial information for SciClone China we will be able to highlight and count by the value of this unique asset.
Looking forward into 2008, we continue to expect strong growth in our consolidated revenues as well as increase cash flow from sales of thymalfasin, primarily to China, which helps to fund our increasing efforts in clinical development.
On a consolidated basis, we expect revenues to increase between 14 to 19% to reach between $42 and $44 million in 2008. For R&D expenses we forecast approximately $27 million for 2008 of which roughly $12 million relate to our ongoing Phase 2 pancreatic cancer trial for RP101. We expect our 2008 net loss to be between 17 and $19 million or between $0.38 and $0.41 per share and forecast a cash position of 10 million by year-end 2008. At this point we have significant control over the amount and sources of future funding. Going into 2009 the expenditures required to complete the RP101 Phase 2 clinical trial will be considerably less than what is planned to be spent on the trial in 2008.
Depending on the results of the HCV Phase 3 trial we and Sigma-Tau may partner the thymalfasin opportunity with a pharmaceutical partner with global reach thereby alleviating us of related future clinical trial expenses while providing us significant upside commercial prospects.
Our operation in China generates considerable operating cash flow which itself may be leveraged as an alternative funding source. In short we believe that our current cash position, our China operation cash flow and product partnering prospects provide us with the financial capability and funding flexibility to execute our business strategy in 2008 and beyond. Now I will turn the call back over to Friedhelm.
Friedhelm Blobel
Thank you, Rick. Our strategy of developing promising late-stage products for the major US and European pharmaceutical market while expanding the capabilities of sites from China is paying off as we are close to achieving several clinical and corporate milestones. I would like to add to Rick's comments on the growth of SciClone, China.
To continue these growth trends in 2008 and beyond we now have over 140 dedicated sales representatives in China, and are expanding our reach beyond the top 500 hospitals into second and third tier cities to continue our double-digit increase in sales for 2008 also.
Looking beyond our successful established sales and marketing capability, our goal for the future remains to build SciClone, China into a fully integrated pharmaceutical company. To broaden our product portfolio we are preparing to launch our second product DCB in China in the second half of this year, and are actively screening additional product with the goal of in-licensing one additional product in 2008.
We are also preparing to file a clinical trial application or CTA to conduct an additional clinical trial for ST07 in China as we continue to build our clinical and regulatory capabilities in this market.
In addition to our valuable asset SciClone, China, we continue to develop our pipeline of late-stage products targeting the US and European pharmaceutical markets.
Moving to Slide 8 I'd like to begin with our lead product candidate thymalfasin. We are excited to report last month promising interim blinded data from a nearly completed Phase 3 hepatitis C trial. This 563 patient trial has a well accepted rigorous protocol to evaluate the triple therapy of thymalfasin, pegylated interferon and ribavirin for the treatment of patients infected with the hepatitis C virus, who have not responded to prior therapy or standard of care, which is pegylated interferon and ribavirin also known are these patients as non responders.
Moving to Slide Nine, as you know the hepatitis C market is a large one with a growing patient population. Currently, there are over 5 million chronically infected hepatitis C carriers in the US and Europe. Of the 160,000 new patients in these markets who try therapy each year, half fail therapy or the current standard of care, which is pegylated interferon and combination of ribavirin. This growing pool of non responder patients has few therapeutic options and thymalfasin is one of the only products in development that specifically targets this large and growing segment of non responder patients. Today, we estimate that this market is already 500,000 patients and it is growing by at least 80,000 non responder patients each year. By our calculations, this large unmet medical need represents a $1 billion plus market opportunity in the US and Europe and thymalfasin can be key components in therapeutic treatment that addresses non responder markets.
For Slide Ten I'd like to spend a minute talking about why we are excited about the interim blinded data from this newly completed Phase 3, from this nearly completed Phase 3 hepatitis C trial. The interim blinded results show that after 48 weeks of therapy, 171 of the 553 patients enrolled in the trial showed and end of treatment response or ETR. Of these 171 patients, 150 have already completed the trial and 54 of those achieved a sustained biologic response or SBR at week 72. This is important because achieving a SBR is considered a cure for hepatitis C virus and is also the primary end point of this Phase 3 trial. Looking at the remaining 21 patients, who showed an ETR at week 48, 19 of those have reached the first full up period at week 60. And of these, 12 have tested negative for HCBRNA and two have not yet reached week 60.
Also these are interim blinded results and, therefore, we do not know which patients achieving SBR bearing the treatment versus control group, we are very encouraged by the trends from this
Looking at Slide 11, by our calculations, the 54ser’s in 12 patients showing negative HTB RNA are 60. We could potentially have 65, or about 12% of the total patients enrolled in the trial, when we complete the trial this summer.
Since half of all our patients are randomized in the treatment arm, and the other half are randomized in the control arm, that percentage would be about 23%, if all of the SERs that we found were in the treatment arm. This obviously is not realistic, but one could assume that we've seen our trial something similar to what historical controls show. With those being between 3 and 8%, we estimate the range of possible results for the treatment arm could be between 15 and 20%.
We've shown in Slide 12 a range of potential outcomes for both the treatment and control group. In view of how treatment success in HTB evolved, frequently in increments of less than 10% of TR improvement, the final results with thymalfasin have the potential to offer an important therapeutic advance for Hepatitis C, non-responsive patient.
Turning to Slides 13, if the final results of the current European Phase 3 trial confirm these SER rates, we plan to use this data, together with this data from a small triple therapy pilot study and the results from the previous studies, which were conducted using duo therapy, without the use of ribavirin, which showed a positive trend, or so they did not reach statistical significance, as the basis for a regulatory filing as early as in the first quarter of 2009.
This significant data will be complemented with the safety information from over 1,000 patients in the US and Europe, and over 50,000 patients treated in China. Alternatively, we may choose to initiate a second Phase 3 triple therapy trial in the first quarter of 2009, should an additional regulatory trial be necessary for FDA and EMEA approval.
In addition to thymalfasin's development as an HTV therapeutic, we continue to evaluate thymalfasin for malignant melanoma indication. Last year, we reported results showing that thymalfasin met its primary endpoint in a large Phase 2 malignant melanoma trial.
As this trial was completed, our Melanoma Advisory Board recommended we request a special protocol assessment, or SPA, from the FDA based on the favorable Phase 2 result. We have looked at the optimal design of a Phase 3 malignant melanoma trial, and a market potential for melanoma therapeutics.
Considering we are indiscernible] months away from a Phase 3 Hepatitis C result, we have decided to wait until these results are confirmed before finalizing our plans for a Phase 3 trial for thymalfasin in melanoma.
Turning to our next development candidate SCV-07. As shown on Slide 15, for those who are watching that we are close to completing a Phase 2 proof of concept study and look forward to reporting data at mid year. After completing this trial we plan to file at CTA in China in the second half of this year and conduct an additional trial for SCV-07 for SciClone China leveraging our capabilities and the cost effective infrastructure of conducting clinical trials in this market.
Our third development candidate RP101, which we are currently developing for the treatment of pancreatic cancer was granted oral drug designation by the FDA, which allows us a seven-year period of market exclusivity should RP101 be approved.
We believe RP101 a novel nucleocyte analog which may act to enhance therapeutic affect of chemotherapy has the potential to make a substantial difference in the life of people with pancreatic cancer. We are pleased that we have dosed the first patient in a Phase 2 trial in pancreatic cancer. The RP101 clinical trial is a multi-sensor, randomized and placebo-controlled one and we plan to enroll a total of 153 pancreatic cancer patients by the first half of next year.
The goal of this trial is to evaluate RP101 as an additive therapy to cisplatin the standard of care in treating patients diagnosed with pancreatic cancer, one of the most deadly forms of cancer. There is a significant unmet medical need for pancreatic cancer patients as their overall median survival is currently only four to six months.
Patients with advanced stages of pancreatic cancer are typically treated with chemotherapeutic agents such as cisplatin alone or with other additive therapeutics with minimal increases in overall survival. We are encouraged by RP101's early clinical data showing the potential to increase patient survival and we estimate the market potential for this compound as a cancer therapeutic could reach $500 million.
As you can see it's a busy and productive time for SciClone. Moving forward we expect to report results from the nearly completed Phase 3 Hepatitis C triple therapy trial in the third quarter of 2008. Reported results from our Phase 2 Hepatitis C trial for SCV-07 in the first half of '08 and fully enroll our Phase 2 pancreatic cancer trial for RP101 in the first half of 2009.
For SciClone China we plan to grow SciClone China's revenues by a double-digit rate for 2008, launch DCBs in China the second half of 2008 , file a TTA for SCV-07 in the second half of this year and in license some additional products for China during the year. We look forward to keeping your informed as we reach this milestone. We strive, the value of our business and advance as close to our corporate goal targeting US, European and Chinese pharmaceutical markets. At this time we would like to open the call for questions. Israel Rios, our Chief Medical Officer has joined us for the Q&A portion of this call. In the interest of time and to ensure that everyone has an opportunity to participate, please limit your questions to one or two at most. If you have any additional questions you may re-queue. Sean?

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