10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2014

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .  

Commission file number 0-19825

SciClone Pharmaceuticals, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	94-3116852
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
950 Tower Lane, Suite 900 Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

(650) 358-3456

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.001 par value	The NASDAQ Stock Market LLC.
(Title of Class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ☐   No   ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   ☐   No   ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ☒   No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ☒   No   ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one): 

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐   No   ☒

The aggregate market value of the voting stock held by non-affiliates of SciClone Pharmaceuticals, Inc. was approximately $268,337,000 as of June 30, 2014, based upon the closing price of SciClone Pharmaceuticals Inc.’s Common Stock on The NASDAQ Global Select Market on such date. Shares of Common Stock held by each executive officer and director have been excluded from the calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of March 4, 2015, 50,056,030shares of the Registrant’s Common Stock, $0.001 par value, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference from the definitive proxy statement for the Company’s 2015 Annual Meeting of Stockholders to be filed with the Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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TABLE OF CONTENTS

		PAGE NO.
PART I.
Item 1.	Business		3
Item 1A.	Risk Factors		14
Item 1B.	Unresolved Staff Comments		34
Item 2.	Properties		34
Item 3.	Legal Proceedings		35
Item 4.	Mine Safety Disclosures		36
PART II.
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		37
Item 6.	Selected Financial Data		39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		55
Item 8.	Financial Statements and Supplementary Data		56
	Reports of Independent Registered Public Accounting Firms		57
	Consolidated Balance Sheets		59
	Consolidated Statements of Income		60
	Consolidated Statements of Comprehensive Income		61
	Consolidated Statements of Stockholders’ Equity		62
	Consolidated Statements of Cash Flows		63
	Notes of Consolidated Financial Statements		64
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		89
Item 9A.	Controls and Procedures		89
Item 9B.	Other Information		90
PART III.
Item 10.	Directors, Executive Officers, and Corporate Governance		90
Item 11.	Executive Compensation		91
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		91
Item 13.	Certain Relationships and Related Transactions, and Director Independence		91
Item 14.	Principal Accountant Fees and Services		91
PART IV.
Item 15.	Exhibits, Financial Statement Schedules		91
Signatures			97

As used in this Annual Report, the terms “we,” “us,” “our,” the “Company” and “SciClone” mean SciClone Pharmaceuticals, Inc. and its subsidiaries (unless the context indicates a different meaning). SciClone, the SciClone logo and ZADAXIN are registered US trademarks and SCV-07 is a trademark of SciClone Pharmaceuticals, Inc. All other Company names and trademarks included in this Annual Report are trademarks, registered trademarks or trade names of their respective owners.

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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 of current or anticipated products; the sufficiency of our resources to complete clinical trials and other new product development initiatives; government regulatory actions that may affect product reimbursement, product pricing or otherwise affect the scope of our sales and marketing; the timing and outcome of clinical trials; prospects for ZADAXIN® and our plans for its enhancement and commercialization as well as our expectations regarding other products; future size of the hepatitis B virus (“HBV”) and hepatitis C virus (“HCV”) and other markets, particularly in China; research and development and other expense levels; the ability of our suppliers to continue financially viable production of our products; cash and other asset levels; the allocation of financial resources to certain trials and programs, and the outcome and expenses related to litigation and regulatory investigations. 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 Annual Report on Form 10-K. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

PART I

Item 1.Business

Overview

SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is a United States (“US”)-headquartered, China-focused, specialty pharmaceutical company with a substantial commercial business and a product portfolio of therapies for oncology, infectious diseases and cardiovascular disorders. We are focused on continuing to grow our revenue and profitability in the future. Our business and corporate strategy is focused primarily on the People’s Republic of China (“China”) where we have built a solid reputation and established a strong brand through many years of experience marketing our lead product, ZADAXIN(thymalfasin). In addition, we have an established product promotion business model with large pharmaceutical partners and we are focused on establishing profitability in all of these collaborations. We believe our sales and marketing strengths position us to benefit from the long-term expansion of the pharmaceutical market in China. This pharmaceutical market currently ranks third among the global pharmaceutical markets, and we believe China will rank second among global pharmaceutical markets by 2020. We seek to expand our presence in China and increase revenues by growing sales and profits of our current product portfolio, launching new products from our development pipeline, adding new, profitable product services agreements and leveraging our strong cash position to in-license additional products.

We operate in two segments which are generally based on the nature and location of our customers: 1) China and 2) the Rest of the World, which includes our US and Hong Kong operations.

We have two categories of revenues: “product sales revenues” and “promotion services revenues.” Our product sales revenues result from our proprietary and in-licensed products, including our lead product, ZADAXIN; Aggrastat®an intervention cardiology product launched in China in 2009 in-licensed from Cardiome Pharma Corp; and products from Pfizer International Trading (Shanghai) Ltd. (“Pfizer”). ZADAXIN has the highest margins in our portfolio as it is a premium product sold exclusively by SciClone. In addition, we anticipate that new marketed products, when and if introduced, can increase the future revenues and profitability of our pharmaceutical business in China over the coming years. Our “promotion services revenues” result from fees we receive for exclusively promoting products under services agreements with certain pharmaceutical partners including Baxter International, Inc. (“Baxter”) in China. We refer to these agreements as promotion agreements, service agreements and distribution contract rights agreements. We recognize promotion services revenues as a percentage of our collaborators’ product sales revenue for these exclusively promoted products. Over time, as additional proprietary or in-licensed products come to the market, we aim to shift our product mix towards those products providing higher margin for us.

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Our promotion agreements with Sanofi Aventis S.A. (“Sanofi”), consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. Our revenues for the years ended 2014, 2013, and 2012 with Sanofi were approximately $0.2 million, $25.0 million, and $30.8 million, respectively. Effective July 14, 2014, we entered into a settlement agreement with Sanofi related to promotion fees due to our subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”), and in August 2014, NovaMed Shanghai received approximately 22 million Chinese Yuan Renminbi (“RMB”) (approximately $3.5 million) as final payment from Sanofi. For further information related to this matter refer to “Results of Operations” “Revenues.”

ZADAXIN is approved in over 30 countries and may be used for the treatment of HBV, HCV, and certain cancers, and as a vaccine adjuvant according to the local regulatory approvals we have in these countries. In China, thymalfasin is included in the treatment guidelines issued by the Ministry of Health (“MOH”) for liver cancer, as well as guidelines for treatment of chronic HBV (issued by both the Chinese Medical Association and the Asian-Pacific Association for the Study of the Liver) and invasive fungal infections of critically ill patients (issued by the Chinese Medical Association). Our sales force is focused on increasing sales to the country’s largest hospitals (class 3A with over 500 beds) as well as mid-size hospitals (class 2A). These hospitals serve Tier 1 and Tier 2 cities located mostly in the eastern part of China, which are the largest and generally have the most affluent populations. We are widening our market strategies by targeting numerous smaller hospitals as well as hospitals in more rural areas. We are also seeking to expand the indications for which ZADAXIN could be used, including sepsis.

In August 2014, we along with our partner BTG plc (“BTG”) announced that the China Food and Drug Administration has approved the registration of DC Bead®for the embolization of malignant hypervascularized tumors. DC Bead may be used to treat liver cancer, a large and growing indication in China, and we believe our oncology sales team and academic marketing liaisons have established high quality relationships with medical professionals and institutions that specialize in cancer treatment, which we believe will be a valuable asset as we prepare for commercial launch of DC Bead, anticipated in the first half of 2015. BTG and SciClone previously entered into an agreement granting SciClone exclusive licensing and distribution rights to DC Bead in China. Under the agreement, we will purchase product from BTG at a specified price for sale in China.

We are also pursuing the registration of several other therapeutic products in China. These include: Loramyc®, a mucoadhesive tablet formulation of miconazole lauriad to treat oropharyngeal candidiasis; and RapidFilm®, an oral film formulation of ondansetron to treat nausea induced by chemotherapy.

In June 2013, we renewed our promotion agreement with Baxter for a 5-year term, through December 2017. In July 2014, we renewed our product distribution agreement with Pfizer for a 5-year term, through June 2019. We continue to seek in-licensing arrangements for well-differentiated products at various stages of development that if not yet approved, have a defined regulatory approval pathway in China. Our objective is to in-license products that provide us with higher margins, augmenting our product sales revenue and profitability, and we continue to explore opportunities to optimize our promotion services revenues.

In December 2014, we entered into a strategic partnership for two cardiovascular products in China. The partnership includes an agreement granting SciClone a license and the exclusive rights in China to promote two products of The Medicines Company including 1) Angiomax®(bivalirudin) for Injection, an anticoagulant indicated in patients undergoing percutaneous coronary intervention (PCI) with provisional use of glycoprotein IIb/IIIa inhibitor (GPI) and in patients with, or at risk of, heparin-induced thrombocytopenia and thrombosis syndrome undergoing PCI for which a Phase 3 registration trial was completed in China and is currently under review by the China Food and Drug Administration for marketing approval, and 2) Cleviprex®(clevidipine) Injectable Emulsion, a third-generation dihydropyridine calcium channel blocker indicated for the reduction of blood pressure when oral therapy is not feasible or desirable for which a clinical trial application (CTA) for China was filed in 2013. Under the terms of the agreement, we will be responsible for all aspects of commercialization, including pre-and post-launch activities, for both products in the China market (excluding Hong Kong and Macao). We have also agreed to participate in the China registration process for both products. Financial terms of the agreement, in addition to net sales royalties payable to The Medicines Company, include the following additional payments to The Medicines Company: an upfront payment; a project support services fee; and regulatory/commercial success milestone payments of up to an aggregate of $50.5 million.

In May 2013, we entered into a framework agreement with Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”) for the exclusive promotion, marketing, distribution and sale of NeucardinTM in China, Hong Kong and Macao. Neucardin is a novel, first-in-class therapeutic for the treatment of patients with intermediate to advanced heart failure, for which a New Drug Application

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(“NDA”) was submitted to and accepted for review by the China Food and Drug Administration (“CFDA”) in 2012. The CFDA subsequently informed Zensun that its Phase 2 data is insufficient, and has asked Zensun to submit a new NDA once the ongoing Phase 3 study reached its endpoints. In 2014, we loaned Zensun a total of approximately $4.75 million under two separate loan agreements pursuant to the terms of the framework agreement (refer to Note 6 to the consolidated financial statements appearing under Part II, Item 8).

In June 2013, we entered into a license agreement with Taiwan Liposome Company (“TLC”) which granted us a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell ProFlow®  for the treatment of peripheral arterial disease (“PAD”) and other indications. PAD is a serious cardiovascular condition in which blood flow to the limbs (usually the legs) is restricted due to arterial plaque build-up. Under the terms of the agreement, TLC will be responsible for the continued development including potential clinical trials and regulatory activities, as well as the manufacture and supply of ProFlow, and we will be responsible for all aspects of commercialization including pre-and post-launch activities. The agreement provides for the principal terms of the arrangement between SciClone and TLC, and in March 2014, the companies entered into a supplemental collaboration and license agreement.TLC was recently notified by the CFDA that ProFlow did not receive clinical trial approval and TLC is in the process of appealing the decision.

The US Securities and Exchange Commission (“SEC”) and the US Department of Justice (“DOJ”) are each conducting formal investigations of SciClone regarding a range of matters including the possibility of violations of the Foreign Corrupt Practices Act (“FCPA”). In response to these matters, the Company’s Board of Directors appointed a Special Committee of independent directors (the “Special Committee”) to oversee the Company’s response to the government inquiry. The Special Committee has undertaken independent investigations as to matters reflected in and arising from the SEC and DOJ investigations in order to evaluate whether any violation of the FCPA or other laws occurred. The Company will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations. These continuing investigations could result in administrative orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil or criminal sanctions against us or certain of our officers, directors and/or employees. We cannot predict what the outcome of those investigations will be, or the timing of any resolution.However, we previously determined that a payment of at least $2.0million to the government in penalties, fines and/or other remedies is probable. Accordingly, we recorded $2.0million of operating expense in our fourth quarter 2013 results of operations to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. We have monitored developments in the investigations since that time and have not determined that any further adjustments to the estimated loss are both probable and reasonable estimable. Any actual fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could materially differ and could be higher than the amount of the $2.0 million estimated loss and could materially impact our financial statements. We will re-assess the potential liability each quarter and may adjust our estimates accordingly in future periods if we determine that a different amount is both probable of being incurred and is reasonably estimable. Refer to Part II, Item 8, Note 19 “Contingencies” to the consolidated financial statements and Part I, Item 3 “Legal Proceedings” in this Form 10-Kfor further information regarding the investigations.

BUILDING A LEADING INTERNATIONAL PHARMACEUTICAL BUSINESS

Our Established Business in China

In China, we have established product revenue and positive cash flow. We are committed to building on this base and introducing additional pharmaceutical products to meet the country’s evolving healthcare needs. China state leaders are continuing to implement a health care reform plan which, among other things, is seeking to expand patient access to pharmaceuticals. We believe the China pharmaceutical market may grow approximately 12 to 15% annually over the next several years.

We launched ZADAXIN in China in 1996 and by 2014 our annual worldwide sales of this product reached more than $126 million, 96% of which were sales to China. Today, ZADAXIN is one of the largest imported pharmaceutical products in China, measured by revenue. We estimate our market share of thymalfasin by units is approximately 14%. Over the last decade, we have established a sales and marketing organization and strong importation relationships with distribution channels that have facilitated strong growth in sales, and profitability, and substantial cash flow. Through our extensive China sales organization of approximately 540 professionals including approximately 430 sales personnel, we believe we have developed a good reputation and relationships with physicians and administrators. We serve approximately  2,000 hospitals with approximately 300 of the largest hospitals in the

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major cities in China contributing approximately 80% of our business. We have built a strong commercial presence in liver disease, cancer and the intensive care setting. We are expanding geographically in China to position the Company for further growth. ZADAXIN has strong brand recognition and is positioned as a high-quality, imported product. ZADAXIN is approved in China for the treatment of HBV and for use as a vaccine adjuvant. It is also included in the treatment guidelines issued by the MOH for liver cancer. In China, orders for ZADAXIN are filled largely by distributors and sub-distributors which purchase ZADAXIN from our selected, established, government-licensed importing agents.

China accounted for approximately 97% of our net revenues for each of the years ended December 31, 2014, 2013, and 2012. In 2014, Sinopharm Holding Hong Kong Co. Ltd. (“Sinopharm”) accounted for 94% of our net revenues. In 2013, Sinopharm and Sanofi accounted for 75% and 20% of our net revenues, respectively. In 2012, Sinopharm, Sanofi and Jian Wei Trading Company accounted for 59%, 20% and 12% of our net revenues, respectively. Sinopharm accounted for a larger percentage of our net revenue in 2014 and 2013 compared to 2012 as a result of our agreement granting certain exclusive importation rights to Sinopharm for ZADAXIN. No other customers accounted for more than 10% of our net revenues in those periods. As of December 31, 2014, approximately $38.9 million or 94% of our gross accounts receivable were attributable to Sinopharm.

The Chinese government is continuing its efforts to reduce overall health care costs, including pricing controls on pharmaceutical products. Individual provinces in China and, in some cases, individual hospitals can and have established pricing requirements for a product to be included on formulary lists. In some cases, these prices have been significantly lower than our distributors have been selling ZADAXIN, in which case we have been removed from formulary lists, which consequently has reduced sales to certain hospitals and could adversely affect our future sales. The price for pharmaceutical products is regulated in China both at the national and at the provincial level. The process and timing for price restrictions is unpredictable. In addition, we are aware that ZADAXIN may be used on an off-label basis, and the Chinese government’s pricing, reimbursement or other actions might reduce such uses.

International Sales and Marketing

ZADAXIN is approved in over 30 countries, primarily in China and countries in the Pacific Rim, Latin America, Eastern Europe, and the Middle East regions. ZADAXIN’s approvals are principally for the treatment of HBV and as a vaccine adjuvant, with additional approvals in certain countries for the treatment of HCV, or as a chemotherapy adjuvant for cancer patients with weakened immune systems. We sell ZADAXIN in various international markets through our wholly owned subsidiary, SciClone Pharmaceuticals International Ltd. (“SPIL”).

SPIL is registered in the Cayman Islands and its principal office is in Hong Kong. SPIL orders ZADAXIN from our European manufacturer and contracts with a third party for the storage of our finished goods inventory at warehousing facilities in Hong Kong. SPIL then distributes our product worldwide from these warehousing facilities based on purchase orders from our customers. Under our established distribution arrangements, local importers and distributors are responsible for the importation, inventory, distribution and invoicing of ZADAXIN after importation.

Product sales of $126.1 million, $96.3 million, and $112.2 million, for the years ended December 31, 2014, 2013, and 2012, respectively, were from sales of ZADAXIN.

SciClone’s Lead Product ZADAXIN (Thymalfasin)

ZADAXIN is SciClone’s synthetic preparation of thymalfasin, scientifically referred to as thymosin alpha 1, a thymic peptide which circulates in the blood naturally and is instrumental in the immune response to certain cancers and infections. Published scientific and clinical studies have shown that thymalfasin helps to stimulate and direct the body’s immune response to eradicate infectious diseases, such as HBV, HCV, bacterial, and fungal infections; to fight certain cancers such as melanoma and liver cancer; and to enhance response to vaccines. 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. Acting on intracellular signaling pathways, thymalfasin increases the Th1 subset of T-helper cells that assist with fighting invading viruses and cancers and leads to a boost in production of antibodies in

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response to vaccines. Thymalfasin 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, and stimulates several other components of the immune response that help the body attack and kill virally-infected or tumor cells.

Thymalfasin for Treatment of Sepsis

Clinical trials have shown that thymalfasin improves survival in patients in intensive care units being treated for sepsis from severe bacterial infections. One publication describes the results from a large, multicenter, single-blind, randomized, and controlled trial in 361 subjects in China. This study showed that the 28-day mortality from any cause was 26% in the ZADAXIN group, versus 35% in the control group, an effect that is clinically important (p = 0.062 non-stratified analysis, p = 0.049 log-rank). Greater improvement in the biomarker HLA-DR was also seen in subjects treated with ZADAXIN (p = 0.037). No serious drug-related adverse events were recorded. These data support the usefulness of ZADAXIN in treating severe sepsis.

Thymalfasin for Enhancement of Response to Vaccine

Clinical trials have demonstrated that thymalfasin increases response to influenza and hepatitis B vaccines in the elderly and in hemodialysis patients. In elderly subjects, thymalfasin was also shown to decrease the incidence of influenza from 19% in subjects given an influenza vaccine alone, to 6% in subjects receiving thymalfasin treatment in addition to the influenza vaccine. For these clinical trials, the treatment regimen involved 8 to 10 injections of 1.6 mg doses of thymalfasin. A clinical study conducted in 2009/2010 by Sigma-Tau Finanziaria, S.p.A. in Italy, however, showed that a higher dose of thymalfasin (3.2 or 6.4 mg) given only twice (seven days prior to vaccination and on the day of vaccination) was also effective. ZADAXIN in treatment led to a statistically significant increase in the percent of subjects who seroconverted to the H1N1 vaccine (MF59 adjuvanted monovalent vaccine, Focetria™ from Novartis), and an increase in total titers, when measured at 21 or 42 days after vaccination. While this effect was no longer seen at time points 84 and 168 days after vaccination, the enhancement effect of ZADAXIN provided a significant enhancing effect in the critical first six weeks following vaccination. These promising data further support the utility of thymalfasin for use in vaccine enhancement.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Patents

We seek regulatory approval for our products in disease areas with high unmet medical need, significant market potential and where we have a proprietary position through patents covering use, manufacturing process, or composition of matter for our products. For our lead product ZADAXIN, we are the licensee or owner of patents and patent applications relating to thymalfasin and its use for a number of diseases. In particular, we are the licensee or owner of patents and applications in the US or China that are directed to thymalfasin therapy for the treatment of hepatitis B and/or hepatitis C as a monotherapy or in combination with other therapeutics, including drugs with or without regulatory approval for marketing. In China, patent number ZL99811382.4 has been granted for ZADAXIN for Chronic Hepatitis B that expires in 2019. In addition, we are the licensee or owner of several patents and applications in the US and internationally that are directed to thymalfasin therapy for vaccine enhancement. The expiring patent terms for issued or to be issued patents are from 2025 to 2030. We are also the licensee or owner of several applications in China that are directed to thymalfasin therapy for the treatment of melanoma. The expiring patent term for these patents, if issued, is 2028. We are also the licensee or owner of patents in the US and China that are directed to thymalfasin therapy for reducing side effects of chemotherapy. The expiring patent terms for these issued patents are from 2020-2021. We have also applied for patents in the US and internationally that are directed to thymalfasin therapy for the treatment of severe sepsis and acute infection, as well as more specific patents for certain infections such as Aspergillus and severe acute respiratory syndrome (“SARS”). In addition, we have issued patents in the US and China directed to thymalfasin conjugates. We have also applied for patents in the US and internationally that are directed to thymalfasin therapy for Purulent rhinosinusitis.

With respect to our issued patents in the US and Europe, we are also entitled to obtain a patent term extension to extend the patent expiration date. For example, in the US, we can apply for a patent term extension of up to five years for one of the patents

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covering ZADAXIN if ZADAXIN is approved by the FDA. The exact duration of the extension depends on the time we spend in clinical trials as well as getting a new drug application approval from the FDA.

Proprietary Rights

In addition to patent protection, we intend to use other means to protect our proprietary rights. We may pursue marketing exclusivity periods that are available under regulatory provisions in certain countries, including the US, Europe, Japan, and China. For example, if we are the first to obtain market approval of a product, e.g., thymalfasin in the US, we would expect to receive at least five years of market exclusivity.

Furthermore, orphan drug exclusivity has been or may be sought where available. Such exclusivity has a term of seven years in the US and 10 years in Europe. We have obtained orphan drug designation for thymalfasin for the treatment of malignant melanoma and chronic hepatitis B in the US and for the treatment of hepatocellular carcinoma in the US and in Europe. We have filed trademark applications worldwide for ZADAXIN and other trademarks that appear on our commercial packaging and promotional literature. Copyrights for the commercial packaging may prevent counterfeit products or genuine but unauthorized products from entering a particular country by parallel importation. Brand and trademark protection are particularly important to us in China. We have implemented anti-counterfeiting measures on commercial packaging and we have registered the packaging with customs departments in countries where such procedures exist. We rely upon trade secrets, which we seek to protect in part by entering into confidentiality agreements with our employees, consultants, corporate partners, suppliers, and licensees.

MANUFACTURING

ZADAXIN is manufactured for us in Europe by third parties under exclusive contract manufacturing and supply agreements. We closely monitor production runs of ZADAXIN and conduct our own quality assurance audit programs. We believe the manufacturing facilities of our contract suppliers are in compliance with the FDA’s current Good Manufacturing Practices (“GMP”), and European equivalents of such standards. In order to sell ZADAXIN to the licensed importers in China, our manufacturers must 1) be approved by the Italian Ministry of Health (“AIFA”) and 2) be accepted by the CFDA, the Chinese regulatory agency, and we must obtain an Imported Drug License from the CFDA permitting the importation of ZADAXIN into China. The license must be renewed every five years, and our next renewal will be required in December 2017. If we change manufacturers, these changes must 1) be approved by AIFA in Italy and 2) be accepted by the CFDA, and we must obtain a new Imported Drug License from the CFDA.

In the event of the termination of an agreement with any single supplier, we believe that we would be able to enter into arrangements with other suppliers with similar terms. We do not intend at this time to acquire or establish our own dedicated manufacturing facilities for any of our products. We believe that our current manufacturing partners for ZADAXIN have enough manufacturing capacity to meet potential market demand. We also believe that our current manufacturing partners in Europe for our other drugs and drug candidates will be able to meet our clinical trial needs and market demand.

COMPETITION

Our competition for sales of ZADAXIN in China is primarily from generic drug manufacturers located in China that sell their product at lower prices. We compete with them based on our reputation as a provider of high quality products, including the fact that our products are produced at US and western European GMP facilities.

Our competitors for existing and future products include pharmaceutical companies, biotechnology firms, universities and other research institutions, in the US, China and other territories, that are actively engaged in research and development or marketing of products in the therapeutic areas we are pursuing. We believe that the principal competitive factors in this industry for a marketed drug include the efficacy, safety, price, therapeutic regimen, manufacturing, quality assurance and associated patents and the capabilities of its marketer.

Most of our competitors, particularly large pharmaceutical companies, have substantially greater financial, technical, regulatory, manufacturing, marketing and human resource capabilities than ours. Most of them also have extensive experience in undertaking the

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preclinical and clinical testing and in obtaining the regulatory approvals necessary to market drugs. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated with our competitors.

For the treatment of HBV, current therapies being marketed by competitors include interferon alpha, in standard and pegylated forms, nucleoside analogues, such as lamivudine and entecavir, and nucleotide analogue adefovir. In addition to these products, in our largest market, China, ZADAXIN faces competition from other synthetic and generic biological extracts that are locally manufactured and significantly lower priced.

Future clinical trials may or may not show ZADAXIN or our other products in the market or in development to have advantages or value over such existing or future competitive products.

Aggrastat, an interventional cardiology product, has proven to be effective in improving the results of primary coronary angioplasty in patients with myocardial infarction. There are about five generic versions of the product available in China.

RESEARCH AND DEVELOPMENT

Research and development (“R&D”) expenses consist of independent R&D costs relating to the conduct of clinical trials and costs associated with in-licensing arrangements. R&D expenses were $14.6 million, $8.0 million, and $5.1 million, for the years ended December 31, 2014, 2013, and 2012, respectively. During 2014 and 2013, R&D expenses included $11.0 million and $5.0 million, respectively, related to upfront payments made under our in-license arrangements.

EMPLOYEES

As of December 31, 2014, we had approximately 570 employees: approximately 540 in China, approximately 20 in the US, and approximately 10 in other countries. From time to time, we engage the services of consultants worldwide with pharmaceutical and business backgrounds to assist in our product development and commercialization activities.

GOVERNMENT REGULATION

Regulation by governmental authorities in the US, China and other foreign countries is a significant factor in the manufacturing and marketing of our products, as well as in ongoing research and development activities and in pre-clinical and clinical trials and testing related to our products. Our products in clinical development in the US, China and other foreign countries are subject to approval by the FDA, the CFDA and similar regulatory authorities.  Manufacturing establishments are subject to inspections by regulatory authorities at the federal, state and local level and must comply with current GMP as established in various jurisdictions. In complying with GMP standards, manufacturers must continue to expend time, money and effort in the area of production and quality assurance to ensure ongoing full technical compliance. We also conduct a separate review of products on an ongoing basis to test and maintain compliance with GMP standards.

China

In China, the pharmaceutical industry is subject to extensive government regulation and supervision. The regulatory framework addresses all aspects of operating in the pharmaceutical industry, including approval, pricing, re-imbursement, production, licensing and certification requirements and procedures, periodic renewal and reassessment processes, registration of new drugs and environmental protection.

The CFDA is the authority that monitors and supervises the administration of pharmaceutical products and medical appliances and equipment as well as food, health food and cosmetics in China. The primary responsibilities of the CFDA include:

· formulating administrative rules and policies concerning the supervision and administration of food, health food, cosmetics and the pharmaceutical industry;

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· evaluating, registering and approving of new drugs, generic drugs, imported drugs and traditional Chinese medicine;

· approving and issuing permits for the manufacture and export/import of pharmaceutical products, medical appliances and equipment and approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; and

· examining and evaluating the safety of food, health food and cosmetics and handling significant accidents involving these products.

The MOH is an authority at the ministerial level under the State Council and is primarily responsible for national public health and has administrative responsibility for the CFDA. The MOH performs a variety of tasks in relation to the health industry such as establishing social medical institutes, promulgating national regulations, and producing professional codes of ethics for public medical personnel. The MOH is also responsible for international issues, such as those pertinent to foreign companies and governments.

Drug Administration Laws and Regulations

The China Drug Administration Law and related regulations provide the legal framework for the establishment of pharmaceutical manufacturing enterprises, and pharmaceutical trading enterprises, and for the administration of pharmaceutical products, including the development and manufacturing of new drugs, the import of pharmaceuticals and the regulation of packaging, trademarking and advertising of pharmaceutical products in China.

Permits and Licenses for Importation, Manufacturing and Registration of Drugs

Imported Drug License. Our strategy to date has been to seek approval for the import into China of drugs approved in other markets. We must obtain an Imported Drug License from the CFDA to import a pharmaceutical product into China.

To qualify to receive an Imported Drug License from the CFDA, each manufacturing establishment must be registered with the FDA or European (“EMA”) regulatory authorities where the product is registered for sale and listed on the Certificate of Pharmaceutical Product (“CPP” or Country of Origin Approval). In general, the CFDA also requires that an imported drug must also have country of origin approval for the same indication for which an Imported Drug License is applied.

As a result, in order to obtain and maintain an Imported Drug License in China, we or our partners must also meet the regulatory requirements for the country of origin of the pharmaceutical products we import, or are seeking to import, into China.

The process for applying for and obtaining an Imported Drug License can be protracted and uncertain. In addition to the submission of clinical data from trials outside China, the CFDA may require additional clinical data, including from studies in China, and it may conduct its own inspection and testing of manufacturing facilities and of finished product. An Imported Drug License needs to be renewed every five years. Further, if the manufacturer of the pharmaceutical product changes, an additional approval is required from the CFDA, and approval will also have to be obtained in the country from which the product is imported.

For ZADAXIN, the CPP is in Italy, and was issued by the AIFA. The named manufacturer of ZADAXIN is Patheon Italia S.p.A. Aggrastat received European approval in 1998 under the Mutual Recognition Process (“MRP”) for countries in Europe (including Germany, Italy, Spain, Netherlands, Finland, Sweden, Greece, Portugal, United Kingdom, Ireland, Austria, Belgium, Luxembourg and France). Aggrastat is manufactured in Finland by Orion Corporation. We and our partners need to maintain these approvals.

China requires that products with an Imported Drug License be imported through approved importing agents. At each port of entry, prior to moving the product forward to the distributors, government-licensed importing agents must process and evaluate each shipment to determine whether such shipment satisfies China's quality control requirements.

GMP Certificates.  Our current products and our clinical candidates in China are all manufactured outside China and are subject to GMP standards in the country in which they are manufactured. Our manufacturers are subject to site inspections by the regulatory authorities in the jurisdictions in which they are located. The issuance and renewal of an Imported Drug License is dependent, among

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other things, upon maintaining manufacturing standards that comply with the GMP standards of a widely recognized regulatory authority, such as the FDA or EMEA.

If we were to manufacture product in China, or obtain product from Chinese contract manufacturers, such manufacturing would be subject to similar GMP standards established in China and administered by local authorities.

Distribution of Pharmaceutical Products

According to the China Drug Administration Law and related regulations, a manufacturer of pharmaceutical products in China can only engage in the trading of the pharmaceutical products that the manufacturer has produced itself. In addition, such manufacturer can only sell its products to:

· wholesalers and retailers holding pharmaceutical trading permits;

· other holders of pharmaceutical manufacturing permits; or

· medical practitioners holding medical practice permits.

A pharmaceutical manufacturer in China is prohibited from selling its products to end-users, or individuals or entities other than holders of Pharmaceutical Trading Permits, the pharmaceutical manufacturing permits or the medical practice permits.

A pharmaceutical distributor (including wholesalers and retailers) must satisfy requirements as to: personnel with pharmaceutical expertise, appropriate warehousing and sanitary environments compatible with the distributed pharmaceutical products; quality management and compliance with regulations to ensure the quality of the distributed pharmaceutical products. Operations of pharmaceutical distributors must be conducted in accordance with the Pharmaceutical Operation Quality Management Rules and require a certificate from the CFDA. Pharmaceutical distributors must comply with record-keeping requirements regarding the products sold.

Price Control and Competitive Bidding

The control of prices of pharmaceutical products in China is vested in the national and provincial price administration authorities. Depending on the categories of pharmaceutical products in question and the prices of pharmaceutical products listed in the State Basic Medical Insurance and Work Injury Insurance National Essential Reimbursement Drug List, as amended (“Catalogue”), drugs with patents and other drugs whose production or trading may constitute monopolies are subject to the control of the National Development and Reform Commission (“NDRC”) of China and the relevant provincial or local price administration authorities. For pharmaceutical products manufactured or imported into China, the national price administration authority from time to time publishes price control lists specifying pricing ceilings for specific pharmaceuticals. The Ministry of Human Resources and Social Security (“MOHRSS”), together with other government authorities, determine which medicines are to be included in or removed from the Catalogue for the national medical insurance program and under which category a medicine should fall, both of which affect the amounts reimbursable to program participants for their purchases of those medicines. These determinations are based on a number of factors, including price and efficacy. A national medical insurance program participant can be reimbursed for the full cost of a Category A medicine and 60 to 90% of the cost of a Category B medicine. In November 2009, thymalfasin, the generic chemical name for our pharmaceutical product ZADAXIN, was included as a Category B product in the National Reimbursed Drug List (“NRDL”). The main purpose of the NDRC and the NRDL price control policy is to establish new maximum allowable prices for listed pharmaceutical products which, in many cases, will be below previously established prices, thus lowering the prices for many approved pharmaceutical products. The provincial price administration authorities also publish price control lists for pharmaceutical products. Pursuant to the NDRC and Measures for Medicine Pricing by the Government, the price ceiling is determined by whether drugs are deemed essential drugs and are included on the National Essential Drug List (“NEDL”) or non-essential drugs, which could be included in the NRDL and are subject to price control. Price ceiling determinations include references to the quality of the product, whether the products are newly developed products and whether the products have patent protection in China, and the status of implementing the GMP Guidelines by the manufacturer of the relevant product.

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The prices of pharmaceutical products included in the price control lists are subject to adjustment on approval by the price administration authorities from time to time. Pharmaceutical enterprises in China are required to submit cost-related information, such as raw material prices, regularly to the relevant authorities so that the authorities may take into account the prevailing market conditions when setting the prices. The price administration authorities may approve adjustments to the price of pharmaceutical products upon the pharmaceutical manufacturer’s request if material changes in the cost structure of producing the pharmaceutical products or significant changes in demand for these pharmaceutical products are recognized.

In each province where we market our products, distributors participate in a government-sponsored competitive bidding process every year or every few years for procurement by state-owned hospitals of a medicine included in the provincial medicine catalogs. A government-appointed committee reviews bids submitted by pharmaceutical companies and selects one or more medicines for treatment of a particular medical condition. The selection is based on a number of factors, including whether the product is on the NEDL or the NRDL, bid price, quality and manufacturer’s reputation and service. The bid price of the selected medicine will become the price required for purchases of that medicine by all state-owned hospitals in the relevant province or local district.

Health Insurance System

The MOHRSS is responsible for the reform of the medical insurance system. As part of the reform of the state basic medical insurance system for employees in the urban areas, the MOHRSS, the CFDA and various other governmental departments jointly issue the Catalogue with a view to enhancing the management of the use of drugs under the medical insurance system. The drugs listed in the Catalogue are covered by the national medical insurance program.

Third-Party Reimbursement

Although in China the National Medical Insurance Program is designated as a national program, the implementation of the national medical insurance program is delegated to various provincial governments, each of which has established its own medicine catalog. A provincial government must include all Category A medicines listed in the Catalogue in its provincial medicine catalog, but may use its discretion based on its own selection criteria to add other medicines to, or exclude Category B medicines listed in the Catalogue from, its provincial medicine catalog, so long as the combined numbers of the medicines added and excluded do not exceed 15% of the number of the Category B medicines listed in the Catalogue. In addition, provincial governments may not downgrade a nationally classified Category A medicine to Category B. The total amount of reimbursement for the cost of prescription and over-the-counter medicines, in addition to other medical expenses, for an individual program participant in a calendar year is capped at the amount in that participant’s individual account. The amount in a participant’s account varies, depending upon the amount of contributions from the participant and his or her employer. Generally, program participants who are from relatively wealthier eastern parts of China and relatively wealthier metropolitan centers have greater amounts in their individual accounts than those from less developed provinces.

Our ability to successfully commercialize our products may depend in part on the extent to which coverage and reimbursement to patients will be available from government health care programs, private health insurers and other third-party payors or organizations. Significant uncertainty exists as to the reimbursement status of therapeutic products, such as ZADAXIN or other drugs we may develop. In most of the markets in which we are currently approved to sell ZADAXIN, reimbursement for ZADAXIN under government or private health insurance programs is not yet widely available, and in many of these countries government resources and per capita income may be so low that our products would be prohibitively expensive. We believe that certain sales of ZADAXIN in China are made with some third-party reimbursement. ZADAXIN’s national reimbursement retail list price in China was reviewed by regulatory authorities consistent with the China government’s review of pharmaceutical prices once a product has been included into the NRDL.

Prescription Regulations

As announced by MOH, the Prescription Administrative Measures, regulating prescription of drugs, took effect on May 1, 2007 and stipulates that doctors may only use the generic names of drugs in their prescriptions instead of brand names and that medical

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institutions offer patients the same type of drug from no more than two separate pharmaceutical companies. The purpose of this legislation is to minimize the practice of doctors receiving kickbacks from pharmaceutical companies for prescribing higher priced or unneeded drugs to patients.

US, Europe and Other Countries

The regulatory regime for the approval for drug distribution and marketing in the US and Europe is similar in many respects to the regulatory system in China. The steps required before a new drug may be distributed commercially generally include:

•conducting appropriate pre-clinical laboratory evaluations, including animal studies, in compliance with the FDA's Good Laboratory Practice (“GLP”) requirements, to assess the potential safety and efficacy of the product;

•submitting the results of these evaluations and tests to the FDA in an IND, and receiving approval from the FDA that the clinical studies proposed under the IND are allowed to proceed;

•conducting adequate and well-controlled clinical trials in compliance with the FDA's Good Clinical Practice (“GCP”) requirements that establish the safety and efficacy of the product candidate for the intended use, typically in the same Phase 1, Phase 2 and Phase 3 steps described above for China;

•development of manufacturing processes that conform to FDA current Good Manufacturing Practices, or cGMPs, as confirmed by FDA inspection;

•submitting to the FDA the results of pre-clinical studies, clinical studies, and adequate data on chemistry, manufacturing and control information to ensure reproducible product quality batch after batch, in a New Drug Application (“NDA”) or Biologics License Application (“BLA”); and

•obtaining FDA approval of the NDA, including inspection and approval of the product manufacturing facility as compliant with cGMP requirements, prior to any commercial sale or shipment of the pharmaceutical agent.

After FDA approval has been obtained, the FDA requires post-marketing reporting to monitor the side effects of the drug. This may include phase 4 studies in which the drug is studied in an expanded patient population in a post-approval setting for continued monitoring of safety and sometimes continued efficacy.

We must comply with the regulations of each country in which we seek approval of and intend to market and sell any product.

AGREEMENTS WITH THIRD PARTIES

We hold license, promotion, distribution or marketing agreements with a number of parties for products currently marketed or under development, including an agreement with Biocompatibles UK Ltd (“Biocompatibles”) for the distribution of DC Bead® in China.  We had agreements during 2014 with several companies for the distribution of certain products in China including the following significant agreements. We have additional license agreements with other parties.

MEDA Pharma GmbH & Co. KG (“MEDA”) Agreement. We are party to an agreement with MEDA for various products under development including Tramadol. See Part I, Item 3 “Legal Proceedings” regarding the status of our agreement with MEDA from whom we license Tramadol.

Baxter Agreement. In June 2013, our subsidiary, NovaMed Shanghai, entered into an Amended and Restated Product Promotion Agreement with Baxter Healthcare Trading (Shanghai) Co. Ltd. (“Baxter”) for the distribution of HoloxanTM, MesnaTM, and EndoxanTM in China effective January 1, 2013. Under the agreement, wemarket products from Baxter for sale in China, with a promotion fee specified in the agreement. To maintain our exclusive rights, we must meet certain unit volume requirements. The agreement will expire on December 31, 2017, unless renewed.

Pfizer Agreement. In July 2014, our subsidiary, NovaMed Shanghai, renewed its promotion and distribution relationship with Pfizer International Trading (Shanghai) Ltd. (“Pfizer”) by entering into an Import and Service Agreement for the continued

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distribution of several pharmaceutical products (currently MethotrexateTM, EstracytTM, and FarlutalTM) in China. Under the agreement, we must purchase product from Pfizer for sale in China at prices specified in the agreement. The purchase prices are subject to adjustment in certain circumstances. To maintain our exclusive rights, we must meet certain unit volume requirements. The agreement will expire June 30, 2019.

Correvio LLC Agreement (acquired by Cardiome Pharma Corp. in November 2013).In December 2008, our subsidiary, NovaMed Pharmaceuticals, Inc. (“NovaMed”), entered into a licensing and distribution agreement with Correvio LLC (“Correvio”) for the distribution of Aggrastat™ in China. Under the agreement, we must purchase product from Correvio for sale in China at prices specified in the agreement. The purchase prices are subject to adjustment in certain circumstances. To maintain our exclusive rights, we must meet certain unit volume requirements. The agreement will expire 10 years after the Import Drug License is granted.

Zensun (Shanghai) Science & Technology Co., Ltd. Agreement. In May 2013, our subsidiary, SciClone Pharmaceuticals International China Holding Ltd. (“SciClone China”), entered into an agreement with Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”) granting SciClone China a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell Neucardin™, a novel, first-in-class therapeutic drug for the treatment of patients with intermediate to advanced chronic heart failure (CHF). The agreement provides for the principal terms of the arrangement between SciClone China and Zensun, and the companies have agreed to negotiate a supplemental license and supply agreement.

Taiwan Liposome Company Agreement.  In June 2013, we entered into an agreement with Taiwan Liposome Company (“TLC”) granting us a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell ProFlow® for the treatment of peripheral arterial disease (PAD) and other indications. The agreement provides for the principal terms of our arrangement with TLC, and in March 2014, we entered into a collaboration and license agreement.

The Medicines Company Agreement.  In December 2014, we entered into an agreement with The Medicines Company granting us a license and the exclusive rights in China to promote, market, distribute and sell two cardiovascular products:  Angiomax®, an anticoagulant indicated in certain patients undergoing percutaneous coronary intervention (PCI), and Cleviprex®, a third-generation dihydropyridine calcium channel blocker for the reduction of blood pressure.

Our continued distribution of approved products depends upon the continuation of these agreements and the renewal of the agreements upon expiration.

AVAILABLE INFORMATION

We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

You may obtain a free copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on the day of filing with the SEC on our website on the World Wide Web at http://www.sciclone.com, by contacting the Investor Relations Department at our corporate offices by calling 800-724-2566 or by sending an e-mail message to investorrelations@sciclone.com.

Item 1A.  Risk Factors

You should carefully consider the risks described below, in addition to the other information in this report on Form 10-K, before making an investment decision. Each of these risk factors could adversely affect our business, financial condition, and operating results as well as adversely affect the value of an investment in our common stock.

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Our stock price may be volatile, and an investment in our stock could suffer a decline in value.

Although we reported net income of $25.2 million, $11.0 million, and $9.6 million for the years ended December 31, 2014, 2013 and 2012, respectively, we have experienced significant operating losses in the past, and as of December 31, 2014, we had an accumulated deficit of approximately $135 million. If our operating expenses were to increase or if we were not able to increase or sustain revenue, we may not maintain profitability over the next 12 months.

The market price of our common stock has experienced, and may continue to experience, substantial volatility due to many factors, some of which we have no control over, including:

· developments related to the pending SEC and DOJ investigations, our efforts to cooperate with the investigations and events related to pending litigation;

· government regulatory action affecting our Company or our drug products or our competitors' drug products in China, the US and other foreign countries, including the effect of government initiatives in China, particularly the Chinese government’s increasing regulation of the pharmaceutical industry through anti-corruption activities and actions intended to reduce pharmaceutical prices such as the reduction in the governmentally permitted maximum listed price for our products and increased oversight of the health care market and pharmaceutical industry;

· actual or anticipated fluctuations in our quarterly operating results, some of which may result from undertaking new clinical development projects, or from licensing or acquisition-related expenses including up-front fees, milestone payments, and other items;

· progress and results of clinical trials and the regulatory approval process in Europe and in China;

· timing and achievement of our corporate objectives;

· charges related to expired inventory or bad debt;

· terminations of, or changes in our agreements or relationships with collaborative partners;

· announcements of technological innovations or new products by us or our competitors;

· announcement and completion of corporate acquisition, merger, licensing or marketing arrangements, or sales of assets;

· developments or disputes concerning patent or proprietary rights;

· changes in the composition of our management team or board of directors;

· changes in company assessments or financial estimates by securities analysts;

· changes in assessments of our internal control over financial reporting;

· general stock market conditions and fluctuations for the emerging growth and pharmaceutical market sectors;

· unanticipated increases in our G&A expense due to legal and accounting expenses, including expenses relating to the governmental investigations, our dispute with MEDA, and arising out of matters relating to any additional or uncorrected control deficiency or related matters;

· economic and political conditions in the US or abroad, particularly in China;

· broad financial market fluctuations in the US, Europe or Asia; and

· More aggressive taxation policy by the government in China.

Any acquisitions we may undertake involve a number of risks, and we may not realize all the anticipated benefits of an acquisition. We may acquire other companies or products that present similar risks.  

We experienced a number of challenges in the process of our integration of NovaMed and its operations and personnel which have had, and could have further adverse effects on our business.

We may enter into other acquisition transactions in the future which could present similar risks and may also cause us to:

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· issue common stock that would dilute our current shareholders’ percentage ownership;

· assume liabilities, some of which may be unknown at the time of such acquisitions;

· record goodwill and intangible assets that would be subject to impairment testing and potential periodic impairment charges;

· incur amortization expenses related to certain intangible assets; and

· incur large and immediate write-offs of in-process research and development costs; or become subject to litigation.

Our revenue will continue to be substantially dependent on our sales of ZADAXIN in China. The Chinese government has previously imposed price restrictions on ZADAXIN, Aggrastat and several of our oncology products. If we experience difficulties in our sales efforts as a result, our operating results and financial condition will be harmed.

Our product revenue is highly dependent on the sales of ZADAXIN in China. We anticipate that sales of ZADAXIN will continue to be a majority of our revenue for at least the next two years. For the years ended December 31, 2014, 2013, and 2012 approximately 96%, 95% and 96% of our ZADAXIN sales, respectively, were to customers in China. Sales of ZADAXIN in China may be limited due to the low average personal income, lack of patient cost reimbursement, poorly developed infrastructure and competition from other products, including generics. ZADAXIN sales growth in recent years has benefited from the rapidly growing Chinese economy and growing personal disposable income. Sales of ZADAXIN in China could be adversely affected by a slowing or downturn of the Chinese economy and from the recent and future decisions of the National Development and Reform Commission (“NDRC”) and provincial agencies’ pricing reform.

In China, ZADAXIN is approved for the treatment of hepatitis B virus (“HBV”) and as a vaccine adjuvant. We face competition from pharmaceutical companies who are aggressively marketing competing products for the treatment of HBV and for other indications where we believe ZADAXIN may be used on an off-label basis. In addition, several local companies are selling lower-priced, locally manufactured generic thymalfasin, which is a competitive product and is selling in substantial and increasing quantities. While generic products outsell ZADAXIN in unit volumes, we have been able to maintain a pricing advantage through the reputation of our imported, branded product. We believe such competition will continue with added new local manufacturers of generic thymalfasin and there could be a negative impact on the price and the volume of ZADAXIN sold in China, which would harm our business. Our efforts to in-license or acquire other pharmaceutical products for marketing in China and other markets may be unsuccessful or even if successful may not have a meaningful effect on our dependence on ZADAXIN sales in those markets.

Sales of ZADAXIN may fluctuate significantly from quarter to quarter due to financing limitations on importers, changes in inventory levels at our customers, and surges in sales and inventories due to epidemics. Importers and distributors of ZADAXIN borrow funds in China from banks to purchase, hold and distribute ZADAXIN. Substantial increases in restrictions on fund availability and/or increases in borrowing costs could limit the ability of our importers and distributors to finance their import and distribution process. Further, our customers tend to purchase large orders, and inventory levels may fluctuate significantly as a result, or as a result of changes in the distribution channel, potentially affecting quarterly periodic results.

During the third quarter of 2012, we estimated that there was a substantial increase in ZADAXIN channel inventory levels and we believe that our sales to our customers exceeded the pace at which our customers were able to sell the ZADAXIN through to other parties, primarily hospital pharmacies. As a result, ZADAXIN revenues were lower in the first half of 2013, as compared to the same period of 2014. We believe channel inventory has returned to normal levels, and we continue to believe that we will grow demand for ZADAXIN through increased penetration in the market; however, we may not be successful or we may experience future fluctuations in channel inventory either of which could adversely affect our future ZADAXIN revenue.

We could experience fluctuations in channel inventory due to actual or expected epidemics. For example, during the second quarter of 2009, we experienced a strong upsurge in ZADAXIN sales, which we believe was attributable both to the increasing penetration of ZADAXIN within the Chinese market, as well as concerns in China from the H1N1 influenza virus. If distributors and hospitals that purchase ZADAXIN stockpile more ZADAXIN than needed for current use, our subsequent sales of ZADAXIN may suffer as distributors and hospitals use ZADAXIN already in their inventory before purchasing additional product from us. This could lead to uneven future revenue results for ZADAXIN and in turn materially impact our cash flows and business condition.

The Chinese government is increasing its efforts to reduce overall health care costs, including pricing controls on pharmaceutical products. Individual provinces in China and, in some cases, individual hospitals can and have established pricing requirements for a

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product to be included on formulary lists. In some cases, these price limits have been significantly lower than prices at which our distributors have been selling ZADAXIN, in which case we have been removed from formulary lists, which consequently has reduced sales to certain hospitals and could adversely affect our future sales. The price for pharmaceutical products is regulated in China both at the national and at the provincial level. The process and timing for price restrictions is unpredictable. In addition, we are aware that ZADAXIN may be used on an off-label basis, and the Chinese government’s pricing, reimbursement or other actions might reduce such uses.

In November 2009, thymalfasin, the generic chemical name for our pharmaceutical product ZADAXIN, was included as a Category B product in the National Reimbursement Drug List (“NRDL”) and pricing for ZADAXIN on the NRDL was reviewed by the authorities. As a result of the Chinese government’s review of pharmaceutical prices once a product has been included in the Reimbursement Drug List (“RDL”), the national reimbursement retail list price of ZADAXIN in China (i.e., the price at the hospital pharmacy level) was reduced by approximately 18% effective October 8, 2012. Sinopharm, our primary importer of ZADAXIN into China agreed to take a larger share of the impact of this price reduction in exchange for certain exclusive importation rights into China and as a result, the impact on our sales price per unit has been insignificant. As Sinopharm is now our exclusive importer of ZADAXIN into China, we have not made any subsequent sales of ZADAXIN to other importers. In addition, the NDRC price of Aggrastat, as well as several of our oncology products exclusively promoted in China for Pfizer and Baxter, were reduced by amounts ranging from 10 to 20%.

These pricing regulations, as well as regulation of the importation of pharmaceutical products, have reduced and may further reduce prices for ZADAXIN or our other products to levels significantly below those that would prevail in an unregulated market, limit the volume of product which may be imported and sold or place high import duties on the product, any of which may limit the growth of our revenues or cause them to decline.

Future healthcare reforms in China and changes to Chinese governmental regulations or policies or the implementation thereof, including those relating to pricing, reimbursement and the tender process, may impact our business, and our future results could be adversely affected by any such changes in such regulations or policies.

Our business strategy is dependent in part on our agreements with third parties for the rights to develop and commercialize products, or promote products, particularly in China. We have experienced challenges in maintaining some of our agreements and if we fail to enter into additional agreements, our business will suffer.

Our sales and marketing strategy in China depends significantly on agreements with third parties, and potentially on entering into additional agreements with third parties, or renegotiating agreements with third parties. Except for ZADAXIN, our rights to develop, market and sell our products in China, including licensed products and products currently promoted or sold by our subsidiaries, NovaMed and NovaMed Shanghai, are held by us under license, promotion, distribution or marketing agreements with third parties. These agreements for products include Aggrastat, a marketed product, DC Bead, a product expected to launch commercially in the first half of 2015, and products in the regulatory review process, including products in clinical trials that are held under license, distribution or marketing agreements. In addition, our success in the future may be dependent on entering into similar agreements with other parties and the renewal of any such agreements. The third parties to these agreements are generally not under an obligation to renew the agreements. If any of these agreements are terminated, or if they are not renewed, our ability to distribute, or develop, the products or product candidates could be terminated and our business could be affected. In addition, if any of such agreements acquired in our NovaMed acquisition are not renewed, we could incur a decline in sales revenues.

All of our products were originally obtained by us under licenses, promotion, distribution or similar third-party agreements. We do not conduct product discovery and our ability to bring new products to market is dependent upon our entering into additional acquisition, in-licensing, promotion or distribution agreements, particularly in China. The competition for attractive products is intense, and we cannot be certain that we will be able to negotiate in-license, promotion or distribution agreements for additional products in the future.

While in June 2013 we renewed our promotion agreement with Baxter for a 5-year term through December 2017 and in July 2014 we renewed our product distribution agreement with Pfizer for a 5-year term through June 2019, our promotion agreements with Sanofi were not renewed and expired on December 31, 2013. We continue to assess the financial performance of the products we promote under our agreements and their overall value within our entire portfolio of products. Over time, we anticipate the product mix

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that we promote will change which may affect our revenues and profitability in the future.Terminations or failures to renew these or any other agreement as to some or all of the products covered by the agreement could result in a decline in revenue and in other costs including restructuring charges if a resulting revenue decline required us to reduce costs.On the other hand, if we are successful in negotiating better terms there may be a positive impact on our revenues and profitability.

If our products do not meet standards established by the Chinese Pharmacopoeia, we could lose our license to import products to China for commercial sale, which could negatively affect our revenues and operating results.

Our products are subject to standards established by the Chinese Pharmacopoeia, or ChP. The ChP is an official compendium of drugs in China and sets the standards of purity, description, test, dosage, precaution, storage and the strength for each drug in China. The ChP is revised from time to time, with the most recent revisions set forth in a 2015 edition. If our products fail to meet ChP specifications during routine customs testing as such specifications may be revised from time to time, our import drug licenses (IDLs), which allow the importation for commercial sale, may be revoked, which would result in a significant loss of revenue and materially adversely affect our business.

For example, as part of the Chinese government’s regular review of the ChP specifications, pharmacopeial monographs of thymalfasin active pharmaceutical ingredient (“API”) and ZADAXIN were selected along with many other drug monographs for updating in the 2015 edition of the ChP. As part of this update, the CFDA’s testing division developed a new and better resolving method to evaluate the level of related substances/impurities in thymalfasin and ZADAXIN. Although the specifications regarding impurities were not modified from previous editions of the ChP, because the new method resolves previously poorly resolved related substance/impurities more accurately, the levels of some impurities may, as a result, appear higher. If the percentages of single or total impurities in the API, as measured by the Chinese government using the new method during routine customs release testing for each lot intended for importation into China are above the ChP specification, the respective lot will be rejected and/or confiscated. If two lots are found to be rejected, the IDL for ZADAXIN may be revoked, which would materially affect our business.

Our revenue will continue to be substantially dependent on our maintaining regulatory licenses and compliance with other regulations.

We have received regulatory approvals to import and market ZADAXIN in China and to manufacture ZADAXIN and export the product from Italy. In order to continue our sales to China, we need to maintain these approvals. Our license to import ZADAXIN into China needs to be renewed every five years and the next renewal is required in 2017. Cardiome Pharma Corp. has obtained a license to import Aggrastat into China that also needs to be renewed every five years with the next renewal required in June 2019. Although renewals in the past were obtained successfully, there is no assurance that SciClone or Cardiome Pharma Corp. will receive renewals in the future when applied for or that the renewals will not be conditioned or limited in ways that limit our ability to sell ZADAXIN or Aggrastat to China.

Our licenses to manufacture and export ZADAXIN from Italy are dependent upon our continuing compliance with regulations in Italy. Our business would be adversely affected if we are not able to maintain these approvals. In order to sell ZADAXIN to the licensed importers in China, our manufacturers must 1) be approved by the Italian Ministry of Health (“AIFA”) and 2) be accepted by the CFDA. Some manufacturing changes may require: 1) approval by AIFA in Italy and/or 2) be accepted by the CFDA, the Chinese equivalent of the FDA. In addition, we must obtain an IDL from the CFDA in order to sell ZADAXIN to the licensed importers in China. ZADAXIN registration in Italy has been essential to the renewal of our IDL from the CFDA permitting the importation of ZADAXIN into China. Our ability to continue to renew our IDL from the CFDA permitting the importation of ZADAXIN into China could be adversely affected, if we were to fail to maintain ZADAXIN registration in Italy. The CFDA, AIFA and other regulatory agencies may, and have, changed their internal administrative rules in ways that may delay or complicate the regulatory approval process. Those changes are not always disclosed or known to us and we may experience unexpected delays or additional costs as a result of such changes. Our product has been distributed in Italy through BioFutura Pharma Srl (“BioFutura”), a subsidiary of Sigma-Tau Finanziaria, S.p.A. (“Sigma-Tau”). In August 2012, we entered into an agreement with BioFutura to continue to distribute ZADAXIN for SciClone in Italy. However, if we are not able to continue this arrangement, we will need to establish alternative distribution operations in Italy to ensure continuing compliance with regulations in Italy and maintain our Italian licenses.

Our ZADAXIN sales and operations in China and in other parts of the world are subject to a number of risks and increasing regulations, including difficulties and delays in obtaining registrations, renewals of registrations, permits, pricing approvals and

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reimbursement, increasing regulation of product promotion and selling practices, unexpected changes in regulatory requirements and political instability.

We face risks related to the potential outcomes of the SEC and DOJ investigations regarding FCPA compliance and other matters, including potential penalties, substantial expense, the use of significant management time and attention, and changes in our marketing and sales practices that could affect our ability to generate revenue, any of which could adversely affect our business.

In August 2010, we received notices of investigations by US government agencies that relate to our operations in China including compliance with the FCPA and we subsequently initiated an internal investigation regarding these matters. In connection with the formal, non-public SEC investigation, the SEC issued a subpoena to us requesting documents regarding a range of matters including but not limited to documents relating to potential payments or transfer of anything of value to regulators and government-owned entities in China; documents relating to bids or contracts with state or government-owned entities in China; documents relating to intermediary or local agent of the Company in China; documents regarding the Company’s ethics and anti-corruption policies, training, and audits; and documents relating to certain Company financial and other disclosures made by the Company. The DOJ is currently conducting an investigation of us in connection with compliance with the FCPA, as to which they have advised us that the DOJ has information about the Company’s practices suggesting possible violations. We have been cooperating with, and will continue to cooperate with, the investigations by and inquiries from the SEC and DOJ. In response to these matters, our Board of Directors appointed the Special Committee of independent directors to oversee our response to the government inquiry. The Special Committee conducted an independent investigation as to matters reflected in and arising from the SEC and DOJ investigations including, but not limited to, certain sales and marketing matters in China, in order to evaluate whether any violation of the FCPA or other laws occurred.

The Special Committee substantially concluded its investigation of those matters and on May 4 and 5, 2011 reported its findings and recommendations to the Board of Directors. The Special Committee reached a number of findings, including that we lacked appropriate internal controls to assure compliance with laws, including the FCPA, with respect to sales and marketing practices including payments for, or reimbursement of, third-party gifts, travel and entertainment expenses, and sponsorships of certain conferences and symposia. The Special Committee identified evidence of sales and marketing activities that might constitute potential violations of the FCPA. We are undertaking certain remedial measures recommended by the Special Committee and adopted by our Board of Directors.

In the Company’s Form 10-Q for the period ending September 30, 2012, filed with the SEC on November 9, 2012, the Company disclosed, among other things, a non-cash impairment loss to fully write down the value of intangible assets recorded as part of the NovaMed acquisition; a remeasurement of the valuation of the contingent consideration expense recorded as part of the NovaMed acquisition; a significant increase in ZADAXIN channel inventory levels; and internal control issues primarily within the NovaMed organization that were concluded to represent a material weakness in internal control over financial reporting. Following our disclosure of these items, the Company received a subpoena from the SEC requesting documents related to these and various other matters regarding the NovaMed acquisition and the Company’s operations in China. After review of the subpoena, and in order to respond to inquiries from the DOJ and SEC and to determine if any wrong-doing occurred, the Audit Committee determined to undertake an additional independent investigation as to additional matters, including, but not limited to, matters related to our acquisition of NovaMed and FCPA matters, and certain sales and marketing expenses.

We are unable to predict what consequences any investigation by any regulatory agency or by our Audit or Special Committees may have on us. Our cooperation with these investigations has resulted in substantial legal and accounting expenses, has diverted management’s attention from other business concerns and could harm our business. The ongoing investigations and any other regulatory investigations that might be initiated in the future will result in similar substantial expenses, management diversion and harm to our business. If we fail to comply with regulations or to carry out controls on our Chinese or other foreign operations in a manner that satisfies all applicable laws, our business would be harmed. Any civil or criminal action commenced against us by a regulatory agency, including Chinese regulatory agencies, could result in administrative orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil or criminal sanctions against certain of our officers, directors and/or employees. The investigations, results of the investigations, or remedial actions we have taken or may take as a result of such investigations may adversely affect our business in China, including adversely affecting our ability to obtain license renewals or other administrative approvals we require to conduct business in China. If we are subject to adverse findings resulting from the SEC and

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DOJ investigations, or from our own independent investigation, we could be required to pay damages or penalties or have other remedies imposed on us. In the quarter ended December 31, 2013, we determined that a payment of at least $2.0 million to the government in penalties, fines and/or other remedies is probable. Accordingly, we recorded $2.0 million of operating expense in our fourth quarter 2013 results of operations to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. Since the fourth quarter of 2013, we have monitored the results of the ongoing investigations; developments in such investigations have not indicated any further estimated loss that is both probable and reasonably estimable. We will incur additional expenses related to remedial measures we are undertaking, and could incur fines that are more than the estimated or other penalties. The period of time necessary to resolve the investigations by the DOJ and the SEC is uncertain, and these matters are requiring significant management and financial resources, which could otherwise be devoted to the operation of our business.

If we fail to achieve or maintain an effective system of internal controls, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and to protect from fraudulent, illegal or unauthorized transactions. If we cannot establish effective controls and provide reliable financial reports, our business and operating results could be harmed. Moreover, as a US-based corporation doing business in China, these controls often need to satisfy the requirements of Chinese law as well as the requirements of US law which frequently differ in certain aspects. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement. For example, during the third quarter of 2012, our management determined that we had a material weakness in internal control over financial reporting related to the design and operation of our controls primarily associated with product returns reserves and the override of certain controls in the financial statement close process related to our NovaMed subsidiary. Furthermore, during the fourth quarter of 2012, our management determined that we had an additional indicator of the same material weakness related to the timing of revenue recognition for our Pfizer products and the override of related controls at our NovaMed subsidiary, and the corporate monitoring thereof.During fiscal 2014, we designed and implemented procedures to address the material weakness disclosed in our Annual Report on Form 10-K for the years ended December 31, 2013 and 2012 related to the design and operating effectiveness of certain corporate monitoring controls. Management designed and implemented corporate monitoring controls and other controls that provided increased oversight over our China operations, and has remediated the material weakness as of December 31, 2014. We continuously work on improvements to our internal controls and there can be no assurance that these or other material weaknesses will not occur in the future, or otherwise cause us to inaccurately report our financial statements. For example, the restatement of our financial statements for each of our first, second, and third quarters of 2012, and our financial statements for each of the second and third quarters of 2011 and the year ended December 31, 2011, were in part caused by the material weakness related to the design and operation of our controls disclosed as of December 31, 2012 discussed above. Any failure to implement and maintain controls over our financial reporting or difficulties encountered in the implementation of improvements in our controls, could cause us to fail to meet our reporting obligations. Any failure to improve our internal controls or to address identified weaknesses in the future, if they were to occur, could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.

Compliance with changing regulations concerning corporate governance and public disclosure has resulted in and may continue to result in additional expenses. Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and The NASDAQ Stock Market rules, are creating uncertainty for companies such as ours and costs are increasing as a result of this uncertainty and other factors. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest all reasonably necessary resources to comply with evolving standards, and this investment has and may continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

We may not be able to effectively manage our employees and distribution network, and our reputation, business, prospects and brand may be materially and adversely affected by actions taken by our distributors and third-party marketing firms.

Our company policies prohibit our employees from making improper payments to hospitals or otherwise engaging in improper activities to influence the procurement decisions of hospitals, and we take remedial actions, including termination, when employees do not adhere to our policies. However, we may not be able to effectively ensure that every employee complies at all times with our

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policies. The compensation of our sales and marketing personnel is partially linked to their sales performance. Although we have made numerous changes to ensure compliance with our policies and to attempt to avoid any violation of law, we cannot assure you that employees will not violate the anticorruption laws of China, the United States and other countries. Such violations, or allegations of such violations, could have a material adverse effect on our reputation, business, prospects and brand.

Furthermore, our employees in China have access to our facilities and internal systems and we have identified from time to time certain minor instances of improperly submitted expense reporting by our employees. Although these instances have involved insignificant sums, our employees may seek to create additional opportunities to engage in misappropriation or other employee malfeasance. If our controls and procedures to prevent such activities fail or are circumvented, our business would be negatively affected by, among other things, the related financial losses, diminished reputation and threat of litigation and regulatory inquiry and investigation.

We do not control, and therefore have limited ability to manage, the activities of third-parties who assist us in marketing and distributing our products. Our distributors or other third parties with whom we do business could take actions which violate the anti-corruption laws of China, the United States or other countries. Failure to adequately manage our employees, and third parties and, or their non-compliance with employment, distribution or marketing agreements, could harm our corporate image among hospitals and end users of our products and disrupt our sales, resulting in a failure to meet our sales goals. Furthermore, we could be liable for actions taken by our employees, distributors or third-party marketing or third-party firms, including any violations of applicable law in connection with the marketing or sale of our products, including China’s anticorruption laws and the FCPA of the United States. In particular, if our employees, distributors or third-party marketing firms make any payments that are forbidden under China’s anticorruption laws or the FCPA, we could be subject to civil and criminal penalties imposed by the Chinese or US government.

Recently, the Chinese government has increased its anti-corruption measures. In the pharmaceutical industry, corrupt practices include, among others, acceptance of kickbacks, bribes or other illegal gains or benefits by the hospitals and medical practitioners from pharmaceutical manufacturers and distributors in connection with the prescription of certain pharmaceuticals. Our employees, affiliates, distributors or third-party marketing firms may violate these laws or otherwise engage in illegal practices with respect to their sales or marketing of our products or other activities involving our products. If our employees, affiliates, distributors or third-party marketing firms violate these laws, or are alleged to have violated these laws, we could be required to pay damages or fines, be subject to administrative actions or suffer additional consequences which could materially and adversely affect our ability to conduct business in China and our financial condition. In addition, Chinese laws regarding what types of payments to promote or sell our products are impermissible are not always clear, and local regulatory authorities enforcing these laws are not always consistent. As a result, we, our employees, affiliates, our distributors or third-party marketing firms could make certain payments in connection with the promotion or sale of our products or other activities involving our products which at the time are considered by us or them to be legal but are later deemed impermissible by the Chinese government, or we may be asked to make payments by local government authorities that may not be permissible under China’s anticorruption laws or the FCPA. Furthermore, our brand and reputation, our sales activities or the price of our common stock could be adversely affected if we become the target of any negative publicity as a result of actions taken by our employees, affiliates, distributors or third-party marketing firms.

The audit report of our incumbent auditor included in this Annual Report on Form 10-K was prepared by an audit firm which is not inspected by the Public Company Accounting Oversight Board (“PCAOB”), and, although they may be subject to other inspections, you do not have the benefits of PCAOB inspections.

Our incumbent independent auditors’ system of quality control and their individual audits are subject to review, inspection, or other outside assurance from time to time by members firms in the network of firms to which they belong, by peer accounting firms, or by regulatory or industry bodies in China (such as China’s securities regulator or the Chinese body representing certified public accountants). However, these various bodies or parties are distinct from the PCAOB, and their efforts may not be concentrated on audits of SEC registrants. Their reviews or inspections may be substantially different, or not comparable to, an inspection by the PCAOB. Auditors of companies that are registered with the SEC and traded publicly in the US, including our independent registered public accounting firm, must be registered with the PCAOB, and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because our auditors are located in the People’s Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities, our auditors are not currently inspected by the PCAOB. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditors operating in

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China, including our auditors. As a result, investors in our equity securities may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditors’ audit procedures or quality control procedures as compared to other public company auditors outside of China that are subject to PCAOB inspections. As a result, investors in our stock may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Proceedings instituted by the SEC against certain PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended.

In December 2012, the SEC brought administrative proceedings against five accounting firms, including our independent registered public accounting firm, in China, alleging that they had refused to produce audit work papers and other documents related to certain other China-based related companies under investigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring these accounting firms and suspending four of these firms from practicing before the SEC for a period of six months. The decision is neither final nor legally effective unless and until reviewed and approved by the SEC. On February 12, 2014, four of these PRC-based accounting firms, including our registered public accounting firm, appealed to the SEC against this sanction decision. In February 2015, the four PRC-based accounting firms agreed to a censure and to pay $500,000 each to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit U.S.- listed companies. The settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the China Securities Regulatory Commission. If the firms don’t follow the procedures, the SEC could impose penalties such as suspensions, or it could restart the current enforcement case administrative proceedings.

In the event that the SEC restarts the enforcement administrative proceedings procedures, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our stock may be adversely affected.

If our independent registered public accounting firm were denied the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act of 1934. Such a determination could ultimately lead to the delisting of our shares from the Nasdaq Global Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our stock in the United States.

Our compliance with the Foreign Corrupt Practices Act may put us at a competitive disadvantage, while our failure to comply with the Foreign Corrupt Practices Act may result in substantial penalties.

As a US reporting company, we are required to comply with the FCPA. If our employees or other agents are found to have engaged in practices in violation of the FCPA, we could suffer severe penalties. Non-US companies, including some of our competitors, are not subject to the provisions of the FCPA. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time to time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in their business dealings, which would put us at a disadvantage.

Retaliation from terminated employees may damage our reputation or make claims that could subject us to further regulatory action.

From time to time we have terminated the employment of certain employees for performance-related reasons, including, in particular, our policies intended to prevent corruption. Employees who are terminated may seek more favorable terms of separation by threatening to damage our reputation in the marketplace. Further, they may seek to retaliate against us by making so-called “whistleblower” claims under the provisions enacted by the Dodd-Frank Act that may entitle persons who report alleged wrong-doing to the SEC to cash rewards. We anticipate that these provisions will result in a significant increase in whistleblower claims across our industry, and dealing with such claims could generate significant expenses and take up significant management time, even for frivolous and non-meritorious claims. Any investigations of whistleblower claims may impose additional expense on us, may require

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the attention of senior management and members of the Board of Directors and may result in fines, adverse administrative sanctions or rulings and/or reputational damage whether or not we are deemed to have violated any regulations. Furthermore, terminated employees may also seek to retaliate against us by making claims against us to other regulatory agencies, including local regulatory authorities. Inquiries by local regulatory agencies about such claims, even if frivolous and non-meritorious, could also generate significant expenses and take up significant management and Board of Directors’ time.

We may incur unexpected charges relating to our operations.

Although we have generally experienced minimal product returns and our customers have historically paid all invoiced amounts, we could incur future charges relating to inventory that expires or as a result of customer failures to pay invoiced amounts timely or in full. For example, we recorded $2.4 million to bad debt expense for the year ended December 31, 2013 related to one customer whose accounts receivable were significantly past due and for which collectability was uncertain at that time, although we subsequently collected $1.5 million of these receivables in fiscal 2014. In addition, we recorded a charge of $1.6 million for potential inventory obsolescence related to Aggrastat during the year ended December 31, 2014. In addition, we could also experience additional charges for potential inventory obsolescence related to Aggrastat or other products if we are unable to sell units of Aggrastat or other products that are nearing their expiration dates, or for bad debt if other distributors do not pay outstanding receivables in full. Those or similar future events would have an adverse impact upon our operating results. 

We are at risk of additional securities class action and derivative lawsuits.

Securities class action and derivative lawsuits are often filed against public companies following a decline in the market price of their securities. After our announcement regarding SEC and DOJ investigations in 2010, we and certain of our officers and directors were named as parties in purported stockholder class actions and derivative lawsuits. Those class action lawsuits were dismissed and we have settled those derivative lawsuits. Our stock price declined following the announcement of a restatement of our financial statements for fiscal 2011 and the first three quarters of fiscal 2012, and that our predecessor independent auditing firm had elected not to stand for reappointment for the 2013 fiscal year. Soon after that announcement, we and certain of our officers and directors were named as parties in a purported derivative lawsuit relating to the restatement, which was subsequently dismissed in its entirety. We may experience stock price volatility in the future, either related to announcements regarding the SEC and DOJ investigations, our own investigations related thereto, or other matters. This risk is especially relevant for us because biotechnology companies have experienced greater than average stock price volatility in recent years. We may be named in additional litigation, which could require significant management time and attention and result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Such litigation could result in additional substantial costs and a diversion of management's and the Board of Directors’ attention and resources, which could harm our business.

We may not be able to successfully develop or commercialize our products.

We have numerous products under development in China, some of which were acquired in the NovaMed acquisition and others which were in-licensed by us. In recent years, we have in-licensed several additional product candidates for each of which our future development expenses and milestone payments could be material.

Clinical trials are inherently risky and may reveal that our product candidates are ineffective or have unanticipated side effects and/or drug interactions that may significantly decrease the likelihood of regulatory approval. For example, in March 2012, we announced the discontinuation of our phase 2b clinical trial evaluating SCV-07 for the delayed onset of oral mucositis. This decision was based on the results of a pre-planned interim analysis that indicated that the trial would not meet the pre-specified efficacy endpoints, and we have no plans to proceed with further development of SCV-07 at this time.

The regulatory approval processes in the US, Europe and China are demanding, lengthy and expensive. We have committed significant resources, including capital and time, to develop and seek approval for products under development, and if we do not obtain approvals we are seeking, we may be unable to achieve any revenue from these products. All new drugs, including our product candidates, are subject to extensive and rigorous regulation by the FDA, CFDA and similar regulatory agencies. These regulations govern, among other things, the development, testing, manufacturing, labeling, storage, pre-market approval, importation, advertising, promotion, sale and distribution of our products. These regulations may change from time to time and new regulations may be adopted.

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Satisfaction of government regulations may take several years and the time needed to satisfy them varies substantially based on the type, complexity and novelty of the pharmaceutical product. As a result, government regulation may cause us to delay the introduction of, or prevent us from marketing, our existing or potential products for a considerable period of time and impose costly procedures on our activities. We have experienced delays in the regulatory process, and there exists risk that we may not receive approval of in-licensed products currently in the regulatory process. In addition, the Chinese government is increasing its efforts to reduce overall health care costs, including pricing controls on pharmaceutical products. We cannot determine what the potential government pricing constraints are likely to be for products in development in advance. Therefore, we may be required to abandon the development or commercialization of a product after significant effort and expense if we determine at any time that trends in government pricing constraints will make the commercialization of a product unprofitable.

To fully develop these products and other products we may acquire, substantial resources are required for extensive research, development, pre-clinical testing, clinical trials, and manufacturing scale-up and regulatory approval prior to the potential products being ready for sale. We cannot assure that our efforts will produce commercially viable products. We face significant technological risks inherent in developing these products. We may also abandon some or all of our proposed products before they become commercially viable. We are obligated to make a milestone payment upon regulatory approval of certain products under development. If any of our products, even if developed and approved, cannot be successfully commercialized in a timely manner, our business will be harmed and the price of our stock may decline.

Market acceptance of any product that is successfully developed and approved will depend on many factors, including our ability to convince prospective customers to use our products as an alternative to other treatments and therapies. In addition, doctors must opt to use treatments involving our products. If doctors elect to use a different course of treatment, demand for our drug products would be reduced. In addition, for certain products we may need to convince partners to manufacture or market our products. Failure to do any of the above will lead to an unfavorable outcome on the results of our operations.

Our success is dependent upon the success of our sales and marketing efforts in China, and we may experience difficulties in complying with regulations, slow collections or other matters that could adversely affect our revenue in China.

Following the acquisition of NovaMed, we have several products on the market in China in addition to ZADAXIN. Our future revenue growth depends to a great extent on increased sales of ZADAXIN to China and increased sales of the products promoted or marketed by our NovaMed subsidiary. If we fail to continue to successfully market ZADAXIN or NovaMed’s product portfolio, our revenue and operating results will be limited. If unexpected and serious adverse events are reported, or if expected efficacy results are not achieved, it would have a material adverse effect on our business.

Our sales are concentrated in China and we face risks relating to operating in China, including pricing and other regulations, slow payment cycles and exposure to fluctuations in the Chinese economy.

The Chinese government is increasing its efforts to reduce overall health care costs, including pricing controls on pharmaceutical products. Individual provinces in China and, in some cases, individual hospitals can and have established pricing requirements for a product to be included on formulary lists. The Chinese government has imposed price restrictions on ZADAXIN, Aggrastat and various oncology products we promote. As a result of the Chinese government’s review of pharmaceutical prices once a product has been included in the Reimbursement Drug List (“RDL”), the national reimbursement retail list price of ZADAXIN in China (i.e., the price at the hospital pharmacy level) was reduced by approximately 18% effective October 8, 2012. Sinopharm, our primary importer of ZADAXIN into China agreed to take a larger share of the impact of this price reduction in exchange for certain exclusive importation rights into China. Since the terms of our agreement with Sinopharm went into effect, the average impact on our sales price per unit has been insignificant. As Sinopharm is now our exclusive importer of ZADAXIN into China, we have not made any subsequent sales of ZADAXIN to other importers.

Over the long term, we believe that the price reductions may positively affect our sales volumes and result in broader penetration into Tier 3 and Tier 2 cities in target geographies, potentially increasing our total sales revenues from these products. However, the process and timing for any price restrictions is unpredictable and further price reduction could be imposed that could adversely affect our business. Further, the successful sales and marketing of all of our products requires continuing compliance with other regulations in China relating to the import, manufacture, approval and distribution of products and if we or our partners are not able to obtain or maintain necessary licenses or other approvals, our operations would be adversely affected.

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We experience other issues with managing sales operations in China including long payment cycles, potential difficulties in timely accounts receivable collection and, especially from significant customers, fluctuations in the timing and amount of orders and the adverse effect of any of these issues on our business could be increased due to the concentration of our business with a small number of distributors. Problems with collections from, or sales to, any one of those distributors could materially adversely affect our results. Operations in foreign countries including China also expose us to risks relating to difficulties in enforcing our proprietary rights, currency fluctuations and adverse or deteriorating economic conditions. If we experience problems with these matters, or if significant political, economic or regulatory changes occur, our results could be adversely affected. During the third quarter of 2014, we wrote-off $1.1 million of $3.5 million in fully reserved accounts receivable related to one customer. For that customer, we received $1.5 million in payments on fully reserved accounts receivable in 2014, and the remaining fully reserved accounts receivable balance of $0.9 million as of December 31, 2014 is substantially delinquent. Although we entered into a settlement agreement with this customer in October 2014, and the customer has a binding obligation to pay us the remaining $0.9 million, there can be no assurance if we are not paid and we pursue legal action what the timing or result of such action would be.

Our operations throughout the world including China are potentially subject to the laws and regulations of the US including the FCPA, in addition to the laws and regulations of the other countries. Regulation in China of the activities in the pharmaceutical industry has increased and may continue to undergo significant and unanticipated changes. A number of companies have faced significant expenses or fines as a result of the increasing regulation of, and enforcement activity regarding, the pharmaceutical industry.The Chinese government has recently made arrests of pharmaceutical company employees for allegedly illegal sales and marketing activities. Recent or future arrests of sales personnel, doctors or others in the pharmaceutical industry, whether or not the individuals violated laws or regulations, could impact the operations and results of pharmaceutical companies in China, including our own.The Chinese government has also been investigating the costs to manufacture approximately 40 pharmaceutical products sold in China. While SciClone was not involved in either of these actions, these actions may be an indication of heightened Chinese government oversight of the pharmaceutical industry, and of multinational pharmaceutical companies in particular. Such activities could have long-term implications for the pharmaceutical industry in China including increased pricing pressure and a heightened level of government oversight and investigations, either of which could adversely affect the industry as a whole or individual companies, including SciClone.

Currently all of our revenue is generated from customers located outside the US, and a substantial portion of our assets, including employees, are located outside the US. US income taxes and foreign withholding taxes have not been provided on undistributed earnings of non-US subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries. The US government may propose initiatives that would substantially reduce our ability to defer US taxes including: repealing deferral of US taxation of foreign earnings, eliminating utilization or substantially reducing our ability to claim foreign tax credits, and eliminating various tax deductions until foreign earnings are repatriated to the US. If any of these proposals are constituted into legislation, they could increase our US income tax liability and as a result have a negative impact on our financial position and results of operations.

Chinese healthcare regulation and the Chinese market are changing rapidly and we may modify our strategy in response to those changes and we cannot assure you that we will be successful in implementing changes.

The Chinese healthcare and regulatory environment have changed and are likely to continue to change in response to Chinese government policies and other factors. We intend to evaluate and make modifications to our strategy in response to these changes. We intend to continue our strategies of growing business in China by expanding ZADAXIN sales, entering into new promotional agreements, and seeking of products that have been approved outside China, but we may implement additional strategies, including expanding our capabilities in China to develop earlier stage products in-licensed from third parties in China or elsewhere. If we make significant additions or changes to our strategy, we may not be successful in implementing such changes, or the Chinese market may change in unexpected directions to which we are not able to respond timely.

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We may lose market share or otherwise fail to compete effectively in the intensely competitive pharmaceutical industry.

Competition in the pharmaceutical industry in China is intense, and we believe that competition will increase. Our success depends on our ability to compete in this industry, but we cannot assure you that we will be able to successfully compete with our competitors. Increased competitive pressure could lead to intensified price-based competition resulting in lower prices and margins, which would hurt our operating results. We cannot assure you that we will compete successfully against our competitors or that our competitors, or potential competitors, will not develop drugs or other treatments for our targeted indications that will be superior to ours.

We depend on sales to China, and global conditions could negatively affect our operating results or limit our ability to expand our operations in and outside of China. Changes in China’s political, social, regulatory and economic environment may affect our financial performance.

Our business is concentrated in China. Heightened tensions resulting from the current geopolitical conditions in the Middle East, North Korea and elsewhere could worsen, causing disruptions in foreign trade, which would harm our sales. In particular, our commercial product is manufactured in Europe and distributed by us from our operations in Hong Kong. Any disruption of our supply and distribution activities due to geopolitical conditions could decrease our sales and harm our operating results.

With respect to China, our financial performance may be affected by changes in China’s political, social, regulatory and economic environment. The role of the Chinese central and local governments in the Chinese economy is significant. Chinese policies toward economic liberalization, and laws and policies affecting foreign companies, currency exchange rates and other matters could change, resulting in greater restrictions on our ability to do business in China. Any imposition of surcharges or any increase in Chinese tax rates could hurt our operating results. The Chinese government could revoke, terminate or suspend our license for national security and similar reasons or in the event our employees, affiliates, distributors or third-party marketing firms violate Chinese anticorruption laws, or are alleged to have violated these laws, without compensation to us. If the government of China were to take any of these actions, we would be prevented from conducting all or part of our business. Any failure on our part to comply with governmental regulations could result in the loss of our ability to market our products in China.

Because of China's tiered method of importing and distributing finished pharmaceutical products, our quarterly results may vary substantially from one period to the next; we are dependent upon Sinopharm as the exclusive importer of ZADAXIN.

Imported products in China, including ZADAXIN and NovaMed’s imported products, are distributed through a tiered method to import and distribute finished pharmaceutical products. Promoted products are typically sold from our partner companies within China to the primary distributor with the following distribution being the same for imported as well as promoted products. At each port of entry, and prior to moving the product forward to the distributors, government-licensed importing agents must process and evaluate each imported product shipment to determine whether it satisfies China's quality assurance requirements. In order to efficiently manage this process, the importing agents typically place large, and therefore relatively few, orders within an annual period. Therefore, sales to an importing agent can vary substantially from quarter to quarter depending on the size and timing of the orders, which has in the past and may in the future cause our quarterly results to fluctuate. We rely on Sinopharm to supply our ZADAXIN sales. Our receivables from Sinopharm are material, and if we were unable to collect receivables from Sinopharm or any other importer, our business and cash-flow would be adversely affected. In 2012, we also relied on another distributor to supply our ZADAXIN product. Receivables from this importer are $0.9 million as of December 31, 2014 that are more than one year past due and fully reserved, and if we were unable to collect these receivables, our business and cash-flow would be adversely affected.

Generally, our importers are not obligated to place purchase orders for our product, and if they determined for any reason not to place purchase orders, we would need to seek alternative licensed importers, which could cause fluctuations in our revenue. As a result of our agreement granting certain exclusive importation rights to Sinopharm for ZADAXIN, we are dependent upon Sinopharm’s performance of its obligations under that agreement. We have a long-standing and, we believe excellent, relationship with Sinopharm; however, if Sinopharm were unable to adequately perform its obligations under, or breached, the agreement our business would be adversely affected.

The existence of counterfeit pharmaceutical products in China’s pharmaceutical retail market may damage our brand and reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.

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Certain medicine products distributed or sold in China’s pharmaceutical retail market, including those appearing to be our products, may be counterfeit. Counterfeit products are products sold under the same or very similar brand names and/or have a similar appearance to genuine products. Counterfeit products, including counterfeit pharmaceutical products, are a significant problem in China. Such products divert sales from genuine products, often are of lower cost, often are of lower quality (having different ingredients or formulations, for example), and have the potential to damage the reputation for quality and effectiveness of the genuine product. The counterfeit pharmaceutical product regulation control and enforcement system in China is not able to completely eliminate production and sale of counterfeit pharmaceutical products. To increase our ability to prevent counterfeiting, we have taken several actions, including enhancements of our product labeling to implement industry-leading labeling technology and implementation of product tracking applications. However we cannot eliminate counterfeiting and, any sale of counterfeit products resulting in adverse side effects to consumers may subject us to negative publicity and expenses. It could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be subject to currency exchange rate fluctuations, which could adversely affect our financial performance.

A majority of our product sales are denominated in US dollars and a significant portion of our sales and expenses are denominated in Chinese Yuan Renminbi (“RMB”). Fluctuation in the US dollar exchange rate with local currency directly affects the customer's cost for our product. In particular, a stronger US dollar vis-à-vis the local currency would tend to have an adverse effect on sales and potentially on collection of accounts receivable. China currently maintains the value of the RMB in a narrow currency trading band that may or may not fluctuate based on government policy. The Chinese government has recently announced a small widening of the trading band. Depending on market conditions and the state of the Chinese economy, China has intervened in the foreign exchange market in the past to prevent significant short-term fluctuations in the RMB exchange rate, and it could make future adjustments, including moving to a managed float system, with opportunistic interventions. This reserve diversification may negatively impact the US dollar and US interest rates. A trend to a stronger US dollar would erode margins earned by our Chinese importers and prompt them to ask us to lower our prices. A weaker US dollar would increase our in-country China operating expenses, and with the addition of NovaMed, our China operating expenses have increased. We are subject to currency exchange rate fluctuations as a result of expenses incurred by our foreign operations. In particular, one of our supply arrangements under which we purchase finished products is denominated in euros and costs of our operations in China are paid in local currency. Consequently, changes in exchange rates could unpredictably and adversely affect our operating results and could result in exchange losses. To date, we have not hedged against the risks associated with fluctuations in exchange rates and, therefore, exchange rate fluctuations could have a material adverse impact on our future operating results and stock price.

We cannot predict the safety profile of the use of ZADAXIN or other drugs we may develop or market particularly when used in combination with other drugs.

While the products we market generally have excellent safety profiles, we cannot predict whether any product may have unexpected safety issues in a particular patient population or when used in new indications. In addition, we cannot predict how ZADAXIN or other drugs we may develop or market will work with other drugs, including causing possible adverse side effects not directly attributable to the other drugs that could compromise the safety profile of ZADAXIN or other drugs we may develop or market when used in certain combination therapies.

If third-party reimbursement is not available or patients cannot otherwise pay for ZADAXIN or other drugs we may develop, we may not be able to successfully market them.

Significant uncertainty exists as to the reimbursement status of therapeutic products, such as ZADAXIN or other drugs we may develop. We cannot assure you that third-party insurance coverage and reimbursement will be available for therapeutic products we might develop. Although ZADAXIN receives some limited reimbursement in certain provinces in China, we cannot assure you that we will be able to maintain existing reimbursements or increase third-party payments for ZADAXIN or obtain third-party payments for other products that we sell or develop in China. The failure to obtain or maintain third-party reimbursement for our products would harm our business. Further, we cannot assure you that additional limitations will not be imposed in the future in the US or elsewhere on drug coverage and reimbursement due to proposed health care reforms. In many emerging markets where we have marketing rights to ZADAXIN, but where government resources and per capita income may be so low that our products will be prohibitively expensive, we may not be able to market our products on economically favorable terms, if at all.

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Recent efforts by governmental and third-party payers to contain or reduce health care costs and the announcement of legislative proposals and reforms to implement government controls has caused us to reduce the prices at which we market our drugs in China, and additional reforms, if they were to occur, could cause us to further reduce our prices which could reduce our gross margins and may harm our business.

We rely on third parties who are our sole source suppliers for our clinical trial and commercial products and their inability to deliver products that meet our quality-control standards could delay or harm one or more important areas of our business including our sales, clinical trials or the regulatory approval process.

We rely on third parties, who are subject to regulatory oversight, to supply our commercial products. Any deficiencies or shortages in supply of our commercial products would adversely affect our ability to realize our sales plans. For example, the manufacturing of the raw material and the processing to finished product of ZADAXIN is done in few batches in any given three-month period and any manufacturing errors have the potential to require a product recall. We currently have only one approved finished vial manufacturer and two approved API suppliers. If we experience a problem with the manufacturer or our suppliers, our sales may suffer. We have each experienced difficulties with obtaining product from manufacturers in the past. During 2012, we experienced limitations on supply of several products we were promoting (each of which we no longer market) and the growth in the sales of those products was affected. During 2011, we experienced manufacturing delays related to repairs for general, non-production-related facilities equipment at one of our API suppliers. During 2010, we experienced difficulties validating upgrades to equipment with one of our API manufacturers. Although we are taking steps to ensure that such problems do not continue, there is no assurance that we will either be successful in doing so with our current supplier or be able to timely and cost-effectively qualify new suppliers for this component. Manufacturing interruptions or failure or delay of product to meet quality assurance specifications could adversely affect shipments and recognition of sales of our products in any period and impair our relationships with customers and our competitive position and may increase the cost of material produced. In addition, each of the products that are marketed through our NovaMed subsidiary is manufactured by, or obtained from, a single source.

China has mandated a unique serialization barcode for the smallest unit carton of each pharmaceutical product intended for importation and commercial sale in China. We are required to have the serialization for ZADAXIN in effect by the end of 2015. Implementation of the new unique barcode on each unit carton involves a long lead time, including physical hardware and software changes to the only approved existing packaging line at our sole finished product packaging contract manufacturing site. There are technical and regulatory risks associated with the packaging line changes that may be beyond our control. If the packaging line changes and/or validation are delayed or if the packaging line change regulatory submission to the Italian regulatory authorities is not approved in a timely manner, the commercial supply of ZADAXIN could be limited or stopped completely until barcode serialization is successfully implemented at the contract manufacturer and subsequently approved by regulatory authorities in Italy, which could materially adversely affect our sales and operating results.

We also rely on third parties, who are subject to regulatory oversight, to supply drug product. For example, Bioalliance is the sole supplier of Loramyc.  Any unanticipated deficiencies in this supplier, or the suppliers of our raw materials, and/or recall of the manufacturing lots could also impede commercialization of our products and impair our competitive position. In addition, any unanticipated deficiencies in suppliers used in our clinical trials could delay the trials or detract from the integrity of the trial data and its potential use in future regulatory filings. In addition, manufacturing interruptions or failure to comply with regulatory requirements by any of these suppliers could significantly delay clinical development of potential products and reduce third-party or clinical researcher interest and support of proposed trials.

If our thymalfasin API or ZADAXIN products are not shipped and stored at precision temperatures, the products could become damaged, which could negatively affect our sales and operating results.

Thymalfasin API and ZADAXIN are temperature sensitive products. SciClone relies on third-party organizations to provide controlled temperature shipping logistics services from the point of ownership transfer from the API contract manufacturer to the point where thymalfasin API is converted to ZADAXIN drug product, and from the ZADAXIN drug product manufacturing site to our storage locations in Hong Kong and then to China. Although some temperature excursions are allowable and thymalfasin and ZADAXIN are relatively stable when exposed to temperatures higher than recommended, if any third-party logistics or equipment provider fails to perform their required oversight duties with respect to temperature control or a shipment is delayed in transit for a prolonged period of time, the thymalfasin API or ZADAXIN drug product could become unsuitable for subsequent processing or commercial use. Although we have not experienced cold chain interruptions in the past and our distributor in China may maintain

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several months supply of our product, were our cold chain distribution or warehouse capability to be interrupted, our ability to timely deliver finished product to China could be adversely affected, which in turn could materially adversely affect our sales and operating results.

We rely on third parties for development of our products and the inability of any of these parties to reliably, timely or cost-effectively provide us with their obligated services could materially harm the timing of bringing our products to market and accordingly adversely affect our business.

We rely on third parties, such as contract research organizations, medical institutions, clinical investigators, contract laboratories, and collaborative partners in the conduct of clinical trials for our product candidates. If these parties, whom we do not control, do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines or choose not to continue their relationship with us, if the third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical or clinical activities may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. 

Commercialization of some of our products depends on collaborations with others. If our collaborators are not successful, or if we are unable to find future collaborators, we may not be able to properly develop and commercialize our products.

We depend in part on our distributors and business partners to develop or promote our drugs, and if they are not successful in their efforts or fail to do so, our business will suffer. We generally do not have control over the amount and timing of resources that our business partners devote to our collaborative efforts, and some have not always performed as or when expected. If they do not perform their obligations as we expect, particularly obligations regarding clinical trials, our development expenses would increase and the development or sale of our products could be limited or delayed, which could hurt our business and cause our stock price to decline. In addition, our relationships with these companies may not be successful. Disputes may arise with our collaborators, including disputes over ownership rights to intellectual property, know-how or technologies developed with our collaborators. We may not be able to negotiate similar additional arrangements in the future to develop and commercialize ZADAXIN or other products.

If we are unable to retain our key personnel, or are unable to attract and retain additional, highly skilled and experienced personnel, including the ability to expand our sales staff, our business will suffer.

We are highly dependent upon our ability to attract and retain qualified personnel because of the specialized, scientific and worldwide nature of our business. We are also dependent on our ability to appropriately staff these personnel in appropriate positions as our business fluctuates. Further, our efforts to in-license or acquire, develop and commercialize product candidates for China may require the addition of clinical and regulatory personnel and the expansion of, or changes in our sales and marketing operation. In addition, we assign numerous key responsibilities to a limited number of individuals, and we would experience difficulty in finding immediate replacements for any of them were any one of them to choose to leave employment with us. There is intense competition for qualified management, scientific, clinical, regulatory, and sales and marketing personnel in the pharmaceutical industry.

Our Senior Vice President and Chief Financial Officer resigned from the Company on May 31, 2013 to pursue other opportunities. Our Vice President, Finance and Controller resigned from the Company on August 2, 2013 to pursue other opportunities. We hired a new Chief Financial Officer in July 2013 and a new Vice President, Finance and Controller in October 2013.

There is significant turnover in the industry, in China in particular, and we have also experienced turnover in our sales personnel and key employees. We may not be able to attract and retain the qualified personnel we need to grow and develop our business globally. In particular, if we are unable to retain key personnel from the acquisition of NovaMed, particularly sales and marketing personnel with expertise in the products they promote and regulatory personnel, our business may suffer and could result in our not achieving the anticipated benefits of the acquisition.

The former Chief Executive Officer and the former Chief Operating Officer of our China operations resigned in the fourth quarter of 2012 and we have also had departures in our senior sales personnel. We may experience other departures. In addition, we have terminated personnel for violations of our policies and procedures as well as for lack of performance. Our future success will depend in part on our retaining key personnel and on recruiting additional senior sales and other personnel in China. We are continuously recruiting executives and other level personnel to address departures and to expand and strengthen our China operations

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and hired a new Chief Executive Officer of SciClone’s China operations, who began on April 1, 2013 and a new General Counsel and Vice President of Compliance, who began in China on February 9, 2014.

Conversely, if we need to reduce the size of a particular aspect of our business, including if we have contracts that are not renewed or renegotiated for products we market or promote, we are also dependent on our ability to make such adjustments while retaining suitably skilled personnel. For example, we reduced the size of our sales force as a result of the expiration of our agreement with Sanofi. In addition, we have taken corrective measures based on the findings of our Special Committee relating to its investigation of matters relating to the FCPA and have taken, and expect to continue to take, corrective measures relating to managements’ evaluation of internal control over financial reporting which could have adverse effects on our business, including the loss of personnel, and changes in marketing, sales and educational practices or programs. If we were unable to attract and retain qualified personnel as needed or promptly replace those employees who are critical to our sales, development and other operations, and in particular senior executives, our financial results and operations would be adversely affected. At this time, we do not maintain “key person” life insurance for any of our personnel.

We may need to obtain additional funding to support our long-term product development and commercialization programs.

We believe our existing cash and investments and ongoing revenue generating business operations will be sufficient to support our current operating plan for at least the next 12 months. We intend to continue to repurchase shares under our stock repurchase program as authorized by our Board of Directors.Further, we may use cash to acquire additional product rights or for future acquisitions. Ourability to achieve and sustain operating profitability is dependent on numerous factors including our ability to achieve increasing sales of ZADAXIN, our goal of launching and reaching our sales goals for DC Bead in China, and for our other products including those products we acquired as a result of the NovaMed acquisition and the execution and successful completion of clinical trials in China. We cannot assure you that such funds from operating activities will be sufficient, or that we will attain profitable operations in future periods. In addition, we intend to develop other products and we may need additional funds in the future to support such development and to support future growth and achieve profitability. If we need to raise additional funds in the future and such funds are not available on reasonable terms, if at all, our commercialization efforts may be impeded, our revenues may be limited and our operating results may suffer.

We are subject to the risk of increased income taxes which could reduce our future operating income.

We have structured our operations in a manner designed to maximize income in countries where:

· tax incentives have been extended to encourage foreign investment; or

· income tax rates are low.

Our taxes could increase if certain tax holidays or incentives are not renewed upon expiration, or if tax rates applicable to us in such jurisdictions are otherwise increased. For example, on March 16, 2007, the Chinese government passed a unified enterprise income tax law which became effective on January 1, 2008. Among other things, the law cancels many income tax incentives previously applicable to one of our subsidiaries in China. The law provides a transition rule which increased the tax rate of one of our subsidiaries in China over a 5-year period to 25% by 2012. The law also increased the standard withholding rate on earnings distributions to between 5% and 10% depending on the residence of the shareholder. The ultimate effect of these and other changes in Chinese tax laws on our overall tax rate will be affected by, among other things, our China income, the manner in which China interprets, implements and applies the new tax provisions, and by our ability to qualify for any exceptions or new incentives.

In addition, the Company and its subsidiaries are regularly subject to tax return audits and examinations by various taxing jurisdictions, particularly in the US and China. In determining the adequacy of our provision for income taxes, we regularly assess the likelihood of adverse outcomes resulting from tax examinations. While it is often difficult to predict the final outcome or the timing of the resolution of a tax examination, we believe that our reserves for uncertain tax positions reflect the outcome of tax positions that are more likely than not to occur. However, we cannot be certain that the final determination of any tax examinations will not be materially different than that which is reflected in our income tax provisions and accruals. Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our tax provision, operating results, financial position and cash flows in the period or periods for which that determination is made.

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If we fail to protect our products, technologies and trade secrets, we may not be able to successfully use, manufacture, market or sell our products, or we may fail to advance or maintain our competitive position, and we have limited intellectual property protection in China.

Our success depends significantly on our ability to obtain and maintain meaningful patent protection for our products and technologies and to preserve our trade secrets. Our pending patent applications may not result in the issuance of patents in the future. Our patents or patent applications may not have priority over others' applications. Our existing patents and additional patents that may be issued, if any, may not provide a competitive advantage to us or may be invalidated or circumvented by our competitors. Others may independently develop similar products or design around patents issued or licensed to us. Patents issued to, or patent applications filed by, other companies could harm our ability to use, manufacture, market or sell our products or maintain our competitive position with respect to our products. Although many of our patents relating to thymalfasin have expired, including composition of matter patents, we have rights to other patents and patent applications relating to thymalfasin and thymalfasin analogues, including method of use patents with respect to the use of thymalfasin for certain indications. Additionally, thymalfasin has received Orphan Drug designation in the US for the treatment of stage 2b through stage 4 melanoma, for the treatment of chronic active hepatitis B, for the treatment of DiGeorge anomaly with immune defects, and for the treatment of hepatocellular carcinoma. If other parties develop generic forms of thymalfasin for other indications, including conducting clinical trials for such indications, our patents and other rights might not be sufficient to prohibit them from marketing and selling such generic forms of thymalfasin or their brands of thymalfasin. If other parties develop analogues or derivatives of thymalfasin, our patents and other rights might not be sufficient to prohibit them from marketing these analogues or derivatives.

Pharmaceutical products are either not patentable or have only recently become patentable in some of the countries in which we market or may market thymalfasin. We do not have composition patent claims directed to the thymalfasin that is currently marketed in China, our largest market, although we do have other type of patent claims, pending or issued, directed to other aspects of thymalfasin therapy. Other companies market generic thymalfasin in China, potentially in violation of our patent, trademark or other rights which, to date, we have defended by informing physicians and hospitals of the practice. Past enforcement of intellectual property rights in many of these countries, including China in particular, has been limited or non-existent. Future enforcement of patents and proprietary rights in many other countries will likely be problematic or unpredictable. Moreover, the issuance of a patent in one country does not assure the issuance of a similar patent in another country. Claim interpretation and infringement laws vary by nation, so the extent of any patent protection is uncertain and may vary in different jurisdictions.

If we are involved in intellectual property claims and litigation, the proceedings may divert our resources and subject us to significant liability for damages, substantial litigation expense and the loss of our proprietary rights.

Our commercial success depends in part on our not infringing valid, enforceable patents or proprietary rights of third parties, and not breaching any licenses that may relate to our technologies and products. In addition, we may not be aware of all patents or patent applications that may impact our ability to make, use or sell any of our potential products. For example, US patent applications may be kept confidential for 12 or more months while pending in the Patent and Trademark Office, and patent applications filed in foreign countries are often first published nine months or more after filing. It is possible that we may unintentionally infringe these patents or other patents or proprietary rights of third parties. We may in the future receive notices claiming infringement from third parties as well as invitations to take licenses under third-party patents. Any legal action against us or our collaborative partners claiming damages and seeking to enjoin commercial activities relating to our products and processes affected by third-party rights may require us or our collaborative partners to obtain licenses in order to continue to manufacture or market the affected products and processes. Our efforts to defend against any of these claims, regardless of merit, would require us to devote resources and attention that could have been directed to our operations and growth plans. In addition, these actions may subject us to potential liability for damages. We or our collaborative partners may not prevail in a patent action and any license required under a patent may not be made available on commercially acceptable terms, or at all. Any conflicts resulting from the patent rights of others could significantly reduce the coverage of our patents and limit our ability to obtain meaningful patent protection.

If other companies obtain patents with conflicting claims, we may be required to obtain licenses to those patents or develop or obtain alternate technology to manufacture or market the affected products and processes. We may not be able to obtain any such licenses on acceptable terms or at all. Any failure to obtain such licenses could delay or prevent us from pursuing the development or commercialization of our potential products. Our efforts to defend against any of these claims would require us to devote resources and attention that could have been directed to our operations and growth plans.

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We may need to initiate litigation, which could be time-consuming and expensive, to enforce our proprietary rights or to determine the scope and validity of others' rights. If litigation results, a court may find our patents or those of our licensors invalid or may find that we have infringed on a competitor's rights. If any of our competitors have filed patent applications in the US that claim technology we also have invented, the Patent and Trademark Office may require us to participate in expensive interference proceedings to determine who has the right to a patent for the technology. These actions may subject us to potential liability for damages. We or our collaborative partners may not prevail in a patent action and any license required under a patent may not be made available on commercially acceptable terms, or at all.

Substantial sales of our stock or the exercise or conversion of options may impact the market price of our common stock.

While we do not have any plans to issue common stock other than with respect to equity compensation, future issuances of substantial amounts of our common stock could adversely affect the market price of our common stock. Similarly, if we raise additional funds through the issuance of common stock or securities convertible into or exercisable for common stock or sell equity in a subsidiary, the percentage ownership of our present stockholders of the respective entities will be reduced and the price of our common stock may fall.

Our cash and cash equivalents are subject to certain risks which could materially adversely affect our overall financial position.

We invest our cash and cash equivalents in accordance with an established internal policy and customarily in instruments which historically have been highly liquid and carried relatively low risk. However, with turmoil in the credit markets, similar types of investments have experienced losses in value or liquidity issues which differ from their historical pattern. For example, we routinely have invested in money market funds with large financial institutions. One or more of these funds could experience losses or liquidity problems and, although to date some of the largest financial institutions who sponsor such funds have offset similar losses, there is no assurance that our financial institutions would either not incur losses or would offset any losses were they to occur. 

Any adjustment to decrease the ratings of our investments by a statistical rating organization (such as Moody’s or Standard and Poor’s) may have a negative impact on the value of our investments.

Should any of our cash investments permanently lose value or have their liquidity impaired, it would have a material and adverse effect on our overall financial position by imperiling our ability to fund our operations and forcing us to seek additional financing sooner than we would otherwise and such financing may not be available on commercially attractive terms.

In addition, financial instruments may subject us to a concentration of credit risk. Most of our cash and cash equivalents are held by a limited number of financial institutions. To date, we have not experienced any losses on our deposits of cash and cash equivalents. However, if any of these instruments permanently lost value or have their liquidity impaired, it would also have a material and adverse effect on our overall financial position by imperiling our ability to fund our operations and forcing us to seek additional financing sooner than we would otherwise and such financing may not be available on commercially attractive terms.

We expect that we may need to transfer capital to NovaMed from time to time to fund its operations. We need to obtain regulatory approval from China’s State Administration of Foreign Exchange (“SAFE”) in order to make such transfers and there can be no assurance that we will be able to obtain such approval in a timely manner. We have been able to fund the operations of NovaMed to date through commercial credit facilities or through intercompany loans, but we could face difficulties in the future if our efforts to improve profitability and cash flow in NovaMed are not successful, or if we are unable to obtain SAFE approval or obtain further funding for NovaMed.

Furthermore, a majority of our cash is held by our foreign subsidiaries. While such cash is used to fund the operating activities of our foreign subsidiaries and for further investment in foreign operations, and we do not anticipate the need to repatriate cash held by foreign subsidiaries under our current operating plan, if we were to repatriate cash to the US, these amounts may be subject to US income tax upon repatriation.

Our loans receivable are subject to certain risks which could materially adversely affect our financial position.

As part of our May 2013 license and supply agreement with Zensun, we agreed to loan up to $12 million to Zensun, of which approximately $4.75 million had been loaned as of December 31, 2014. The proceeds of the loans are to be usedfor working capital and general corporate purposes by Zensun. As security for the loan agreements, Zensun pledged its entire equity interest in its

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subsidiary Shanghai Dongxin Biochemical Technology Co. Ltd. (whose assets include real property) to us.If these loans were to become impaired and the loans could not be collected, our financial position could be negatively impacted with a charge to operations for the amount of any unpaid principal and interest.

Our ability to utilize our tax attributes may be limited by an “ownership change.”

Our ability to use our tax attributes, such as our US federal income tax net operating loss carryforwards and our tax credit carryforwards, may be substantially restricted if we have had in the past, or have in the future, an “ownership change” as defined in Section 382 of the US Internal Revenue Code. An ownership change occurs if increases in the percentage of our stock held by “5-percent shareholders” (within the meaning of Section 382, which provides that certain public groups can be treated as 5-percent shareholders) collectively exceed more than fifty percent, comparing the lowest percentage of stock owned by each 5-percent shareholder at any time during the testing period (which is generally a three-year rolling period) to the percentage of stock owned by the 5-percent shareholder immediately after the close of any owner shift testing date. Our repurchases of our Common Stock, issuances of any additional significant amounts of our Common Stock for future acquisitions or other transactions and trading in our stock by stockholders, may have increased the possibility that in the future we could experience an ownership change. Trading by our stockholders, our stock repurchases or other transactions could, in the future, cause an ownership change, resulting in an annual limitation on utilization of our tax attributes. If our tax attribute usage is subject to limitation and if we are profitable, our future cash flows could be adversely affected due to an increased tax liability.

Anti-takeover provisions in our charter documents and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult.

Certain anti-takeover provisions of Delaware law and our charter documents as currently in effect may make a change in control of our company more difficult, even if a change in control would be beneficial to our stockholders. Our charter documents contain certain anti-takeover provisions, including provisions in our certificate of incorporation providing that stockholders may not cumulate votes, stockholders' meetings may be called by stockholders only if they hold 25% or more of our common stock and provisions in our bylaws providing that the stockholders may not take action by written consent. Additionally, our Board of Directors has the authority to issue 10 million shares of preferred stock and to determine the terms of those shares of stock without any further action by the stockholders. The rights of holders of our common stock are subject to the rights of the holders of any preferred stock that may be issued. The issuance of preferred stock could make it more difficult for a third-party to acquire a majority of our outstanding voting stock. Delaware law also prohibits corporations from engaging in a business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. Our Board of Directors may use these provisions to prevent changes in the management and control of our company. Also, on December 18, 2006, our Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (collectively, the “Rights”) for each outstanding share of our Common Stock, each Right which entitles the registered holder to purchase from the Company one one-thousandth of a share of the Company’s Series D Preferred Stock, $0.001 par value, at a price of $25.00 pursuant to a Rights Agreement dated as of December 19, 2006, between the Company and Mellon Investor Services LLC. The Rights have certain anti-takeover effects. Under certain circumstances the Rights could cause substantial dilution to a person or group who attempts to acquire the Company on terms not approved by our Board of Directors. Although the Rights should not interfere with an acquisition of the Company approved by the board, the Rights may have the effect of delaying and perhaps improving the terms of an acquisition for our stockholders, or deterring an acquisition of the Company. Also, under applicable Delaware law, our Board of Directors may adopt additional anti-takeover measures in the future.

We may be subject to product liability lawsuits, and our insurance may be inadequate to cover damages.

Clinical trials of any of our current and potential products or the actual commercial sales of our product may expose us to liability claims from the use of these products. We currently carry product liability insurance. However, we cannot be certain that we will be able to maintain insurance on acceptable terms, if at all, for clinical and commercial activities, that any insurance we have will cover any particular claim that is asserted, or that the insurance would be sufficient to cover any potential product liability claim or recall. If we fail to have sufficient coverage, our business, results of operations and cash flows could be adversely affected.

If we are unable to comply with environmental and other laws and regulations, our business may be harmed.

We are subject to various federal, state and local laws, regulations and recommendations relating to the use, manufacture, storage, handling and disposal of hazardous materials and waste products (including radioactive compounds and infectious disease

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agents), as well as safe working conditions, laboratory and manufacturing practices and the experimental use of animals. The extent of government regulation that might result from future legislation or administrative action in these areas cannot be accurately predicted.

We do not currently maintain hazardous materials at our facilities. While we outsource our research and development programs involving the controlled use of biohazardous materials, if in the future we conduct these programs ourselves, we might be required to incur significant cost to comply with environmental laws and regulations. Further, in the event of an accident, we would be liable for any damages that result, and the liability could exceed our resources.

Our business and operations are subject to the risks of being based in particular locations known for earthquakes, other natural catastrophic disasters and service interruptions.

Our corporate headquarters are located in the Silicon Valley area of Northern California, a region known for seismic activity. Although we maintain a disaster recovery policy that includes storage of important corporate data in a different geographic region of the US, all of our significant corporate data is stored in our headquarters facility and accordingly, a significant natural disaster, such as an earthquake, could have a material adverse impact on our business, operating results, and financial condition. Most of our sales are into China for which we maintain our warehouses for finished goods in Hong Kong, which can experience severe typhoon storms, earthquakes or other natural catastrophic disasters. Although our distributors in China may maintain several months supply of our product, were our warehouse capability to be interrupted, either through a natural disaster such as flooding or through a service interruption, such as a lack of electricity to power required air conditioning, our ability to timely deliver finished product to China could be adversely affected which in turn would materially adversely affect our sales and ensuing operating results.

We may be affected by climate change and market or regulatory responses to climate change.

Climate change, including the impact of global warming, could have a material adverse effect on our results of operations, financial condition, and liquidity if it were to disrupt the demand, supply or delivery of product, management of our business, or result in cost increases as a result of government regulation.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we store sensitive data, including intellectual property, our proprietary business information, certain information regarding our business partners, and personally identifiable information of our employees, in our computer networks. The secure maintenance and transmission of this information is critical to our operations and reputation. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Although we have not been adversely affected in any significant manner, we have experienced problems with information security in the past which we believe is primarily due to breaches of security by current or former employees gaining access to restricted information. Any such breach could compromise our computer networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Although we have purchased cyber liability insurance, any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, and damage our reputation, any of which could adversely affect our business and competitive position.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

We currently lease approximately 11,900 square feet of office space for our corporate headquarters in Foster City, California, approximately 40,500 square feet of office space in China, primarily in Beijing and Shanghai, and lease approximately 2,000 square feet of combined office space in Hong Kong and Vietnam. We believe that our existing facilities will be adequate for our current needs and that additional space will be available as needed.

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Item 3.Legal Proceedings

The US Securities and Exchange Commission (“SEC”) and the US Department of Justice (“DOJ”) are each conducting formal investigations of us regarding a range of matters including the possibility of violations of the Foreign Corrupt Practices Act (“FCPA”). We will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations.

In response to these matters, our Board of Directors appointed a Special Committee of independent directors (the “Special Committee”) to oversee our response to the government inquiry. Based on an initial review, the Special Committee decided to undertake an independent investigation as to matters reflected in and arising from the SEC and DOJ investigations including, but not limited to, certain sales and marketing matters in China, in order to evaluate whether any violation of the FCPA or other laws occurred.

During the investigation, the Special Committee instructed management to (i) evaluate and to expand the Company’s training of employees regarding understanding and compliance with laws including the FCPA and other anti-bribery laws and regulations, (ii) evaluate existing compliance and anti-bribery policies and guidelines and to prepare new, more detailed policies and guidelines for implementation after review by our Board of Directors and/or committees of the Board of Directors, (iii) implement a pre-approval policy for certain expenses including payments for, or reimbursement of, travel and entertainment expenses, and sponsorships of certain third-party events, (iv) establish an automated system for recording and approving travel and entertainment expenditures,  and (v) hire a Vice President of Compliance and Internal Audit to monitor and enforce compliance with our policies. Also, upon the recommendation of the Special Committee, the Audit Committee of the Board has retained a forensic accountant to observe and make recommendations regarding our FCPA compliance.

The Special Committee substantially concluded its investigation of those matters and on May 4 and 5, 2011 reported its findings and recommendations to the Board of Directors. The Special Committee has also reported those findings to the SEC and DOJ, and the Special Committee and the Company have continued to cooperate with the on-going SEC and DOJ investigations.

In the Company’s Form 10-Q for the period ended September 30, 2012, filed with the SEC on November 9, 2012, the Company disclosed, among other things, a non-cash impairment loss to fully write down the value of intangible assets recorded as part of the NovaMed Pharmaceuticals, Inc.  (“NovaMed”) acquisition; a remeasurement of the valuation of the contingent consideration recorded as part of the NovaMed acquisition; a significant increase in ZADAXIN channel inventory levels; and internal control issues primarily within the NovaMed organization, and the corporate monitoring thereof, that was concluded to represent a material weakness in internal control over financial reporting. Following our disclosure of these items, the Company received a subpoena from the SEC requesting documents related to these and various other matters regarding the NovaMed acquisition and the Company’s operations in China. After review of the subpoena, and in order to respond to inquiries from the DOJ and SEC and to determine if any wrong-doing occurred, the Audit Committee determined to undertake an independent investigation as to additional matters, including but not limited to our acquisition of NovaMed and FCPA matters, including certain sales and marketing expenses.

We are unable to predict what consequences any investigation by any regulatory agency or by our Audit Committee may have on us. Our cooperation with these investigations has resulted in substantial legal and accounting expenses, has diverted management’s attention from other business concerns and could harm our business. The ongoing investigations and any other regulatory investigations that might be initiated in the future, will result in similar substantial expenses, management diversion and harm to our business. If we fail to comply with regulations or to carry out controls in our Chinese or other foreign operations in a manner that satisfies all applicable laws, our business would be harmed. Any civil or criminal action commenced against us by a regulatory agency could result in administrative orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil or criminal sanctions against certain of our officers, directors and/or employees. The investigations, results of the investigations or remedial actions we have taken or may take, if any, as a result of such investigations, may adversely affect our business in China. In the quarter ended December 31, 2013, we determined that a payment of at least $2.0 million to the government in penalties, fines and/or other remedies is probable. Accordingly, we recorded $2.0 million of operating expense in our fourth quarter 2013 results of operations to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. Since the fourth quarter of 2013, we have monitored the results of the ongoing investigations; developments in such investigations have not indicated any further estimated loss that is both probable and reasonably estimable. If we are subject to adverse findings resulting from the SEC and DOJ investigations, or from our own independent investigations, we could be required to pay higher or lower damages or penalties or have other remedies imposed upon us. In addition, we will incur additional

35

expenses related to remedial measures we are undertaking, and could incur fines or other penalties. The period of time necessary to resolve the investigations by the DOJ and the SEC is uncertain, and these matters are requiring significant time from management and the Board of Directors, as well as significant financial resources which could otherwise be devoted to the operation of our business.

NovaMed was a party to a Distribution and Supply Agreement with MEDA originally entered into in early 2007. Following our acquisition of NovaMed on April 18, 2011, NovaMed continued to perform this agreement; however, MEDA claimed it had a right to terminate the agreement under a change of control provision. A dispute arose over MEDA’s right to terminate the agreement and NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On April 3, 2014, CIETAC issued the final Award of the Arbitral Tribunal. The Arbitral Tribunal found that MEDA did have a right to terminate the agreement upon a change of control, but that MEDA must make reasonable reimbursement to NovaMed before any products’ rights are returned to MEDA. The amount that must be paid includes $333,333 as “unjust enrichment” plus an amount for reasonable compensation for such services provided by NovaMed to MEDA since the entry into the Distribution and Supply Agreement and up to the date of the Award. On April 30, 2014, NovaMed informed MEDA that its determination of reasonable compensation for its services was $3,314,629, including the $333,333 for unjust enrichment. MEDA made a counter offer and the parties were attempting to resolve the matter without an additional arbitration proceeding. In December 2014, NovaMed filed a “Request for Second Arbitration” with CIETAC in order to enforce its right to compensation. The arbitration case is pending with CIETAC and no hearing has taken place yet. The amount of any final payment to NovaMed remains uncertain, and as such the Company has not recognized it as a gain contingency.

On March 11, 2013, Adam Crum filed a derivative lawsuit, purportedly in the name of SciClone, against Friedhelm Blobel, Gary Titus, Jon Saxe, Peter Barrett, Richard Hawkins, Gregg Lapointe and Ira Lawrence in California Superior Court, San Mateo County, captioned Crum v. Blobel, et al, Case No. CIV520331. The lawsuit alleges, based on the restatement of our consolidated financial statements for the year ended December 31, 2011 and certain quarters of 2011 and 2012 resulting from the timing of revenue recognition for certain products sold by the Company’s subsidiary, NovaMed, that the Board of Directors and management breached their fiduciary duties to the Company by not exercising oversight in such a way that they allowed the Company to file financial statements that were materially inaccurate. Plaintiff asserts claims for breach of fiduciary duty, abuse of control and mismanagement. Plaintiff seeks, among other things, injunctive relief, disgorgement, undisclosed damages and attorneys’ fees and costs. The Company and other defendants filed motions to dismiss the complaint. The court granted the motions to dismiss but allowed plaintiff to amend the complaint. An amended complaint was filed on September 19, 2014. On October 24, 2014, the defendants filed motions to dismiss the amended complaint. On December 5, 2014, the court dismissed the lawsuit in its entirety. Plaintiff did not file an appeal and the matter is finally resolved.

Item 4.Mine Safety Disclosures

Not applicable.

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PART II

Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on The NASDAQ Global Select Market of the NASDAQ Stock Market under the symbol “SCLN.”

The following table sets forth the high and low sales prices per share for the quarterly periods indicated, as reported by The NASDAQ Stock Market. The quotations shown represent inter-dealer prices without adjustment for retail markups, markdowns, or commissions, and may not necessarily reflect actual transactions.

	Price Range
	Common Stock
		High		Low
2014
4th quarter	$	9.14	$	6.59
3rd quarter		7.40		4.68
2nd quarter		5.39		4.24
1st quarter		5.34		4.25
2013
4th quarter	$	5.35	$	4.34
3rd quarter		6.30		4.95
2nd quarter		5.13		4.29
1st quarter		5.39		4.34

Stockholders

As of March 4, 2015, there were approximately 230 holders of record of our common stock and 50,056,030 shares of common stock issued and outstanding. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders we are unable to estimate the total number of stockholders represented by these record holders.

Dividends

We have not paid any dividends on our common stock during the fiscal years ended December 31, 2014, 2013, and 2012 and do not currently have plans to pay any cash dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by Item 201(d) of Regulation S-K is incorporated by reference from the section entitled “Securities Authorized for Issuance under Equity Compensation Plans” in Part III, Item 12 of this Form 10-K.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Common stock repurchases by the Company for the fourth quarter of fiscal 2014 were as follows (in thousands, except average price paid per share):

				Total Number		Approximate
				of Shares		Dollar
				Purchased as Part		Value of Shares
	Total		Average	of Publicly		that May Yet Be
	Number		Price	Announced		Purchased
	of Shares		Paid	Plans		Under the
	Purchased		per Share	or Programs		Plans or Programs(1)
October 1 to October 31	162	$	6.92	162	$	8,993
November 1 to November 30	550	$	8.66	550	$	4,206
December 1 to December 31	459	$	8.58	459	$	251
	1,171	$	8.39	1,171

(1) “Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs” reflects the $65.5 million total authorized since the program's inception in October 2011, less the $65.2 million we repurchased through December 31, 2014 (which includes $0.4 million of commissions paid). Subsequent to December 31, 2014, our Board of Directors authorized an additional $15 million bringing the total authorized since the program’s inception to $80.5 million. The stock repurchase program will expire December 31, 2015.

Performance Graph

The following line graph compares the annual percentage change in (i) the cumulative total stockholder return on the Company’s Common Stock since December 31, 2009, with (ii) the cumulative total return on (a) The NASDAQ Composite Index and (b) the NASDAQ Biotechnology Index. The comparison assumes (i) an investment of $100 on December 31, 2009 in each of the foregoing indices and (ii) reinvestment of dividends, if any. The stock price performance shown on the graph below is not necessarily indicative of future stock price performance.

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Item 6.Selected Financial Data

This section presents selected historical financial data for each of the last five fiscal years and is qualified by reference to and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The selected balance sheet data as of December 31, 2014 and 2013 and the selected statement of operations data for each year ended December 31, 2014, 2013, and 2012 have been derived from our audited financial statements that are included elsewhere in this report. The selected balance sheet data as of December 31, 2012, 2011, and 2010 and the selected statement of operations data for each year ended December 31, 2011 and 2010 have been derived from our audited financial statements not included in this report. Historical results are not necessarily indicative of the results to be expected in the future.

		Year Ended December 31,
		(in thousands, except per share data)
	2014		2013		2012(1)		2011(2)		2010
Statement of Operations data:
Total net revenues	$	134,790	$	127,058	$	156,269	$	132,565	$	85,112
Net income	$	25,208	$	10,964	$	9,620	$	28,122	$	21,081
Basic net income per share	$	0.49	$	0.20	$	0.17	$	0.51	$	0.44
Diluted net income per share	$	0.48	$	0.20	$	0.16	$	0.49	$	0.43
Shares used in computing:
Basic net income per share		51,277		53,587		56,637		55,110		47,624
Diluted net income per share		52,684		54,936		58,483		57,387		49,414

		As of December 31,
		(in thousands)
	2014		2013		2012(1)		2011(2)		2010
Balance Sheet data:
Cash and cash equivalents	$	86,228	$	85,803	$	84,228	$	66,654	$	56,142
Restricted cash and short-term investments		75		75		2,759		364		—
Accounts receivable, net of allowance		40,268		39,771		38,109		38,465		30,671
Inventories		10,703		15,238		10,424		11,141		7,078
Deferred tax assets		326		6		369		1,788		—
Total current assets		140,197		143,417		137,329		119,694		95,948
Intangible assets, net		—		—		—		45,185		—
Goodwill		34,521		35,357		34,313		33,868		—
Total assets		181,831		179,859		174,071		200,844		97,807
Borrowings		—		1,651		1,445		2,500		2,500
Contingent consideration		—		—		—		15,400		—
Deferred revenue		596		2,915		—		—		—
Deferred tax liabilities		—		—		153		8,407		—
Other long-term liabilities		114		44		237		469		990
Total stockholders’ equity		155,274		146,595		143,022		150,119		82,188

(1) During fiscal 2012, we identified an impairment indicator with respect to our intangible assets related to our promotion and distribution contract rights and recorded losses of approximately $42.7 million to recognize the full impairment. We recorded a benefit for income tax of approximately $6.8 million for the year ended December 31, 2012 due to the impairment of intangible assets, which resulted in a reversal of deferred tax liabilities. This was partially offset by the impact of recognizing a full valuation allowance on any remaining NovaMed deferred tax assets. In addition, we recorded a non-cash gain of $15.4 million related to the contingent consideration because revenue and EBITDA targets of NovaMed were not achieved.

(2) On April 18, 2011, we acquired NovaMed Pharmaceuticals, Inc. ("NovaMed") for approximately $24.6 million in cash and 8,298,110 shares of SciClone common stock and a contingent right to receive additional cash consideration (“the contingent consideration”) of up to $43.0 million based upon achievement of revenue and earnings targets for the 2011 and 2012 fiscal years. Commencing April 18, 2011, the Company’s financial statements include the assets, liabilities, and operating results of NovaMed.

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Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is a United States (“US”)-headquartered, China-focused, specialty pharmaceutical company with a substantial commercial business and a product portfolio of therapies for oncology, infectious diseases and cardiovascular disorders. We are focused on continuing to grow our revenue and profitability in the future. Our business and corporate strategy is focused primarily on the People’s Republic of China (“China”) where we have built a solid reputation and established a strong brand through many years of experience marketing our lead product, ZADAXIN(thymalfasin). In addition, we have an established product promotion business model with large pharmaceutical partners and we are focused on establishing profitability in all of these collaborations. We believe our sales and marketing strengths position us to benefit from the long-term expansion of the pharmaceutical market in China. This pharmaceutical market currently ranks third among the global pharmaceutical markets, and we believe China will rank second among global pharmaceutical markets by 2020. We seek to expand our presence in China and increase revenues by growing sales and profits of our current product portfolio, launching new products from our development pipeline, adding new, profitable product services agreements and leveraging our strong cash position to in-license additional products.

We operate in two segments which are generally based on the nature and location of our customers: 1) China and 2) the Rest of the World, which includes our US and Hong Kong operations.

We have two categories of revenues: “product sales revenues” and “promotion services revenues.” Our product sales revenues result from our proprietary and in-licensed products, including our lead product, ZADAXIN; Aggrastat®an intervention cardiology product launched in China in 2009 in-licensed from Cardiome Pharma Corp; and products from Pfizer International Trading (Shanghai) Ltd. (“Pfizer”). ZADAXIN has the highest margins in our portfolio as it is a premium product sold exclusively by SciClone. In addition, we anticipate that new marketed products, when and if introduced, can increase the future revenues and profitability of our pharmaceutical business in China over the coming years. Our “promotion services revenues” result from fees we receive for exclusively promoting products under services agreements with certain pharmaceutical partners including Baxter International, Inc. (“Baxter”) in China. We refer to these agreements as promotion agreements, service agreements and distribution contract rights agreements. We recognize promotion services revenues as a percentage of our collaborators’ product sales revenue for these exclusively promoted products. Over time, as additional proprietary or in-licensed products come to the market, we aim to shift our product mix towards those products providing higher margin for us.

Our promotion agreements with Sanofi Aventis S.A. (“Sanofi”), consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. Our revenues for the years ended 2014, 2013, and 2012 with Sanofi were approximately $0.2 million, $25.0 million, and $30.8 million, respectively. Effective July 14, 2014, we entered into a settlement agreement with Sanofi related to promotion fees due to our subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”), and in August 2014, NovaMed Shanghai received approximately 22 million Chinese Yuan Renminbi (“RMB”) (approximately $3.5 million) as final payment from Sanofi. For further information related to this matter refer to “Results of Operations” “Revenues.”

ZADAXIN is approved in over 30 countries and may be used for the treatment of HBV, HCV, and certain cancers, and as a vaccine adjuvant according to the local regulatory approvals we have in these countries. In China, thymalfasin is included in the treatment guidelines issued by the Ministry of Health (“MOH”) for liver cancer, as well as guidelines for treatment of chronic HBV (issued by both the Chinese Medical Association and the Asian-Pacific Association for the Study of the Liver) and invasive fungal infections of critically ill patients (issued by the Chinese Medical Association). Our sales force is focused on increasing sales to the country’s largest hospitals (class 3A with over 500 beds) as well as mid-size hospitals (class 2A). These hospitals serve Tier 1 and Tier 2 cities located mostly in the eastern part of China, which are the largest and generally have the most affluent populations. We are widening our market strategies by targeting numerous smaller hospitals as well as hospitals in more rural areas. We are also seeking to expand the indications for which ZADAXIN could be used, including sepsis.

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In August 2014, we, along with our partner BTG plc (“BTG”), announced that the China Food and Drug Administration has approved the registration of DC Bead®for the embolization of malignant hypervascularized tumors. DC Bead may be used to treat liver cancer, a large and growing indication in China, and we believe our oncology sales team and academic marketing liaisons have established high quality relationships with medical professionals and institutions that specialize in cancer treatment, which we believe will be a valuable asset as we prepare for commercial launch of DC Bead, anticipated in the first half of 2015. BTG and SciClone previously entered into an agreement granting SciClone exclusive licensing and distribution rights to DC Bead in China. Under the agreement, we will purchase product from BTG at a specified price for sale in China.

We are also pursuing the registration of several other therapeutic products in China. These include: Loramyc®, a mucoadhesive tablet formulation of miconazole lauriad to treat oropharyngeal candidiasis; and RapidFilm®, an oral film formulation of ondansetron to treat nausea induced by chemotherapy.

In June 2013, we renewed our promotion agreement with Baxter for a 5-year term, through December 2017. In July 2014, we renewed our product distribution agreement with Pfizer for a 5-year term, through June 2019. We are pursuing additional agreements to generate additional revenue. We continue to seek in-licensing arrangements for well-differentiated products at various stages of development that, if not yet approved, have a defined regulatory approval pathway in China. Our objective is to in-license products that provide us with higher margins, augmenting our product sales revenue and profitability, and we continue to explore opportunities to optimize our promotion services revenues.

In December 2014, we entered into a strategic partnership for two cardiovascular products in China. The partnership includes an agreement granting us a license and the exclusive rights in China to promote two products of The Medicines Company including 1) Angiomax®(bivalirudin) for Injection, an anticoagulant indicated in patients undergoing percutaneous coronary intervention (PCI) with provisional use of glycoprotein IIb/IIIa inhibitor (GPI) and in patients with, or at risk of, heparin-induced thrombocytopenia and thrombosis syndrome undergoing PCI for which a Phase 3 registration trial was completed in China and is currently under review by the China Food and Drug Administration for marketing approval, and 2) Cleviprex®(clevidipine) Injectable Emulsion, a third-generation dihydropyridine calcium channel blocker indicated for the reduction of blood pressure when oral therapy is not feasible or desirable for which a clinical trial application (CTA) for China was filed in 2013. Under the terms of the agreement, we will be responsible for all aspects of commercialization, including pre-and post-launch activities, for both products in the China market (excluding Hong Kong and Macao). We have also agreed to participate in the China registration process for both products. Financial terms of the agreement, in addition to net sales royalties payable to The Medicines Company, include the following additional payments to The Medicines Company: an upfront payment; a project support services fee; and regulatory/commercial success milestone payments of up to an aggregate of $50.5 million.

In May 2013, we entered into a framework agreement with Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”) for the exclusive promotion, marketing, distribution and sale of NeucardinTM in China, Hong Kong and Macao. Neucardin is a novel, first-in-class therapeutic for the treatment of patients with intermediate to advanced heart failure, for which a New Drug Application (“NDA”) was submitted to and accepted for review by the China Food and Drug Administration (“CFDA”) in 2012. The CFDA subsequently informed Zensun that its Phase 2 data is insufficient, and has asked Zensun to submit a new NDA once the ongoing Phase 3 study reached its endpoints. In 2014, we loaned Zensun a total of approximately $4.75 million under two separate loan agreements pursuant to the terms of the framework agreement (refer to Note 6 to the consolidated financial statements appearing under Part II, Item 8).

In June 2013, we entered into a license agreement with Taiwan Liposome Company (“TLC”) which granted us a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell ProFlow®  for the treatment of peripheral arterial disease (“PAD”) and other indications. PAD is a serious cardiovascular condition in which blood flow to the limbs (usually the legs) is restricted due to arterial plaque build-up. Under the terms of the agreement, TLC will be responsible for the continued development including potential clinical trials and regulatory activities, as well as the manufacture and supply of ProFlow, and we will be responsible for all aspects of commercialization including pre-and post-launch activities. The agreement provides for the principal terms of the arrangement between SciClone and TLC, and in March 2014, the companies entered into a supplemental collaboration and license agreement.TLC was recently notified by the CFDA that ProFlow did not receive clinical trial approval and TLC is in the process of appealing the decision.

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We believe our cash and investments as of December 31, 2014 and ongoing revenue generating business operations will be sufficient to support our current operating plan for at least the next 12 months. Our results may fluctuate from quarter to quarter and we may report losses in the future.

Results of Operations

Revenues:

The following table summarizes the year over year changes in our product sales and promotion services revenues (in thousands):

	Years Ended December 31,
	2014		Change	2013		Change	2012
Product Sales, net	$	131,973	33%	$	99,414	-19%	$	123,171
Promotion Services		2,817	-90%		27,644	-16%		33,098
Total Net Revenues	$	134,790	6%	$	127,058	-19%	$	156,269

Product sales were $132.0 million, $99.4 million, and $123.2 million for the years ended December 31, 2014, 2013, and 2012, respectively. The increase of $32.6 million, or 33%, forthe year ended December 31, 2014 compared to 2013, was primarily attributable to an increase in ZADAXIN unit sales and stronger demand for certain oncology products. ZADAXIN sales were $126.1 million for the year ended December 31, 2014, compared to $96.3 million for the prior year, an increase of $29.8 million or 31%, which mainly related to an increase in volume sold, and to a lesser extent related to an increase in selling price. We believe our ZADAXIN product revenues in the first half of fiscal 2013 were adversely affected by the increase in channel inventory we experienced in the third quarter of 2012. We believe channel inventory for ZADAXIN has returned to normalized levels, and we anticipate that ZADAXIN revenues in 2015 will be higher than 2014.  

We deferred approximately $0.6 million in revenue during the third and fourth quarters of 2014 related to Aggrastat product delivered during the year ended December 31, 2014 that may be returned because at the time of shipping the product was within six months of its expiration date.

The decrease of $23.8 million in product sales, or 19%, for the year ended December 31, 2013 compared to 2012, was primarily attributable to a decrease in ZADAXIN unit sales and weaker demand for certain oncology and Aggrastat products.

In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For our proprietary product ZADAXIN, we manufacture our product using our US and European contract manufacturers, and we generate our product sales revenue through sales of ZADAXIN product to Sinopharm Holding Hong Kong Co. Limited. (“Sinopharm”). Sinopharm through its affiliate acts as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. Our ZADAXIN sales occur when Sinopharm purchases product from us without any right of return except for damaged product or quality control issues. Passage of title and risk of loss are transferred to Sinopharm at the time of shipment. After the sale, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier local or regional distributors who, in turn, sell products to hospitals and pharmacies.

Promotion services revenue was $2.8 million, $27.6 million, and $33.1 million and for the years ended December 31, 2014, 2013, and 2012, respectively, and related to products promoted under agreements with Baxter and Sanofi. Promotion services revenue decreased $24.8 million or 90% for the year ended December 31, 2014, compared to 2013, related to the expiration of our promotional agreements with Sanofi as of December 31, 2013. Promotion services revenue decreased $5.5 million or 16% for the year ended December 31, 2013, compared to 2012, related to the non-renewal of our promotional agreements with Sanofi and the wind down of our services with them.

Our promotion agreements with Sanofi, consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. NovaMed Shanghai and Sanofi negotiated a settlement of certain amounts in dispute, effective as of July 14, 2014, and NovaMed received approximately 22

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million RMB (approximately $3.5 million) in August 2014 as final payment from Sanofi. The terms of the settlement resulted in the recognition of promotion services revenue, for the second quarter of 2014, of approximately $0.2 million of Sanofi revenue that had been deferred in the fourth quarter of 2013. The remaining approximately $2.6 million of deferred revenue that had been deferred in the fourth quarter of 2013 was reversed with an equivalent write-down of accounts receivable. This contemporaneous write-down of accounts receivable and deferred revenue had no impact on net income for the second quarter of 2014 or for the year ended December 31, 2014. Our revenues for the years ended December 31, 2014, 2013, and 2012 with Sanofi were approximately $0.2 million, $25.0 million, and $30.8 million, respectively.

In June 2013, we renewed our promotion agreement with Baxter for a 5-year term, through December 2017. We had been renewing our product distribution agreement with Pfizer month-to-month while negotiating for an extended and renegotiated agreement. In July 2014, we renewed our product distribution agreement with Pfizer for a 5-year term, through June 2019. We continue to assess the financial performance of the products we promote under our agreements and their overall value within our entire portfolio of products. Over time, we anticipate the product mix that we promote will change, which may affect our revenues and profitability in the future. If any of these agreements are determined to no longer be beneficial to us and are allowed to expire, or if third parties will not renegotiate, renew or extend the agreements on terms acceptable to us, our revenues would be adversely affected and our profitability may be adversely or beneficially affected. On the other hand, if we are successful in negotiating better terms, there may be a positive impact on our revenues and profitability.

All of our promotion services revenue and a majority of our product revenues related to our China segment. Total China revenues were $130.3 million, $122.6 million, and $152.2 million, or 97% of sales for the years ended December 31, 2014, 2013, and 2012. Rest of the World segment revenues were $4.5 million, $4.4 million, and $4.0 million, or 3%, for each of  the years ended December 31, 2014, 2013 and 2012, and related to sales of ZADAXIN product.

For the year ended December 31, 2014, sales to one customer in China accounted for approximately 94% of our revenues. For the year ended December 31, 2013, sales to two customers in China accounted for approximately 75% and 20% of our revenues (prior to the expiration of our promotion agreements with Sanofi). For the year ended December 31, 2012, sales to three customers in China accounted for approximately 59%, 20% and 12% of our revenues. Our experience with our largest customer has been good and we anticipate that we will continue to sell a majority of our product to them.

Cost of Product Sales:

The following table summarizes the year over year changes in our cost of product sales (in thousands):

	Years Ended December 31,
	2014		Change	2013		Change	2012
Cost of Product Sales	$	23,002	30%	$	17,668	-20%	$	21,996

Cost of product sales was $23.0 million for the year ended December 31, 2014, compared to $17.7 million and $22.0 million for the years ended December 31, 2013 and 2012, respectively, for an increase of $5.3 million or 30% and a decrease of $4.3 million or 20%, respectively.  

The increase of $5.3 million, or 30%, for the year ended December 31, 2014, compared to 2013, was attributable to a $2.0 million increase in ZADAXIN cost of product sales related primarily to an increase in ZADAXIN unit sales and a $3.3 million increase in Aggrastat and oncology cost of sales as a result of higher sales volume of Aggrastat and certain oncology products.  Cost of sales for Aggrastat product also increased for the year ended December 31, 2014 related to a provision of $1.6 million for excess Aggrastat inventory expected to expire and $0.2 million associated with Aggrastat inventory shipped within six months of expiration.

The decrease of $4.3 million, or 20%, for the year ended December 31, 2013, compared to 2012, was attributable to a $0.6 million decrease in ZADAXIN cost of product sales related to a decrease in ZADAXIN unit sales and a $3.7 million decrease in Aggrastat and oncology cost of sales as a result of lower sales volume of Aggrastat and Methotrexate product and discontinued sales of Adriamycin and Daunoblastina.

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ZADAXIN cost of sales were $17.5 million for the year ended December 31, 2014, compared to $15.5 million and $16.2 million for the years ended December 31, 2013 and 2012, respectively. Gross margin for ZADAXIN was 86.1% for the year ended December 31, 2014, compared to 83.9% and 85.7% for the years ended December 31, 2013 and 2012, respectively.The increase in gross margin for ZADAXIN for the year ended December 31, 2014, compared to the year ended December 31, 2013, was due primarily to higher production volume lowering per unit overhead costs and manufacturing efficiencies. The decrease in gross margin for ZADAXIN for the year ended December 31, 2013, compared to the year ended December 31, 2012, was due primarily to costs incurred related to planned manufacturing process improvements for ZADAXIN, costs incurred for product warehousing fees related to the renewal of our ZADAXIN China import license, higher overhead costs related to lower production volume, and to a reduction in the list price of ZADAXIN since October 2012.

We expect our ZADAXIN cost of product sales and gross margins to fluctuate from period to period depending on the level of sales and price of our products, the absorption of product-related fixed costs, currency exchange fluctuations, any charges associated with excess or expiring finished product inventory, and the timing of other inventory period costssuch as manufacturing process improvements for the goal of future cost reductions.

Overall, we expect our gross margin percentages in 2015 to remain comparable to 2014, although they may fluctuate from quarter to quarter.

Sales and Marketing:

The following table summarizes the year over year changes in our sales and marketing expenses (in thousands):

	Years Ended December 31,
	2014		Change	2013		Change	2012
Sales and Marketing	$	48,477	-12%	$	55,240	-21%	$	70,327

Sales and marketing expenses were $48.5 million, $55.2 million, and $70.3 million for the years ended December 31, 2014, 2013, and 2012, respectively, for a decrease of$6.8 million or 12% for the year ended December 31, 2014 compared to 2013, and a decrease of $15.1 million or 21%, for the year ended December 31, 2013 compared to 2012. Sales and marketing expenses have decreased for the years ended December 31, 2014 and 2013 related to the expiration of the Sanofi distribution agreements and the reduction in costs associated with marketing the products under the Sanofi agreements. As a result of our restructuring in the fourth quarter of 2013 in connection with the expiration of our Sanofi distribution agreements and other expense-saving measures, we have reduced our sales force by over 300 salespersons since 2012. The reductions in sales and marketing expenses for the years ended December 31, 2014, compared to 2013 and 2012, were partially offset by increases in our sales and marketing efforts for ZADAXIN in 2014.

We anticipate total sales and marketing expenses for the year ending December 31, 2015 to be higher than those incurred for the year ended December 31, 2014 related to growth in our sales and marketing efforts for ZADAXIN.

Research and Development (“R&D”):

The following table summarizes the year over year changes in our R&D expenses (in thousands):

	Years Ended December 31,
	2014		Change	2013		Change	2012
Research and Development	$	14,581	81%	$	8,044	56%	$	5,145

Research and development (“R&D”) expenses were $14.6 million, $8.0 million, and $5.1 million for the years ended December 31, 2014, 2013, and 2012, respectively. For the years ended December 31, 2014 and 2013, we recorded $11.0 million and $5.0 million, respectively, in research and development expenses related to upfront costs under our in-license arrangements. In addition during the years ended December 31, 2014 and 2013, R&D expenses included costs incurred related to preparation for a potential sepsis clinical study for ZADAXIN we were contemplating. This increase in R&D for the year ended December 31, 2013, compared to 2012, was partially offset by decreases to R&D expenses for the year ended December 31, 2013 related to the announcement in

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March 2012 of the discontinuation of our SCV-07 phase 2b clinical trial for the delay to onset of severe oral mucositis based on the results of the pre-planned interim analysis that indicated that the trial would not meet the pre-specified efficacy endpoints.

The major components of R&D expenses include salaries and other personnel-related expenses, including associated stock-based compensation, facility-related expenses, depreciation of facilities and equipment, license-related fees, services performed by clinical research organizations and research institutions and other outside service providers.

We anticipate our research and development expenses to increase in 2015 compared to 2014 related to potential license fee payments, milestone payments expected to occur under license arrangements, and related to research and development activities in China.

General and Administrative:

The following table summarizes the year over year changes in our general and administrative expenses (in thousands):

	Years Ended December 31,
	2014		Change	2013		Change	2012
General and Administrative	$	22,746	-30%	$	32,496	52%	$	21,344

General and administrative expenses were $22.7 million, $32.5 million, and $21.3 million for the years ended December 31, 2014, 2013, and 2012, respectively. General and administrative expenses for the year ended December 31, 2014 decreased by $9.8 million, or 30%, compared to the year ended December 31, 2013, mainly related to a decrease in legal fees associated with the ongoing government investigation, MEDA Pharma GmbH & Co KG (“MEDA”) arbitration and other corporate matters. During the year ended December 31, 2014, general and administrative expenses also reflected credits to bad debt expense for $1.5 million in recovery of previously fully reserved substantially delinquent accounts receivable balances from a particular customer that had been fully reserved prior to 2014.

General and administrative expenses for the year ended December 31, 2013 increased by $11.2 million, or 52%, compared to the year ended December 31, 2012. During the year ended December 31, 2013, we recorded an additional $2.4 million in bad debt expense related to significantly past due accounts receivable from the customer noted above in order to fully reserve such receivables. The increase in bad debt expense was determined as a result of continual negotiations that indicated the accounts receivable balance may not be recoverable. Additional increases in general and administrative expenses for the year ended December 31, 2013, included higher professional expenses of approximately $5.3 million related to legal matters associated with the ongoing government investigation and our ongoing improvements to our FCPA compliance efforts, and approximately $1.1 million mainly related to accounting matters associated with the restatement of our consolidated financial statements for the year ended December 31, 2011 and certain quarters of 2012 and 2011 and matters involving consultation with the Securities and Exchange Commission related to one aspect of our accounting for one of our contracts, as well as higher general and administrative personnel-related costs and higher legal costs related to other general corporate matters.

We expect our general and administrative expenses in 2015 to increase compared to 2014 related to growth in our business. Our ongoing investigations with the SEC and DOJ are unpredictable and may result in higher legal costs or fines or penalties and could affect our expenses or the timing thereof. We do not expect to incur any significant acquisition-related costs in 2015, though we continue to evaluate opportunities in China, which may result in increased general and administrative expenses in the future. See Part I, Item 3 “Legal Proceedings”.

Restructuring Charges:

We had no restructuring expenses for the year ended December 31, 2014. For the year ended December 31, 2013, we recorded $1.2 million to restructuring charges to reflect planned reductions in our China segment related to our sales force and the one-time termination benefits for approximately 175 employees as a result of the non-renewal of the Sanofi promotion agreement as of December 31, 2013. The amounts provided were paid in 2014. For the year ended December 31, 2012, we recorded $1.1 million in restructuring charges related to the Rest of the World segment to reflect reductions in our staffing following the discontinuation of the Company’s SCV-07 phase 2b clinical trial.

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Estimated SEC/DOJ Investigation Loss:

As of December 31, 2013, we had determined that a payment of $2.0 million to the government in penalties, fines and/or other remedies was probable. Accordingly, we recorded $2.0 million of operating expense during the quarter ended December 31, 2013 to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. Since that time, we have monitored developments in the investigations for which facts and circumstances have not yet indicated any further loss that is both probable and reasonably estimable. We could be required to pay higher or lower fines or other penalties, but we cannot predict what the outcome of those investigations will be, or the timing of any resolution.

Amortization and Impairment of Acquired Intangible Assets:

For the year ended December 31, 2012, we recognized $2.6 million in amortization of acquired intangible assets. Amortization of acquired intangible assets reflects the amortization of services and distribution contract intangible assets acquired as part of the NovaMed acquisition on April 18, 2011.

During the year ended December 31, 2012, we identified an impairment indicator with respect to the intangible assets related to our promotion and distribution contract rights. We determined that the undiscounted cash flows estimated to be generated by the intangible assets were less than the carrying amounts. We further performed a discounted cash flow analysis related to the intangible assets and determined that a full impairment should be recorded. As a result, we recognized a non-cash impairment loss of approximately $42.7 million for the year ended December 31, 2012. No further amortization expense will be recorded in future periods related to our NovaMed intangible assets.

Change in Fair Value of Contingent Consideration:

As part of the acquisition of NovaMed, we would have been required to pay up to an additional $43.0 million in earn-out payments on the successful achievement of revenue and earnings targets for the 2012 and 2011 fiscal years (the “earn-out” or “contingent consideration”). We initially recorded $18.9 million as the estimated fair value of the contingent consideration. The fair value of the contingent consideration was remeasured each quarter, and changes to the fair value were recorded to contingent consideration expense or gain. As of December 31, 2012, the fair value of the earn-out was determined to be $0, resulting in a gain of $15.4 million for the year ended December 31, 2012. The significant reduction in the valuation of the contingent consideration expense during 2012 was primarily due to revenue and EBITDA (earnings before interest, depreciation and taxes) targets not being achieved and to the reduced probability of renewal relating to NovaMed’s product distribution agreements including, in particular, the target of renewing the Depakine services agreement with Sanofi for a five-year term. The Depakine services agreement was extended through December 31, 2013, a term less than five years.

Other Income:

On July 8, 2013, we and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which we retained approximately $0.8 million in cash and 342,300 shares of our common stock, having a combined fair value of approximately $2.6 million on the settlement date. As a result, we recorded $2.6 million in the year ended December 31, 2013 to other income related to this settlement.

Provision (Benefit) for Income Tax:

The provision (benefit) for income tax relates to our foreign operations in China. The provision for income tax was $1.2 million and $2.2 million for the years ended December 31, 2014 and 2013, respectively, compared to a benefit of $3.3 million for the year ended December 31, 2012. The tax provision decreased $1.0 million for the year ended December 31, 2014, compared to the year ended December 31, 2013, principally due to a reduction of approximately $0.2 million in our liabilities for uncertain tax positions (and associated accrued interest) due to certain tax years becoming closed to assessment due to the statute of limitations. Tax expense was also lower for the year ended December 31, 2014, compared to 2013, as a result oflower taxable income related to our China operations.

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The tax benefit decreased $5.9 million for the year ended December 31, 2013, compared to 2012, primarily related to the reversal of deferred tax liabilities due to the impairment loss of $42.7 million recorded for intangible assets, partially offset by the impact of recording a full valuation allowance on NovaMed deferred tax assets, offset by tax expense related to growth in our China operations.

The statutory tax rate in China was 25% in 2014, 2013 and 2012. Our statutory tax rate in China is 25% in 2015.We expect the provision for income tax to increase for the year ending December 31, 2015, compared to the year ended December 31, 2014 due to growth in our China operations.

We have not recorded any US federal or state income tax expense for the years ended December 31, 2014, 2013, and 2012. Undistributed earnings of our foreign subsidiaries amounted to approximately $138.3 million as of December 31, 2014. These earnings are considered to be indefinitely reinvested and accordingly, no US income taxes have been provided thereon.

As of December 31, 2014, we had net operating loss carryforwards for federal income tax purposes of approximately $110.3 million that expire in the years 2020 through 2034. As of December 31, 2014, we had federal research and development, orphan drug and investment tax credit carryforwards of approximately $12.2 million that expire in the years 2018 through 2034.

Because of the “change in ownership” provisions of the Internal Revenue Code, a portion of our net operating loss carryforwards and tax credit carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. As a result of the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities.

Liquidity and Capital Resources

We continue to closely manage our liquidity and capital resources. We rely on our operating cash flows, cash and cash equivalents, and short-term investments to provide for our liquidity requirements. We continue to believe that we have the ability to meet our liquidity needs for at least the next 12 months to fund our working capital requirements of our operations, including investments in our business, share repurchases,  and to fund our business development activities.

The following tables summarize our cash and investments and our cash flow activities as of the end of, and for each of, the years presented (in thousands):

	As of December 31,
	2014		2013
Cash and investments	$	86,228	$	85,803

As of December 31, 2014, we had $86.2 million in cash, cash equivalents and investments of which $78.8 million was located in subsidiaries of the Company outside the US. Cash and cash equivalents held by subsidiaries outside the US are held primarily in US dollars. Such cash and cash equivalents are used to fund the operating activities of our foreign subsidiaries and for further investment in foreign operations, which may include in-licensing new products, particularly for China, and for potential acquisitions. As of December 31, 2014, we determined that our remaining $138.3 million accumulated undistributed earnings of foreign subsidiaries continues to be indefinitely reinvested outside of the US. In making this determination, the following attributes were considered: (i) the expected future needs of the foreign subsidiaries, including working capital, debt service, capital expenditures, as well as additional investmentsto support the infrastructure in our China subsidiaries, (ii) additional investments to support our expansion in the China market as well as planned business acquisitions and/or product licensing transactions, and (iii) there is no foreseeable need to repatriate any additional undistributed earnings to fund our limited US operations. Should circumstances change and it becomes apparent that some or all of the undistributed earnings will be remitted, we will accrue for income taxes not previously recognized. Upon distribution of those earnings, we may be subject to US federal and state income taxes. Determination of such additional tax is not practicable as it is dependent on several future uncertainties, including the amount of US tax losses, available net operating losses and, potentially, foreign tax credits available at the time of the repatriation. Based on our current operating plan, we do not anticipate the need to repatriate cash and cash equivalents held by foreign subsidiaries in the foreseeable future.

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	Years Ended December 31,
	2014		2013		2012
Cash provided by (used in):
Operating activities	$	27,609	$	9,502	$	43,521
Investing activities	$	(6,203)	$	55	$	(1,203)
Financing activities	$	(20,806)	$	(8,353)	$	(24,699)

Net cash provided by operating activities was $27.6 million for the year ended December 31, 2014 and primarily reflected the net income for the period, adjusted for non-cash items such as stock-based compensation expense, provisions for expiring inventory, depreciation and amortization expense, and changes in operating assets and liabilities. As of December 31, 2014, we had accounts receivable totaling approximately $0.9 million from a single customer, which are substantially delinquent and which we are actively trying to collect, and for which we have recorded a reserve of $0.9 million. We have recently entered into a settlement agreement with the customer in October 2014 to collect the remaining balance (refer to Note 1 to the consolidated financial statements appearing under Part II, Item 8). Accounts receivable increased $3.3 million mainly related to an increase in ZADAXIN sales. Inventory decreased $5.9 million mainly related to ZADAXIN inventory sales during the first half of 2014 exceeding our purchase levels, excluding approximately $2.9 million in Pfizer and Aggrastat inventory not yet paid for as of December 31, 2014. Accounts payable and accrued liabilities decreased $5.9 million mainly related to sales and marketing and manufacturing expense payments made during the year ended December 31, 2014.

Net cash provided by operating activities was $9.5 million for the year ended December 31, 2013 and primarily reflected the net income for the period, adjusted for non-cash items such as stock-based compensation expense, depreciation and amortization expense, non-cash escrow share settlement, loss on maturity of available-for-sale investments, provision for losses on accounts receivable, and changes in operating assets and liabilities. Accounts receivable increased $4.0 million related to an increase in our ZADAXIN sales during the fourth quarter of 2013, compared to the same quarter of 2012 when there was excess inventory of ZADAXIN in the channel.  Inventory increased $4.7 million due to the completion our new manufacturing process and processing of new batches.

Net cash provided by operating activities was $43.5 million for the year ended December 31, 2012 and primarily reflected the net income for the period, adjusted for non-cash items such as intangible asset impairment, the change in the fair value of the contingent consideration, stock-based compensation expense, depreciation and amortization expense, and changes in operating assets and liabilities. Such changes included a $2.2 million increase in accounts payable mainly related to professional and manufacturing services, and a $3.0 million increase in accrued liabilities mainly related to increases in sales and marketing and tax accruals.

Net cash provided by (used in) investing activities was ($6.2) million, $0.1 million, and ($1.2) million for the years ended December 31, 2014, 2013, and 2012, respectively. For the years ended December 31, 2014, 2013, and 2012, purchases of property and equipment were $1.5 million, $0.3 million, and $1.1 million, respectively. In addition, for the year ended December 31, 2013, we received proceeds of $0.4 million, from the sale or maturity of our available-for-sale securities, net of purchases. In 2012, we used $0.1 million in cash to purchase available-for-sale securities. In addition, as part of our license and supply agreement with Zensun, we agreed to loan up to $12 million in total to Zensun under two separate loan agreements. Pursuant to these agreements, we loaned $4.75 million to Zensun during the second half of 2014 (such lendings are further described in Note 6 to the consolidated financial statements appearing under Part II, Item 8), which is reflected in the $6.2 million of net cash used in investing activities for 2014. The proceeds of the loans are to be used for working capital and general corporate purposes by Zensun. To secure the loans, Zensun pledged its entire equity interest in its subsidiary, Shanghai Dongxin Biochemical Technology Co. Ltd. (whose assets include real property) to SPIL China.

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Net cash used in financing activities was $20.8 million, $8.4 million, and $24.7 million for the years ended December 31, 2014, 2013, and 2012, respectively. During the years ended December 31, 2014, 2013, and 2012, we used $24.4 million, $12.5 million, and $24.8 million, respectively, to repurchase and retire approximately 3.8 million, 2.4 million, and 4.7 million shares of our common stock under our stock repurchase program. For the years ended December 31, 2014, 2013, and 2012, we also received $5.2 million, $1.7 million, and $3.5 million of proceeds, respectively, from the issuances of common stock made under our stock award plans. For the year ended December 31, 2013, our subsidiary borrowed $0.6 million and repaid $2.0 million under its loan agreement with Shanghai Pudong Development Bank Co. Ltd that expired August 29, 2013. All amounts borrowed were repaid by the expiration date. The restricted cash that was used of $2.3 million during the year ended December 31, 2012 to secure the letter of credit related to the loan agreement was released during the year ended December 31, 2013 when the letter of credit was cancelled.

In December 2013, our subsidiary, NovaMed Shanghai, entered into a 10.0 million RMB revolving line of credit facility (approximately $1.6 million USD) and a maximum 15.0 million RMB loan facility (approximately $2.4 million USD) secured by its accounts receivable with Shanghai Pudong Development Bank Co. Ltd. (the “Credit Facility”). In June 2014, NovaMed Shanghai repaid the 10.0 million RMB (approximately $1.6 million USD) under the Credit Facility. The Credit Facility expired on November 30, 2014 and all amounts borrowed were repaid by the expiration date.

The following summarizes our other future contractual obligations as of December 31, 2014 (in thousands):

		Payments Due by Period
				Less than						More Than
Contractual Obligations		Total		1 Year		1-3 Years		3-5 Years		5 Years
Operating leases (1)	$	6,469	$	2,290	$	3,560	$	619	$	—
Purchase obligations (2)		18,143		18,143		—		—		—
Uncertain tax positions (3)		4,174		—		—		—		—
Total	$	28,786	$	20,433	$	3,560	$	619	$	—

(1) These are future minimum rental commitments for office space and copiers leased under non-cancelable operating lease arrangements.

(2) These consist of purchase obligations with manufacturers and distributors.

(3) As we are not able to reasonably estimate the timing of the payments or the amount by which our obligations for unrecognized tax benefits will increase or decrease over time, the related balances have not been reflected in the ”Payments Due by Period” section of the table.

In July 2014, our Board of Directors approved an increase of $15 million to the Company’s stock repurchase program, bringing the total authorized since the program’s inception in October 2011 to $65.5 million and the Board of Directors extended the program through December 31, 2015. Under this program, we repurchased and retired 3.8 million shares at a cost of $24.4 million during the year ended December 31, 2014, bringing the total repurchases since the program’s inception to approximately 11.7 million shares at a cost of $65.2 million through December 31, 2014. Subsequent to December 31, 2014, the Board of Directors approved an additional increase of $15 million to the Company’s stock repurchase program, bringing the total authorized to $80.5 million. We consider several factors in determining when to make share repurchases including, among other things, our cash needs, the availability of funding and the market price of our stock. We expect that cash provided by future operating activities, as well as available cash and cash equivalents and short-term investments, will be the sources of funding for our share repurchase program. 

We recorded $2.0 million of operating expense in our fourth quarter 2013 results of operations to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. We have monitored developments in the ongoing investigations since that time and have not determined that further adjustments to the estimated loss are warranted. However, we cannot predict what the outcome of the SEC/DOJ investigations will be, or the timing of any resolution. Any actual fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could be materially higher than the amount recorded and could impact our cash and financing needs.

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Under our license agreements with third parties we have agreed to various milestone payments related to regulatory and commercial success and other achievements that may require substantial payments in the future and we anticipate making a milestone payment of approximately $2 million in 2015 related to one of these agreements.

We believe that our existing cash, cash equivalents and investments and ongoing revenue generating business operations will be sufficient to support our current operating plan for at least the next 12 months. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may subject us to restrictive covenants and significant interest costs. To the extent that we raise additional funds through collaboration and licensing arrangements, we would be required to relinquish some rights to our technologies, product candidates or marketing territories. Additional financing or collaboration and licensing arrangements may not be available when needed either at all or, on favorable terms.

We intend to continue to explore alternatives for financing to provide additional flexibility in managing our operations, in-licensing new products, particularly for China, and potential acquisitions, as may be required. The unavailability or the inopportune timing of any financing could prevent or delay our long-term product development and commercialization programs, either of which could hurt our business. We cannot assure you that funds from financings, if any, will be sufficient to in-license additional products. The need, timing and amount of any such financing would depend upon numerous factors, including the status of the pending regulatory investigations and pending litigations, the level and price of our products, the timing and amount of manufacturing costs related to our products, the availability of complementary products, technologies and businesses, the initiation and continuation of preclinical and clinical trials and testing, the timing of regulatory approvals, developments in relationships with existing or future collaborative parties, the status of competitive products, and various alternatives for financing. We have not determined the timing or structure of any transaction.

Off-Balance Sheet Arrangements

We do not have any off-sheet balance sheet arrangements.

Critical Accounting Policies and Significant Judgments 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 are 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 States, which require 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 and judgments. 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 when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured.

Product Revenue. We recognize product revenue from selling ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm and its affiliates are recognized at time of shipment when title to the product is transferred to them. We also earn product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. Sales of Pfizer products, from the date of the acquisition of NovaMed into October 2012, were based on the “sell-through” method as our distribution arrangement for these products allowed for payment terms dependent on when the distributor sold the product. We did not

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maintain information on the timing of “sell-through” of the Pfizer products by the distributor through this period, therefore we applied the cash receipts approach for the application of the “sell-through” method as it was the most reliable information available. Accordingly, during this period of time, revenue for sales of the Pfizer products was recognized on receipt of cash from the distributor. On October 21, 2012, we amended the agreement with the distributor which amendment removed any contingent payment terms. Prior to the amendment, the agreement allowed for delayed payment based on the timing of sales from the distributor to the next tier customer. The amendment changed the payment terms to 60 days, thus ensuring that the distributor could not withhold payment until after the distributor received payment on sale of product to its next tier customer. The combination of the revised payment terms, together with all of the other contractual restrictions on the distributor (e.g., no return rights or other terms that may raise question as to whether or not they had taken title and assumed “risk of loss”), permitted revenue to be recognized on a “sell-in” basis upon the amendment. Therefore, from October 21, 2012 onward, we used the “sell-in” method for recognition of related revenue. All other product sales are also recognized on the “sell-in” method, or when the medical products have been delivered to the importers or distributors.

Promotion Services Revenue. We recognize promotion services revenue after designated medical products are delivered to the distributors as specified in the promotion services contracts, which marks the period when marketing and promotion services have been rendered, and the revenue recognition criteria are met. In certain arrangements, we were required to return or refund a portion of promotion services fees received during interim periods from pharmaceutical customers if defined annual sales targets were not achieved. Under our agreements with these customers, if the agreement was terminated, and provided such targets had been met on a “pro rata” basis at the date of contract termination, we were entitled to retain the amounts paid. Due to these contractual provisions, we recognized revenue during interim periods without reduction for amounts subject to refund based on Method 2 of Accounting Standards Codification 605-20-S99-1, “Accounting for Management Fees Based on a Formula.”

Revenue Reserve. We generally maintain a revenue reserve for product returns based on estimates of the amount of product to be returned by our customers which may result from expired or damaged product on delivery or for price reductions on the related sales and is based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, we are expected to replace products that have expired on delivery or are deemed to be damaged or defective when delivered. The calculation of the product returns reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the product returns reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions. As of December 31, 2014 and 2013,  our revenue reserves were approximately $0.1 million and $0, respectively; the reserves were recorded as accrued liabilities on our consolidated balances sheets.

We evaluate our returns reserve quarterly and adjust it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect our results of operations or financial position. It is possible that we may need to adjust our estimates in future periods.

Accounts Receivable Reserve

We record a receivable reserve based on a specific review of our overdue invoices. Our estimate for a reserve is determined after considering our existing contractual payment terms, payment patterns of our customers and individual customer circumstances, the age of any outstanding receivables and our current customer relationships. Accounts receivable are charged off at the point when they are considered uncollectible. As of December 31, 2013, we had $3.5 million in fully reserved accounts receivable from one customer that were more than one year past due. As a result of our negotiations with the customer, we collected $0.5 million in July 2014. In October 2014, our subsidiary, SciClone Pharmaceuticals International China Holding Ltd (“SPIL China”) executed an agreement with this customer providing for settlement of $1.9 million of the remaining outstanding $3.0 million in installments. The settlement agreement provided that the customer will pay SPIL China $1.9 million in installment payments to be made as follows: $500,000 before October 31, 2014; $500,000 before November 30, 2014; $400,000 before May 31, 2015; and the remaining balance of $500,000 to be made by December 31, 2015. The terms of the settlement agreement resulted in the write-off of $1.1 million in previously fully reserved accounts receivable with an equivalent charge-off of the allowance for bad debt, which had no impact on net income in 2014, as the subsequent agreement provided direct evidence that the $1.1 million previously reserved will not be collected in the future. We received the first and second payments under the terms of the settlement agreement in October and December 2014 totaling $1.0 million, and these gains on recovery, as well as the $0.5 million payment received in July 2014, were recorded as

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reductions to general and administrative expense for the year ended December 31, 2014. We will continue to maintain a full reserve on the remaining outstanding accounts receivable balance of $0.9 million for this customer until payments are received.

Inventories

Our inventories are valued at the lower of cost or market (net realizable value), with cost determined on a first-in, first-out basis and include amounts related to materials, labor and overhead. 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. If obsolete or excess items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the impairment is first recognized. During the years ended December 31, 2014, 2013 and 2012, we recorded inventory write-downs of $1.6 million, $0, and $0, respectively, principally related to carrying value reductions for excess Aggrastat product.

Contingent Consideration

As part of the acquisition of NovaMed, we would have been required to pay up to $43.0 million in contingent consideration on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years. As of December 31, 2012, fair value of the earn-out was determined to be $0. Fair value is defined 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. When quoted prices and observable inputs are unavailable, fair values are based on internally developed cash flow models and are classified in level 3 of the valuation hierarchy. Through September 30, 2012, we estimated the fair value of the contingent consideration using a Monte Carlo simulation model and classified it in level 3 of the valuation hierarchy. The inputs used in the Monte Carlo simulation model reflected assumptions and estimates including for the risk-adjusted discount rate and volatility. Our assessment of the inputs used in the fair value measurement required judgment, and affected the valuation of the contingent consideration being measured.

The earn-out was based upon certain financial performance metrics, including a revenue-based formula and an adjusted EBITDA based formula. The earn-out provisions were subject to a number of adjustments and acceleration provisions. The total earn-out payments described above could have been increased by $10.0 million (but not exceeding a total maximum contingent cash consideration of $43.0 million) or reduced by $10.0 million, depending on whether we were able to achieve targets relating to product distribution agreements. We were required to remeasure the contingent consideration each reporting period until the amount of the payment was finalized, which occurred December 31, 2012. The change in the estimated fair value of the contingent consideration was recognized as an adjustment to operating expenses. For the year ended December 31, 2012, the estimated fair value of the contingent consideration decreased by $15.4 million, primarily related to the decrease in the estimated probability of achieving revenue and EBITDA targets and to the reduced probability of renewal relating to NovaMed’s product distribution agreements, including, in particular, the target of renewing the Depakine services agreement with Sanofi for a five-year term. The Depakine services agreement was extended through December 31, 2013, a term less than five years.

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with ASC Topic 805, and ASC Topic 350, Intangibles — Goodwill and Other. ASC Topic 805 requires that the acquisition method of accounting be used for all business combinations and specifies the criteria that must be met in order for intangible assets acquired in a business combination to be recognized and reported apart from goodwill. Intangible assets and goodwill are tested for impairment at least annually or whenever events or circumstances occur that indicate impairment might have occurred or circumstances suggest that the carrying value of these assets may not be recoverable and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets in accordance with ASC Topic 350. Judgment regarding the existence of impairment indicators will be based on operating results, changes in the manner of our use of the acquired assets or our overall business strategy, and market and economic trends.

Goodwill relates to our China segment which focuses on our primary pharmaceutical distribution market, consisting of the NovaMed business and the legacy China business of the Company, which represent a single reporting unit. For the years ended

52

December 31, 2014, 2013 and 2012, we tested for goodwill impairment by quantitatively comparing the fair value of the reporting unit to its carrying amounts - step one of the two-step impairment test. We estimated the fair value of the China reporting unit using a discounted cash flow model. This valuation approach considers a number of factors that include, but are not limited to, expected future cash flows, growth rates, discount rates, and requires us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. Although we believe our assumptions are reasonable, actual results may vary significantly and may expose us to impairment charges in the future. Our methodology for determining fair value remained consistent for the periods presented. If we determine that the carrying value of our reporting unit exceeds its fair value, we would then calculate the implied fair value of the reporting unit goodwill as compared to its carrying value to determine the appropriate impairment charge. After completing our annual impairment review for the reporting unit as of December 31, 2014, 2013 and 2012, and our interim impairment review during the third quarter of 2013, as a result of the notification by Sanofi of the non-renewal of our promotional agreements with them at the end of their terms on December 31, 2013, we concluded that goodwill was not impaired in 2014, 2013, or 2012.

As part of the acquisition of NovaMed, we recorded intangible assets related to promotion and distribution contract rights. The promotion and distribution contracts expire in one to ten years, with the majority expiring in one to two years, but are subject to renewal or extension. The estimated useful life was approximately 13.5 years. Although revenues from the NovaMed business grew in 2012 after the acquisition in April 2011, NovaMed’s overall revenue growth and profitability did not meet our expectations. This condition was considered to be an impairment indicator with respect to the intangible assets related to our promotion and distribution contract rights. We determined that the undiscounted cash flows estimated to be generated by the intangible assets were less than the carrying amounts. We further performed a discounted cash flow analysis related to the intangible assets and recognized a non-cash impairment loss of approximately $42.7 million for year ended December 31, 2012, which represented the entire amount of the intangible assets.

Loans Receivable

Loans receivable consist of two loans to one third party (see Note 6). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the consolidated balance sheet as of December 31, 2014. Carried balances are subsequently adjusted for payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote.

Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date.

Management assessed the credit worthiness of the counterparty by reviewing available borrower financial information and substantiation of the value of the pledged security interest in the course of preparing our consolidated financial statements. Management also considered in its analysis that the borrower was compliant with the terms of the loans, and that interest payments have been timely made. As of December 31, 2014, management concluded the loans receivable were not impaired, and there was no allowance for loan losses.

Contingent Liabilities

We record as liabilities estimated amounts for litigation, claims or other legal actions that are probable and can be reasonably estimated. The likelihood of a material change in these estimated reserves is dependent on the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and circumstances in extended litigation, which could change claims or assessments when both the amount and range of loss on some outstanding litigation is uncertain. We disclose in the footnotes of the financial statements when we are unable to make a reasonable estimate of a material liability that could result from unfavorable outcomes. As events occur, we will assess the potential liability related to any pending litigation, claims or other legal actions and adjust our estimates accordingly. As of both December 31, 2014 and 2013, we determined that a payment of $2.0 million to the government in penalties, fines and/or other remedies is probable related to the SEC and DOJ ongoing investigations. We

53

recorded $2.0 million in operating expense during the quarter ended December 31, 2013, to reflect our estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. We have monitored developments in the ongoing investigations since that time and have not determined that further adjustments to the estimated loss are warranted. However, we cannot predict what the outcome of the SEC/DOJ investigation will be, or the timing of any resolution. Any fines or penalties that may be imposed, or other losses that may be realized related to the investigations could vary from the amount accrued, and such adjustments could materially impact our financial statements.

Stock-Based Compensation

We record stock-based compensation costs relating to share-based payment transactions, including stock options, restricted stock units (“RSUs”) and employee stock purchase plans. Stock-based compensation expense for stock options and the employee stock purchase plan is estimated at the date of grant based on the fair value of the award using the Black-Scholes option-pricing model. Stock-based compensation expense for RSUs is estimated at the date of grant based on the number of shares granted and the quoted price of the Company’s common stock on the grant date. Stock-based compensation expense values are recognized as expense on a straight-line basis over the requisite service period, net of estimated forfeitures. The share-based payment awards that are ultimately expected to vest are recognized as expense ratably (as the awards vest) over the requisite service period, which is generally one or four years for stock options and RSUs and three months for the employee stock purchase plan. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.

The option-pricing models require the use of certain subjective assumptions, including the expected volatility of the market price of the underlying stock and the expected term of the award. Expected volatility is based on the historical volatility of our stock. Expected term is derived from historical data on employee exercises and terminations. We review our valuation assumptions at each grant date, and, as a result, valuation assumptions used to value stock-based compensation of awards granted in future periods may change.

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. We provide a valuation allowance against deferred tax assets if, based upon the available evidence, it is more-likely-than-not that the deferred tax assets will not be realized. Realization of our deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. The tax years 1995-2014 remain open to examination by the major US taxing jurisdictions to which we are subject. The Internal Revenue Service completed their examinations of our 2008, 2009 and 2011 US Federal tax returns with no additional tax assessments or proposed adjustments relating to taxable income for any years. Our China income tax returns are generally subject to examination for a period of five years and those years remain open to examination.

We record liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We do not believe any such uncertain tax positions currently pending will have a material adverse effect on our consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period.

Restructuring Costs

When necessary, we record expense for the estimated costs of restructuring activities. The liability recorded for restructuring costs contains uncertainties because management is required to make assumptions and to apply judgment to estimate the amounts and timing of future settlement payments and the timing of such payments. When making these assumptions, management considers a number of factors including the number of employees involved and the related benefits included in the restructuring plan, and historical settlement experience. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate our restructuring liabilities; such liabilities were $0 and $0.6 million as of December 31, 2014 and

54

2013, respectively. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains which would have an impact on the results of operations for that period.

New Accounting Standards

Recently Effective Accounting Standards. In March of 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”.  The amendments in the ASU clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should generally be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss, similar tax loss, or tax credit carryforward, with certain limited exceptions. The amendments were effective for us beginning January 1, 2014 and we have applied them since the first quarter of 2014. We also have retrospectively applied the guidance to deferred tax and unrecognized tax benefit amounts as of December 31, 2013, as retrospective application is optional but not required, leading to reclassifications of an insignificant amount at such date. The adoption of this ASU had an immaterial impact on our consolidated deferred tax balances as of December 31, 2014 and 2013.

Accounting Standards Issued and Not Yet Effective.  In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for our fiscal year beginning January 1, 2017, with early application not permitted. We are in the process of determining what impact, if any, the adoption of ASU 2014-09 will have on our financial statements and related disclosures. The standard permits the use of either the full retrospective or modified retrospective transition method. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risk

We do not hold any derivative financial instruments for speculation or trading purposes. The majority of our sales have been in US dollars, although a significant amount of our sales are denominated in RMB. Our purchases with contract manufacturers are denominated in US dollars and euros and costs of our marketing efforts in China are paid in local currency. In addition, we have certain cash balances and other assets and liabilities denominated in euros, RMB and Hong Kong dollars. As a result, we are exposed to foreign currency rate fluctuations, and we do not hedge against the risk associated with such fluctuations. Consequently, changes in exchange rates could result in material exchange losses and could unpredictably, materially and adversely affect our operating results and stock price. A hypothetical 1% increase or decrease in foreign exchange rates would result in an approximate $0.1 million increase or decrease in our financial assets and liabilities denominated in euros, RMB and Hong Kong dollars, as of December 31, 2014 and 2013. These potential changes are based on sensitivity analyses performed on our financial position as of December 31, 2014 and 2013. Actual results may differ materially.

Interest Rate Risk

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we invest in money market funds, term deposits, commercial paper, corporate bonds, US treasury, or government agency notes; our investments are most frequently classified as cash equivalents. We are also invested in a loan to a business partner; however, the purpose for such loan is to facilitate the business relationship and it is not principally for investment purposes. Our investment securities may be subject to interest rate risk and could decrease in value if market interest rates rise. To minimize this risk, we primarily hold securities that are short-term in duration and maintain an average maturity of less than one year. We believe that our exposure to interest rate risk is not significant and a 1% movement in market interest rates would not have a significant impact to the total value of our investment portfolio as of December 31, 2014 or 2013.

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Item 8.Financial Statements and Supplementary Data

SCICLONE PHARMACEUTICALS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE NO.
Report of Independent Registered Public Accounting Firm		57
Report of Independent Registered Public Accounting Firm		58
Consolidated Balance Sheets		59
Consolidated Statements of Income		60
Consolidated Statements of Comprehensive Income		61
Consolidated Statements of Stockholders’ Equity		62
Consolidated Statements of Cash Flows		63
Notes to Consolidated Financial Statements		64

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of SciClone Pharmaceuticals, Inc.

In our opinion, the consolidatedfinancial statements listed in theindex appearing under Item 15(a)(1) present fairly,in all material respects, the financial position of SciClone Pharmaceuticals, Inc. and its subsidiaries atDecember 31, 2014 and December 31, 2013, and the results oftheir operations and their cash flows foreach of the two years in the period endedDecember 31, 2014in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2), as it relates to the information as of and for each of the two years in the period ended December 31, 2014, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidatedfinancial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9(a).  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers Zhong Tian LLP

Shanghai, the People’s Republic of China

March 12, 2015

57

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of SciClone Pharmaceuticals, Inc.

We have audited the accompanying consolidated statement of income, comprehensive income, stockholders’ equity, and cash flows of SciClone Pharmaceuticals, Inc. for the year ended December 31, 2012. Our audit also included the financial statement schedule at Item 15(a)(2) for the year ended December 31, 2012. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provided a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial results of operations of SciClone Pharmaceuticals, Inc. and its cash flows for the year ended December 31, 2012, in conformity with US generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Redwood City, California

April 1, 2013

58

SCICLONE PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31,		December 31,
	2014		2013
ASSETS
Current assets:
Cash and cash equivalents	$	86,228	$	85,803
Accounts receivable (net of allowances of $998 and $3,587 as of December 31, 2014 and 2013, respectively)		40,268		39,771
Inventories		10,703		15,238
Short-term investments		75		75
Prepaid expenses and other current assets		2,597		2,524
Deferred tax assets		326		6
Total current assets		140,197		143,417
Property and equipment, net		1,848		843
Goodwill		34,521		35,357
Other assets		5,265		242
Total assets	$	181,831	$	179,859
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,311	$	7,716
Accrued and other current liabilities		20,536		20,938
Deferred revenue		596		2,915
Short-term borrowings on loan facility		—		1,651
Total current liabilities		26,443		33,220
Other long-term liabilities		114		44
Commitments and contingencies (Notes 11 and 19)
Stockholders’ equity:
Preferred stock; $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock; $0.001 par value; 100,000,000 shares authorized; 49,948,897 and 52,371,664 shares issued and outstanding as of December 31, 2014 and 2013, respectively		50		52
Additional paid-in capital		287,108		278,327
Accumulated other comprehensive income		3,264		4,176
Accumulated deficit		(135,148)		(135,960)
Total stockholders’ equity		155,274		146,595
Total liabilities and stockholders’ equity	$	181,831	$	179,859

See notes to consolidated financial statements.

59

SCICLONE PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Year Ended December 31,
	2014		2013		2012
Net revenues:
Product sales, net	$	131,973	$	99,414	$	123,171
Promotion services		2,817		27,644		33,098
Total net revenues		134,790		127,058		156,269
Operating expenses:
Cost of product sales		23,002		17,668		21,996
Sales and marketing		48,477		55,240		70,327
Research and development		14,581		8,044		5,145
General and administrative		22,746		32,496		21,344
Restructuring charges		—		1,181		1,096
Estimated SEC and DOJ investigation loss (Note 19)		—		2,000		—
Intangible asset impairment (Note 7)		—		—		42,728
Amortization of acquired intangible assets		—		—		2,645
Change in fair value of contingent consideration (Note 3)		—		—		(15,422)
Total operating expenses		108,806		116,629		149,859
Income from operations		25,984		10,429		6,410
Non-operating income (expense):
Interest and investment income		161		85		89
Interest and investment expense		(48)		(103)		(185)
Other income (expense), net		280		2,795		(42)
Income before income tax provision (benefit)		26,377		13,206		6,272
Income tax provision (benefit)		1,169		2,242		(3,348)
Net income	$	25,208	$	10,964	$	9,620
Basic net income per share	$	0.49	$	0.20	$	0.17
Diluted net income per share	$	0.48	$	0.20	$	0.16
Weighted-average shares used in computing:
Basic net income per share		51,277		53,587		56,637
Diluted net income per share		52,684		54,936		58,483

See notes to consolidated financial statements.

60

SCICLONE PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Year Ended December 31,
	2014		2013		2012
Net income	$	25,208	$	10,964	$	9,620
Other comprehensive income, net of income tax:
Available-for-sale securities:
Unrealized gain (loss) and foreign currency translation arising during the period on foreign currency denominated available-for-sale securities		—		(4)		19
Reclassification adjustment for losses included in net income		—		71		—
Net change		—		67		19
Foreign currency translation		(912)		1,121		625
Total other comprehensive income (loss)		(912)		1,188		644
Total comprehensive income	$	24,296	$	12,152	$	10,264

See notes to consolidated financial statements.

61

SCICLONE PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

						Accumulated
					Additional	Other				Total
	Common stock				Paid-in	Comprehensive		Accumulated		Stockholders’
	Shares	Amount			Capital	Income (Loss)		Deficit		Equity
Balance as of January 1, 2012	57,847	$	58	$	266,913	$	2,344	$	(119,196)	$	150,119
Net income	—		—		—		—		9,620		9,620
Other comprehensive income	—		—		—		644		—		644
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	1,346		1		3,491		—		—		3,492
Compensation related to stock option awards	—		—		3,983		—		—		3,983
Repurchase of common stock	(4,709)		(5)		—		—		(24,831)		(24,836)
Balance as of December 31, 2012	54,484		54		274,387		2,988		(134,407)		143,022
Net income	—		—		—		—		10,964		10,964
Other comprehensive income	—		—		—		1,188		—		1,188
Escrow shares received in settlement and immediately retired	(342)		—		(1,866)		—		—		(1,866)
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	634		—		1,705		—		—		1,705
Compensation related to stock option awards	—		—		4,101		—		—		4,101
Repurchase of common stock	(2,404)		(2)		—		—		(12,517)		(12,519)
Balance as of December 31, 2013	52,372		52		278,327		4,176		(135,960)		146,595
Net income	—		—		—		—		25,208		25,208
Other comprehensive loss	—		—		—		(912)		—		(912)
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net	1,399		2		5,212		—		—		5,214
Compensation related to stock option awards	—		—		3,569		—		—		3,569
Repurchase of common stock	(3,822)		(4)		—		—		(24,396)		(24,400)
Balance as of December 31, 2014	49,949	$	50	$	287,108	$	3,264	$	(135,148)	$	155,274

See notes to consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2014		2013		2012
Operating activities:
Net income	$	25,208	$	10,964	$	9,620
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash expense related to stock-based compensation		3,465		4,007		3,897
Non-cash escrow share settlement		—		(1,866)		—
Provision for doubtful accounts		—		2,540		—
Provision for expiring inventory		1,574		—		—
Depreciation and amortization		852		860		3,449
Intangible asset impairment		—		—		42,728
Loss on maturity of available-for-sale investment		—		75		—
Loss on disposal of fixed assets		26		17		—
Change in fair value of contingent consideration		—		—		(15,422)
Deferred income taxes		(321)		191		(6,785)
Other long-term liabilities		10		(133)		(232)
Changes in operating assets and liabilities:
Accounts receivable, net		(3,276)		(3,999)		356
Inventories		5,907		(4,685)		801
Prepaid expenses and other assets		(277)		(202)		(156)
Accounts payable		(5,485)		(134)		2,195
Accrued and other current liabilities		(414)		(1,006)		3,070
Deferred revenue		340		2,873		—
Net cash provided by operating activities		27,609		9,502		43,521
Investing activities:
Purchases of available-for-sale investments		—		—		(75)
Proceeds from the maturity of available-for-sale securities		—		379		—
Loans to third party (Note 6)		(4,751)		—		—
Purchases of property and equipment		(1,452)		(324)		(1,128)
Net cash (used in) provided by investing activities		(6,203)		55		(1,203)
Financing activities:
Repurchase of common stock including commissions		(24,400)		(12,519)		(24,836)
Repayment of credit facilities		(1,620)		(2,035)		(2,500)
Proceeds from borrowing on credit facilities		—		2,196		1,445
Decrease (increase) in restricted cash related to loan facility		—		2,300		(2,300)
Proceeds from issuances of common stock, net		5,214		1,705		3,492
Net cash used in financing activities		(20,806)		(8,353)		(24,699)
Effect of exchange rate changes on cash and cash equivalents		(175)		371		(45)
Net increase in cash and cash equivalents		425		1,575		17,574
Cash and cash equivalents, beginning of period		85,803		84,228		66,654
Cash and cash equivalents, end of period	$	86,228	$	85,803	$	84,228
Supplemental disclosure of cash flow information:
Net income taxes paid related to foreign operations	$	944	$	2,237	$	1,893
Interest and unused line fees paid related to borrowings	$	48	$	81	$	136

See notes to consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — The Company and Summary of Significant Accounting Policies

Description of Business

SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”), incorporated in 1990, is a United States (“US”)-headquartered, China-focused, specialty pharmaceutical company with a substantial commercial business in China and a product portfolio of therapies for oncology, infectious diseases and cardiovascular disorders. The Company’s lead product, ZADAXIN® (thymalfasin) is approved in over 30 countries and may be used for the treatment of hepatitis B (HBV), hepatitis C (HCV), as a vaccine adjuvant, and certain cancers according to the local regulatory approvals. In addition to ZADAXIN, SciClone markets approximately 7 partnered and in-licensed products in China,  including Aggrastat®, an interventional cardiology product. SciClone is also pursuing the registration of several other therapeutic products in China.

Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated from the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make informed estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities of three months or less on the date of purchase. The Company records its investments at fair value, as determined by available information on the consolidated balance sheet date. The Company’s investment portfolio as of December 31, 2014 consisted of money market funds that were included in cash and cash equivalents, and a certificate of deposit that was included in short-term investments.

Unrealized gains or losses on available-for-sale securities are included in accumulated other comprehensive income on the consolidated balance sheets. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in earnings. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity and is included in earnings. The cost of securities sold is based on the specific identification method.

Available-for-sale investments are evaluated for impairment each reporting period. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the consolidated statement of income. No such losses were recorded in the periods presented.

Fair Value of Financial Instruments

Fair value is defined 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 must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three levels of input are:

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

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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.

Where quoted prices are available in an active market, the Company determines fair value based on quoted market prices, and classifies these values in level 1 of the valuation hierarchy. If quoted market prices are not available, fair values are based on observable inputs 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 and are classified in level 2 of the valuation hierarchy. When quoted prices and observable inputs are unavailable, fair values are based on cash flow models and are classified in level 3 of the valuation hierarchy. The cash flow models use inputs specific to the asset or liabilities including estimates for interest rates and discount rates including yields of comparable traded instruments adjusted for illiquidity and other risk factors, amount of cash flows and expected holding periods of the assets and liabilities. These inputs reflect the Company’s assumptions about the assumptions market participants would use in pricing the assets and liabilities including assumptions about risk developed based on the best information available in the circumstances. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may materially affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Other financial instruments, including accrued short-term liabilities, are carried at cost, which the Company believes approximates fair value because of the short-term maturity of these instruments.

Concentration of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, accounts receivable and loans receivable. The Company is exposed to credit risk in the event of default by the institutions holding the cash, cash equivalents and investments, and by customers and partners in the event of default by the customer or partner to pay the amounts due to us on receivables and loans receivables, respectively, to the extent of the amounts recorded on the consolidated balance sheet. Most of the Company’s cash and cash equivalents are held by financial institutions that the Company believes are of high credit quality. At times, deposits may exceed government insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For the Company’s proprietary product ZADAXIN®, the Company manufactures its product using its US and European contract manufacturers, and it generates its product sales revenue through sales of ZADAXIN products to Sinopharm Holding Hong Kong Co. Ltd. (“Sinopharm”). Sinopharm and its affiliates act as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. The Company’s ZADAXIN sales occur when the importer purchases product from the Company, without any right of return except for damaged product or quality control issues and after passage of title and risk of loss are transferred to Sinopharm at the time of shipment. After the Company’s sale, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier local or regional distributors who, in turn, sell products to hospitals and pharmacies. The Company’s other product sales revenues result from the sale of the Company’s in-licensed products to importing agents and distributors.

Promotion services revenues result from fees received for exclusively promoting products for certain pharmaceutical partners. These importing agents, distributors and partners are the Company’s customers.

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Customers that exceeded 10% of the Company’s total net revenue and related to our China segment were as follows:

	For the Year Ended December 31,
	2014		2013	2012
Customer A		94%	75%	59%
Customer B		—	20%	20%
Customer C		—	—	12%

As of December 31, 2014, approximately $38.9 million, or 94%, of the Company's gross accounts receivable was attributable to one customer in China. The Company generally does not require collateral from its customers. The Company maintains reserves for potential credit losses and such actual losses may vary significantly from its estimates.

The Company currently relies on two suppliers to provide key components to its ZADAXIN manufacturing supply. Although there are a limited number of manufacturers who would be able to meet the requirements to manufacture these components, the Company believes that other suppliers could provide similar components on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would affect operating results adversely.

The majority of the Company’s product sales are in US dollars. However, a significant portion of the Company’s revenues and expenses are denominated in Chinese Yuan Renminbi (“RMB”) and a significant portion of the Company’s assets and liabilities are denominated in RMB and are exposed to foreign exchange risk. RMB is not freely convertible into foreign currencies. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates quoted by People’s Bank of China. Remittances in currencies other than RMB by the Company in China require certain supporting documentation in order to affect the remittance.

Accounts Receivable Reserve

The Company records a receivable reserve based on a specific review of its overdue invoices. The Company’s estimate for a reserve is determined after considering its existing contractual payment terms, payment patterns of its customers and individual customer circumstances, the age of any outstanding receivables and its current customer relationships. Accounts receivable are charged off at the point when they are considered uncollectible.

As of December 31, 2013, the Company had $3.5 million in fully reserved accounts receivable from one customer that were more than one year past due. As a result of its negotiations with the customer, the Company collected $0.5 million in July 2014 and in October 2014, the Company’s subsidiary, SciClone Pharmaceuticals International China Holding Ltd (“SPIL China”) executed an agreement with this customer providing for settlement of $1.9 million of the remaining outstanding $3.0 million due in installments. The settlement agreement provided that the customer will pay SPIL China $1.9 million in installment payments to be made as follows: $500,000 before October 31, 2014; $500,000 before November 30, 2014; $400,000 before May 31, 2015; and the remaining balance of $500,000 to be made by December 31, 2015. The terms of the settlement agreement resulted in the write-off of $1.1 million in previously fully reserved accounts receivable with an equivalent charge-off of the allowance for bad debt, which had no impact on net income in 2014, as the subsequent agreement provided direct evidence that the $1.1 million previously reserved will not be collected in the future. The Company received the first and second payments under the terms of the settlement agreement in October and December 2014 totaling $1.0 million, and these gains on recovery, as well as the $0.5 million payment received in July 2014, were recorded as $1.5 million of reductions to general and administrative expense for the year ended December 31, 2014. The remaining outstanding receivable balance of $0.9 million as of December 31, 2014 will remain fully reserved until payments are received.

Inventories

Inventories consist of raw materials, work in progress and finished goods products. Inventories are valued at the lower of cost or market (net realizable value), with cost determined on a first-in, first-out basis, and include amounts related to materials, labor and overhead.The Company periodically reviews the inventory in order to identify excess and obsolete items. If obsolete or excess items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the impairment is first recognized. During the years ended December 31, 2014, 2013, and 2012, the Company recorded

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inventory write-downs of $1.6 million, $0, and $0, respectively, principally related to carrying value reductions for excess Aggrastat product.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recorded over the estimated useful lives of the respective assets on the straight-line basis. Office furniture and fixtures are generally amortized over five years, office equipment and computer software are generally amortized over three years, and the Company’s vehicle is being amortized over four years. Leasehold improvements are amortized over the shorter of the estimated useful life or lease term on the straight-line basis. The Company’s policy is to identify and record impairment losses, if necessary, on property and equipment when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.

Intangible Assets

Intangible assets are reviewed for impairment when changes in facts or circumstances suggest that the carrying value of these assets may not be recoverable. The Company's policy is to identify and record impairment losses, if necessary, on intangible product rights when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.It is the Company’s policy to expense costs as incurred in connection with the renewal or extension of its intangible assets.

As part of the acquisition of NovaMed Pharmaceuticals Ltd. (“NovaMed”) in April 2011, the Company recorded intangible assets related to promotion and distribution contract rights. During the year ended December 31, 2012, the Company identified impairment indicators related to the intangible assets and fully wrote off the intangible assets. Refer to Net Intangible Assets in Note 7 for further information.

Goodwill

The Company accounted for the acquisition of NovaMed under the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under the acquisition method of accounting, the total acquisition-date fair value of the assets and liabilities are recognized as of the closing date. The total consideration paid by SciClone to NovaMed consisted of cash, SciClone common stock, and contingent consideration. The excess of the fair value of the total consideration transferred over the acquisition-date fair value of net tangible and intangible assets and liabilities assumed was allocated to goodwill. Goodwill is tested for impairment at least annually, or whenever events or circumstances occur that indicate impairment might have occurred in accordance with ASC Topic 350, Intangibles — Goodwill and Other. Goodwill relates to the Company’s China segment which focuses on the Company’s primary pharmaceutical distribution market, consisting of the NovaMed business and the legacy China business, which represent a single reporting unit. As of December 31, 2014, 2013 and 2012, the Company tested for goodwill impairment by quantitatively comparing the fair value of the reporting unit to its carrying amount - step one of the two-step impairment test. In addition, during the third quarter of fiscal 2013, the Company performed an interim goodwill impairment analysis to determine if the goodwill was impaired as a result of the non-renewal of the Sanofi Aventis S.A. (“Sanofi”) promotional agreements as of December 31, 2013, by comparing the fair value of the reporting unit to its carrying amount. The Company estimated the fair value of the China reporting unit using a discounted cash flow model. This valuation approach considers a number of factors that include, but are not limited to, expected future cash flows, growth rates, discount rates, and requires us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. If the Company determines that the carrying value of its reporting unit exceeds its fair value, the Company would then calculate the implied fair value of the reporting unit goodwill as compared to its carrying value to determine the appropriate impairment charge. After completing the Company’s impairment review for the reporting unit during the third quarter of 2013, and as of December 31, 2014, 2013, and 2012, the Company concluded that goodwill was not impaired in any of these years.

Loans Receivable

Loans receivable consist of two loans to one third party (see Note 6). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the consolidated balance sheet. Carried balances are subsequently adjusted for

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payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote.

Although the measurement basis is unpaid principal (as adjusted for subsequent payments or impairment), not fair value, the loans receivable would qualify as Level 3 measurements under the fair value hierarchy (Note 3) due to the presence of significant unobservable inputs related to the counterparty, which is a private entity.

Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date. As of December 31, 2014, management concluded the loans receivable were not impaired, and there was no allowance for loan losses.

Contingent Consideration

As part of the acquisition of NovaMed, the Company would have been required to pay up to an additional $43.0 million in earn-out on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn-out” or “contingent consideration”). The fair value of the earn-out was re-measured each period, and changes in the fair value were recorded to “contingent consideration” in operating expenses. As of December 31, 2012, the earn-out was determined to be zero. Through September 30, 2012, the Company used the assistance of a third-party valuation expert to estimate the fair value of the contingent consideration using a Monte Carlo simulation model. Refer to Contingent Consideration in Note 3 and Escrow Settlement Agreement Note 10 for further information.

Accrued Expenses

The Company makes estimates of its accrued expenses as of each balance sheet date in its consolidated financial statements based on facts and circumstances known to them. Examples of estimated accrued expenses include fees paid to contract research organizations and investigative sites in connection with clinical trials, fees paid to contract manufacturers in connection with the production of clinical trial materials, and professional services.The Company periodically confirms the accuracy of its estimates with selected service providers and makes adjustments, if necessary, in the periods identified.

Expenses related to clinical trials charged to research and development expense generally are accrued based on estimates of work performed or the level of patient enrollment and activities according to the protocols and agreements. The Company makes adjustments, if necessary, in the periods identified to reflect actual levels of work performed, and such adjustments have historically not been material. 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 certain 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 the Company’s accrual policy is to match the recording of expenses to the actual services received and efforts expended. The Company monitors planned protocols, work performed, patient enrollment levels and related activities to the extent possible and adjusts estimates accordingly.

The Company records as liabilities estimated amounts for litigation, claims or other legal actions that are probable and can be reasonably estimated. The likelihood of a material change in these estimated reserves is dependent on the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and circumstances in extended litigation which could change claims or assessments when both the amount and range of loss on some outstanding litigation is uncertain. The Company discloses in the footnotes to the financial statements when it is unable to make a reasonable estimate of a material liability that is reasonably possible to result from unfavorable outcomes. As events occur, the Company assesses the potential liability related to any pending litigation, claims or other legal actions and adjusts its estimates accordingly. Such adjustments could materially impact its financial statements.

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Foreign Currency Translation

The Company translates the assets and liabilities of its foreign subsidiaries stated in local functional currencies to US dollars at the rates of exchange in effect at the end of the period. Revenues and expenses are translated using average rates of exchange in effect during the period.Goodwill, and certain other balances, are generally recorded in the local currency which is the functional currency of the Company’s subsidiaries located in China. As a result, the carrying value of goodwill and certain other balances may fluctuate with the value of the RMB as compared to the US dollar.Gains and losses from the translation of financial statements denominated in foreign currencies are included as a separate component of accumulated other comprehensive income in the statement of stockholders' equity.

The Company records foreign currency transactions at the exchange rate prevailing at the date of the transaction with resultant gains and losses being included in results of operations. Foreign currency transaction gains and losses have not been significant for any period presented.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured.

Product Revenue.The Company recognizes product revenue from selling manufactured ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm and its affiliates are recognized at time of shipment when title to the product is transferred to them. The Company also earns product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. Sales of Pfizer International Trading (Shanghai) Ltd. (“Pfizer”) products through October 2012 were based on the “sell-through” method as the Company’s distribution arrangement for these products allowed for payment terms dependent on when the distributor sold the product. The Company did not maintain information on the timing of “sell-through” of the Pfizer products by the distributor through this period; therefore, the Company applied the cash receipts approach for the application of the “sell-through” method as it was the most reliable information available. Accordingly, during this period of time, revenue for sales of the Pfizer products was recognized on receipt of cash from the distributor. On October 21, 2012, the Company amended the agreement with the distributor which amendment removed any contingent payment terms. Prior to the amendment, the agreement allowed for delayed payment based on the timing of sales from the distributor to the next tier customer. The amendment changed the payment terms to 60 days, thus ensuring that the distributor could not withhold payment until after the distributor received payment on sale of product to its next tier customer. The combination of the revised payment terms, together with all of the other contractual restrictions on the distributor (e.g., no return rights or other terms that may raise question as to whether or not they had taken title and assumed “risk of loss”), permitted revenue to be recognized on a “sell-in” basis upon the amendment. Therefore, from October 21, 2012 onward, the “sell-in” method was used by the Company for recognition of related revenue. All other product sales are also recognized on the “sell-in” method, or when the medical products have been delivered to the importers or distributors.

Promotion Services Revenue.The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in a promotion services contract, which marks the period when marketing and promotion services have been rendered and the revenue recognition criteria are met. In certain arrangements, the Company was required to return or refund a portion of promotion services fees received during interim periods from a pharmaceutical customer if defined annual sales targets were not achieved. Under the Company’s agreements with this customer, if an agreement was terminated, and provided such targets had been met on a “pro rata” basis at the date of contract termination, the Company was entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets had been met on a “pro rata” basis at any interim date, the Company elected to recognize revenue during interim periods without reduction for amounts subject to refund based on Method 2 of Accounting Standards Codification 605-20-S99-1, “Accounting for Management Fees Based on a Formula.”

The Company’s promotion agreements with Sanofi, consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”) and Sanofi negotiated a settlement of certain amounts in dispute, effective July 14, 2014, and NovaMed Shanghai received approximately 22 million RMB (approximately $3.5 million) in August 2014 as final payment from Sanofi. The terms of the settlement resulted in the recognition of promotion services revenue for the second quarter of 2014 of approximately $0.2 million of Sanofi revenue that had been deferred in the fourth quarter of 2013. The

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remaining approximately $2.6 million of deferred revenue recorded during the fourth quarter of 2013, was reversed with an equivalent write-down of accounts receivable. This contemporaneous write-down of accounts receivable and deferred revenue had no impact on net income during the second quarter of 2014 or the year ended December 31, 2014.

Revenue Reserve: The Company generally maintains a revenue reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired or damaged product on delivery or for price reductions on the related sales and is based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, the Company is expected to replace products that have expired on delivery or are deemed to be damaged or defective when delivered. The calculation of the revenue reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the revenue reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions.

As of December 31, 2014 and 2013, the Company’s revenue reserves were  $0.1 million and $0, respectively, on its consolidated balance sheets.

The Company evaluates the need for a returns reserve quarterly and adjusts it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect the Company’s results of operations or financial position. It is possible that the Company may need to adjust its estimates in future periods.

Sales Tax and Surcharge Expense

Sales taxes and surcharge costs are expensed as incurred and are included in sales and marketing expense. The Company is generally subject to a 5-6.42% business tax and surcharge for services provided related to marketing products under the relevant taxation laws in China. Sales tax and surcharge costs amounted to approximately $2.5 million, $3.5 million, and $3.8 million, for the years ended December 31, 2014, 2013, and 2012, respectively.

Research and Development Expenses

Research and development costs are expensed as incurred. These costs include salaries and other personnel-related expenses, including associated stock-based compensation, facility-related expenses, depreciation of facilities and equipment, upfront payments under in-licensing agreements with certain business partners and other license-related fees, and services performed by clinical research organizations and research institutions and other outside service providers.

Shipping and Handling Costs

Shipping and handling costs incurred for inventory purchases and product shipments are included in cost of product sales for all periods presented.

Advertising Expenses

Advertising costs are expensed as incurred and are included in sales and marketing expenses for all periods presented. Advertising expenses for the years ended December 31, 2014, 2013, and 2012, were $0.5 million, $0.1 million, and $0.2 million, respectively.

Legal Costs

Legal costs related to loss contingencies are expensed to general and administrative expense as incurred.

Stock-Based Compensation

The Company records stock-based compensation costs relating to share-based payment transactions, including stock options, restricted stock units (“RSUs”) and the employee stock purchase plan. Stock-based compensation expense for stock options and the

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employee stock purchase plan is estimated at the date of grant based on the fair value of the award using the Black-Scholes option-pricing model. Stock-based compensation expense for RSUs is estimated at the date of grant based on the number of shares granted and the quoted price of the Company’s common stock on the grant date. Stock-based compensation expense values are recognized as expense on a straight-line basis over the requisite service period, net of estimated forfeitures. The stock-based compensation costs that are ultimately expected to vest are recognized as expense ratably (as the awards vest) over the requisite service period, which is generally one or four years for stock options and RSUs and three months for the employee stock purchase plan. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more-likely-than-not that the deferred tax assets will not be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company records liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe any such uncertain tax positions currently pending will have a material adverse effect on its consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period. The Company’s policy is to recognize interest and penalties related to the liabilities for uncertain tax positions as a component of income tax expense. The amount of accrued interest related to tax positions taken on the Company’s tax returns and included in accrued and other current liabilities was $1.5 million and $1.2 million, as of December 31, 2014 and 2013, respectively. The amount of interest recognized as tax expense related to uncertain tax positions in the consolidated statements of income was $0.3million and$0.4 million for the years ended December 31, 2014 and2013, respectively.

Net Income Per Share

Basic net income per share has been computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common equivalent shares outstanding for the period. Diluted net income per share includes any dilutive impact from outstanding stock options and the employee stock purchase plan using the treasury stock method.

The following is a reconciliation of the numerator and denominators of the basic and diluted net income per share computations for the years ended December 31 (in thousands, except per share amounts):

	2014		2013		2012
Numerator:
Net income	$	25,208	$	10,964	$	9,620
Denominator:
Weighted-average shares outstanding used to compute basic net income per share		51,277		53,587		56,637
Effect of dilutive securities		1,407		1,349		1,846
Weighted-average shares outstanding used to compute diluted net income per share		52,684		54,936		58,483
Basic net income per share	$	0.49	$	0.20	$	0.17
Diluted net income per share	$	0.48	$	0.20	$	0.16

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For the years ended December 31, 2014, 2013, and 2012, approximately 3,541,071,  3,378,063, and 3,280,492 shares, respectively, related to outstanding stock options were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive. In addition, for the years ended December 31, 2014, 2013, and 2012, 50,000,  50,171, and 118,046 shares, respectively, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met.

Segment Information

The Company operates in two segments (refer to Note 20).

Reclassifications

The Company reclassified approximately $0.4 million of deferred tax balances as of December 31, 2013 to conform to the current year presentation, as permitted by the optional retrospective presentation provisions of Accounting Standards Update (ASU) 2013-11 “Income Taxes:Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists”. These reclassifications had no effect on prior years’ net income or stockholders’ equity.

The Company revised its December 31, 2013 consolidated balance sheet and consolidated statement of cash flows by reducing accounts receivable and increasing prepaid expenses and other current assets by $0.2 million to conform to the current year presentation, and reclassified $0.5 million in accrued liabilities to accounts payable to conform to the current year presentation. In addition, the Company revised its consolidated statement of income for the year ended December 31, 2013 by reducing sales and marketing expense and increasing research and development expense by $0.6 million for costs incurred related to pre-market research activities.

Accounting Standards Updates

Recently Effective Accounting Standards.  In March of 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The amendments in the ASU clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should generally be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss, similar tax loss, or tax credit carryforward, with certain limited exceptions. The amendments were effective for the Company beginning January 1, 2014 and they have been applied since the first quarter of 2014. The Company also has retrospectively applied the guidance to deferred tax and unrecognized tax benefit amounts as of December 31, 2013, as retrospective application is optional but not required – see Reclassifications above. The adoption of this ASU had an immaterial impact on consolidated deferred tax balances as of December 31, 2014 and 2013.

Accounting Standards Issued and Not Yet Effective.  In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for the Company’s fiscal year beginning January 1, 2017, with early application not permitted. The Company is in the process of determining what impact, if any, the adoption of ASU 2014-09 will have on its financial statements and related disclosures. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

Note 2 — Available-for-Sale Investments

The Company realized $0.1 million in losses related to the maturity of its Italian state bonds for the year ended December 31, 2013 which were reclassified out of accumulated other comprehensive income and included in non-operating expenses.

The Company’s certificate of deposit for $0.1 million included in short-term investments as of December 31, 2014 and 2013, secures the Company’s letter of credit required under its European value-added tax filing arrangements.

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Note 3 — Fair Value Measurements

The following tables represent the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements as of December 31, 2014 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2014
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		19,678		—		—		19,678
Total	$	19,678	$	75	$	—	$	19,753

	Fair Value Measurements as of December 31, 2013 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		28,262		—		—		28,262
Total	$	28,262	$	75	$	—	$	28,337

The following table provides a summary of changes in fair value of the Company’s level 3 liability during fiscal 2012 (in thousands):

	Contingent
	Consideration
Balance as of January 1, 2012	$	15,400
Change in the estimated fair value of the contingent consideration liability		(15,422)
Translation adjustments		22
Balance as of December 31, 2012	$	—

Contingent Consideration

As part of the acquisition of NovaMed which occurred on April 18, 2011, the Company would have been required to pay up to an additional $43.0 million in earn-out payments on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn out” or “contingent consideration”).

The earn-out period ended on December 31, 2012 with none of the targets met. Through September 30, 2012, the Company used the assistance of a third-party valuation expert to estimate the fair value of the contingent consideration using a Monte Carlo simulation model. The fair value of the contingent consideration was remeasured each period, and changes to the fair value were recorded as expense or gains. As of December 31, 2012, the Company estimated the fair value of the contingent consideration to be $0, given none of the performance targets were met, resulting in a non-cash gain of $15.4 million for the year ended December 31, 2012. The Company subsequently settled various matters with the former stockholders of NovaMed, confirming among other things, that the Company had no liability for earn-out contingent payments.

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Note 4 — Inventories

Inventories consisted of the following (in thousands):

	December 31,
	2014		2013
Raw materials	$	5,009	$	7,746
Work in progress		761		319
Finished goods		4,933		7,173
Total	$	10,703	$	15,238

As of December 31, 2014 and 2013, the Company had $3.1 million and $2.4 million, respectively, in net inventory held at distributors related to products sold by its NovaMed subsidiary.

Note 5 — Property and Equipment

Property and equipment consisted of the following (in thousands):  

	December 31,
	2014		2013
Construction in process	$	30	$	143
Office equipment		2,059		1,406
Leasehold improvements		791		1,518
Office furniture and fixtures		1,463		606
Software		763		212
Vehicle		70		68
		5,176		3,953
Less accumulated depreciation		(3,328)		(3,110)
Net property and equipment	$	1,848	$	843

Depreciation expense was $0.9 million, $0.9 million, and $0.6 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Note 6 —Loans Receivable

As part of the Company’s May 2013 license and supply agreement with Zensun (Shanghai) Science & Technology Co. Ltd (“Zensun”), the Company previously agreed to loan up to $12 million to Zensun. The entry into the license and supply agreement in the second quarter of 2013, pursuant to which the Company licensed the exclusive rights to promote, market, distribute, and sell NeucardinTM, a chronic heart failure product under development by Zensun (such rights licensed for the People’s Republic of China, Hong Kong and Macao) is more fully described in Note 18.

Pursuant to its agreement to loan funds, the Company loaned $4.75 million to Zensun in the second half of 2014. The extension of credit and funding to Zensun was accomplished through two of the Company's subsidiaries, SciClone Pharmaceuticals International China Holding Ltd. (“SPIL China”) and SciClone Pharmaceuticals (China) Ltd. (“SciClone China”).

With respect to lender SPIL China, Zensun can request US-dollar denominated borrowings up to $11.75 million. As of December 31, 2014, borrowings totaling $4.5 million had been requested by Zensun and paid by SPIL China with $2.25 million lent in the third quarter of 2014 and $2.25 million lent in the fourth quarter of 2014. These borrowings bear interest at a fixed rate of 7.5% per annum payable annually in arrears at each interest payment date as defined in the overall loan agreement. These borrowings mature on September 26, 2017, with an option electable by Zensun to extend for two additional years provided certain conditions are met. All outstanding balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice.

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With respect to lender SciClone China, Zensun can make RMB-denominated borrowings for up to RMB 1,550,000 using an entrustment mechanism with a bank as an intermediary. In the third quarter of 2014, SciClone China entered into an entrusted loan agreement for RMB 1,550,000 (approximately US$250,000 as of December 31, 2014) with Zensun, using a major Chinese bank as the lending agent. SciClone China is the principal and ultimately bears the credit risk, not the bank. The loan bears interest at a fixed rate of 7.5% per annum and Zensun is subject to obligations of the borrower as specified in the loan agreements. The loan term is sixty-six months. All outstanding principal and interest balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice.

The proceeds of the separate but related loans are to be used for working capital and general corporate purposes by Zensun. To secure the loans, Zensun pledged its entire equity interest in its subsidiary, Shanghai Dongxin Biochemical Technology Co. Ltd. (whose assets include real property) to SPIL China.

Management, on the basis of (i) a creditworthiness evaluation using recent Zensun financial information, (ii) consideration of the market value of the pledged security, and (iii) consideration of Zensun’s compliance with the terms of the loans and timely payment of interest, concluded there were no indications of loan impairment at December 31, 2014; accordingly, there is no allowance for losses.

The two loans are included in “other assets” on the Company’s consolidated balance sheet as of December 31, 2014. Interest income on the loans amounted to $0.1 million for the year ended December 31, 2014 and is included in interest and investment income in the statement of operations. The Company estimates the fair value of the loans receivable approximates $5.2 million as of December 31, 2014, based upon prevailing market rates of interest as published by major Chinese banks.

Note 7 — Net Intangible Assets

As part of the acquisition of NovaMed, the Company recorded intangible assets related to promotion and distribution contract rights that were included in the Company’s China segment. During the third quarter of 2012, the Company identified impairment indicators related to the intangible assets. The Company determined that the undiscounted cash flows estimated to be generated by the intangible assets were less than the carrying amounts. The Company further performed a discounted cash flow analysis related to the intangible assets and recorded a full impairment charge, as the estimated fair value was determined to be zero. As a result, the Company recognized a non-cash impairment loss of approximately $42.7 million on its consolidated statement of operations for the year ended December 31, 2012. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value (see Note 1). The significant Level 3 unobservable inputs used in the fair value measurement of the intangible assets were estimates of projected revenues and earnings, a discount rate of approximately 20%, and assumptions regarding the probability of renewal of the customer contracts. Significant changes in the estimated revenues and earnings would have resulted in adjustments in the fair value measurement. A change in the renewal probability rates of the customer contracts would have also resulted in a significant change in the fair value measurement.

Acquired promotion and distribution contract intangible assets were being amortized on a straight-line basis over 13.5 years, based on their estimated useful life. Amortization expense was $0, $0, and $2.6 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Note 8 — Goodwill

The following table represents the changes in goodwill for the years ended December 31, 2014, 2013 and 2012 (in thousands):

Balance as of January 1,  2012	$	33,868
Translation adjustments		445
Balance as of December 31, 2012	$	34,313
Translation adjustments		1,044
Balance as of December 31, 2013	$	35,357
Translation adjustments		(836)
Balance as of December 31, 2014	$	34,521

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Note 9 — Accrued Liabilities

The following is a summary of accrued liabilities (in thousands):  

	December 31,
	2014		2013
Accrued sales and marketing expenses	$	5,383	$	6,419
Accrued taxes, tax reserves and interest		5,208		5,029
Accrued compensation and benefits		4,176		3,475
Accrued professional fees		1,819		1,601
Accrued manufacturing costs		95		1,617
Accrued estimated SEC and DOJ investigation loss (Note 19)		2,000		2,000
Accrued license fee		1,000		—
Other		855		797
Total	$	20,536	$	20,938

Note 10 — Escrow Settlement Agreement

On October 16, 2012, the Company made a claim against the former stockholders of NovaMed pursuant to the acquisition agreement relating to its acquisition of NovaMed. As a result of the Company’s claim, approximately $1.4 million in cash that was held in escrow and 622,363 shares of the Company’s common stock that were held in escrow were not released to the former NovaMed stockholders pending the outcome of the Company’s claim. The claim related to damages the Company incurred as a result of misrepresentations made by NovaMed regarding various matters, including the estimated product return reserves for Aggrastat product on the date of the acquisition, and related expenses and damages. On July 8, 2013, the Company and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which the Company retained approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6 million on the settlement date that was recorded to other income during the year ended December 31, 2013. As of December 31, 2013, the Company has canceled and retired the shares.

Note 11 — Commitments

Purchase Obligations

Under agreements with certain of the Company’s pharmaceutical partners, the Company is committed to certain annual minimum product purchases where the contract is subject to termination if the annual minimum order is not met. As of December 31, 2014, the Company did not have any material unmet purchase obligations.

Leases

In May 2007, the Company entered into a non-cancelable operating lease agreement for its corporate headquarters ("the Lease”) effective from July 1, 2007 through June 30, 2014. In September 2008, the Company entered into an amendment to the Lease for additional office space (“the Amendment”) that expired on June 30, 2014. Both the Lease and Amendment contained rent escalations of approximately 4% and 6% per year, respectively. In December 2013, the Company entered into a second amendment to the Lease extending the term of the lease for an additional four years through June 30, 2018, with an option to renew for an additional five year period. Beginning on July 1, 2014, the second amendment reduced the amount of leased office space from approximately 21,517 square feet leased to approximately 11,886 square feet. It also reduced the monthly base rent of $120,824 to $51,704 in the first year, with rent escalations of approximately 3% per year. In addition, the Company received a rent abatement for the first four months of the extended lease term.

The Company is recognizing the rental expense on a straight-line basis over the lease term. Under the terms of the Lease and the Amendment, the Company was provided allowances in the amounts of approximately $0.2 million and $0.5 million, respectively, towards the cost of its leasehold improvements and as an incentive to rent, respectively. The Company has recorded these allowances as deferred rent which is being amortized over the lease term as a reduction of rent expense. The Lease requires the Company to pay insurance and taxes and its pro-rata share of operating expenses.

In June 2014, the Company entered into a non-cancelable operating lease agreement for its primary office space in China (“the China Lease”) for a fixed lease term from October 15, 2014 through April 14, 2018, with options to renew for an additional two years.

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The Company is recognizing the rental expense on a straight-line basis over the lease term. The leases require the Company to pay insurance and its pro-rata share of operating expenses.

The Company also leases other office facilities and equipment outside the US under non-cancelable operating lease agreements. Through May 2014, the Company also subleased certain office facilities to a third party. Rent expense for the years ended December 31, 2014, 2013, and 2012, was $2.2 million, $2.9 million, and $2.9 million, respectively, net of sublease income. Future minimum lease payments under non-cancelable facility and equipment operating lease agreements as of December 31, 2014, were as follows (in thousands):  

	Minimum Lease
Year ended:	Payments
2015	$	2,290
2016		1,931
2017		1,629
2018		619
2019		—
	$	6,469

Note 12 — Credit Facilities

Credit Facility

In December 2013, the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”) entered into a 10.0 million RMB revolving line of credit facility (approximately $1.6 million USD) and a maximum 15.0 million RMB loan facility (approximately $2.4 million USD) with Shanghai Pudong Development Bank Co. Ltd. (“the Credit Facility”) that was secured by its accounts receivable. The Credit Facility bore interest on borrowed funds at the People’s Bank of China 6-month base rate plus 15% (6.44% in 2014 and 2013) on outstanding balances. The Credit Facility expired November 30, 2014, and all amounts borrowed were repaid by the expiration date. For the year ended December 31, 2014, the Company paid interest of approximately $48,000 related to the Credit Facility.

Loan Agreement

The Company’s 2012 loan agreement for 12.5 million RMB (approximately $2.0 million) with Shanghai Pudong Development Bank Co. Ltd. expired August 29, 2013. All amounts borrowed were repaid by the expiration date. The loan bore interest on borrowed funds at 7.5%. For the years ended December 31, 2013 and 2012, the Company paid interest of approximately $81,000 and $11,000, respectively, related to this loan agreement.

Note 13 — Restructuring Charges

In December 2013, the Company announced a plan to significantly reduce its workforce by approximately 175 employees, from approximately 650 full-time employees, primarily in sales and marketing that were included in the Company's China segment. The restructuring was decided as a result of the non-renewal of the Company’s distribution agreement with Sanofi as of December 31, 2013. The decision resulted in severance-related charges of approximately $1.2 million recognized to restructuring expense in the consolidated statement of income for the year ended December 31, 2013. As of December 31, 2014, the Company had paid all but an insignificant portion of the restructuring related charges.

In March 2012, the Company implemented a reduction in its workforce of 11 full-time employees, primarily in research and development that were included in the Company’s Rest of the World (including the US and Hong Kong) segment. The restructuring followed the discontinuation of the Company’s SCV-07 phase 2b clinical trial. The reduction in workforce resulted in severance-related charges of approximately $1.1 million recognized to restructuring expense in the consolidated statement of income for the year ended December 31, 2012. As of December 31, 2013, the Company had completed its SCV-07 restructuring activities.

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Note 14 — Income Taxes

The Company recorded income tax provision (benefit) of $1.2 million, $2.2 million, and ($3.3) million, for the years ended December 31, 2014, 2013, and 2012, respectively, related to its operations in China. The Company’s statutory tax rate in China was 25% in 2014, 2013 and 2012. The Company has not recorded any significant US federal or state income taxes for the years ended December 31, 2014, 2013, and 2012. Undistributed earnings of the Company’s foreign subsidiaries that are considered to be indefinitely reinvested outside the US and for which no US taxes have been provided amounted to approximately $138.3 million as of December 31, 2014. Upon distribution of those earnings, the Company may be subject to US federal and state income taxes, although determining the amount is not practicable as it is dependent on a variety of factors, including but not limited to the amounts of US tax loss carryforwards and tax credit carryforwards available at the time of the repatriation.Based on our current operating plan, the Company does not anticipate the need to repatriate cash and cash equivalents held by foreign subsidiaries in the foreseeable future. Should circumstances change and it becomes apparent that some or all of the undistributed earnings will be remitted, the Company will accrue for income taxes not previously recognized.

The domestic and foreign components of income (loss) before provision (benefit) for tax for the years ended December 31 are as follows (in thousands):  

	2014		2013		2012
Domestic	$	(8,496)	$	(17,168)	$	(11,541)
Foreign		34,873		30,374		17,813
Pre-tax income	$	26,377	$	13,206	$	6,272

A reconciliation of tax at the statutory federal income tax rate of 34% to the actual tax provision (benefit) for the years ended December 31 is as follows (in thousands):  

	2014		2013		2012
Tax at federal statutory rate	$	8,968	$	4,490	$	2,132
Foreign income tax at different rates		(10,788)		(8,383)		(10,405)
Taxable dividend from foreign subsidiary		—		—		11,900
Uncertain tax positions accrual		127		297		999
Change in valuation allowance		2,672		5,254		(7,945)
Stock-based compensation		2		(87)		(41)
Non deductible expenses		189		670		11
Other		(1)		1		1
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

The provision (benefit) for income taxes for the years ended December 31 consisted of the following (in thousands):

	2014		2013		2012
Federal	$	—	$	—	$	—
State		1		1		1
Foreign		1,489		2,032		3,445
Total current		1,490		2,033		3,446
Federal		—		—		—
State		—		—		—
Foreign		(321)		209		(6,794)
Total deferred		(321)		209		(6,794)
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

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During the year ended December 31, 2012, the Company identified an impairment indicator with respect to its intangible assets related to its promotion and distribution contract rights and recorded a charge of$42.7 million to recognize the full impairment of the assets. The Company recorded an income tax benefit of $6.8 million due to the impairment of the intangible assets as a result of the reversal of the deferred tax liabilities associated with the intangible assets.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows (in thousands):

	2014		2013
Deferred tax assets:
Net operating loss carryforwards	$	37,513	$	33,654
Research and development credit carryforwards		10,615		10,498
Intangibles		395		337
Other		2,527		2,867
Gross deferred tax assets		51,050		47,356
Valuation allowance		(50,724)		(47,350)
Total deferred tax assets		326		6
Deferred tax liabilities:
Other		—		—
Total deferred tax liabilities		—		—
Net deferred tax assets	$	326	$	6

Realization of deferred tax assets is dependent upon the Company generating future taxable income, the timing and amount of which are uncertain. Accordingly, the deferred tax assets have been largely offset by a valuation allowance. The valuation allowance increased (decreased) by approximately $3.4 million, $4.4 million, and ($7.7) million in the years ended December 31, 2014, 2013, and 2012, respectively.

As of December 31, 2014, the Company had federal net operating loss carryforwards of approximately $110.3 million that expire in the years 2020 through 2034, and federal research and development, orphan drug and investment tax credit carryforwards of approximately $12.2 million that expire in the years 2018 through 2034. As of December 31, 2014, the Company had state net operating loss carryforwards of approximately $26.9 million that expire in the years 2015 through 2030, if not utilized, and state research and development tax credit carryforwards of approximately $2.2 million that do not expire. Approximately $3.7 million of the valuation allowance relates to benefits associated with stock option deductions that, when recognized, will be credited directly to stockholders' equity.

Utilization of the Company’s net operating loss and credit carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitation could result in the expiration of the net operating loss and credit carryforwards before utilization.

As of December 31, 2014, the unrecognized tax benefit was $5.9 million, of which $2.2 million, if recognized would affect the effective tax rate, and $3.7 million, if recognized, would be offset by a change in the valuation allowance. A reconciliation of the beginning and ending amount of unrecognized tax benefit for the years ended December 31 is as follows (in thousands):

	2014		2013		2012
Balance beginning of period	$	6,138	$	6,053	$	5,715
Tax positions related to current year:
Additions for current year items		32		36		1,050
Additions for prior year items		—		88		—
Reductions for prior year items		(206)		(115)		(747)
Changes for foreign currency translation		(88)		76		35
Balance end of period	$	5,876	$	6,138	$	6,053

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Tax years 1995-2014 remain open to examination by the major US taxing jurisdictions to which the Company is subject. The Internal Revenue Service concluded its examinations of the Company’s 2011, 2009 and 2008 US federal tax returns with no additional tax assessments or proposed adjustments relating to taxable income for any years. The Company’s China operations are generally subject to examination under China tax law for a period of five years and those five years remain open for examination. Although the outcome of income tax examinations is uncertain, and the amounts ultimately paid, if any, on resolution of any issues raised by the taxing authorities may differ materially from the amounts accrued for each year, the Company does not anticipate any material change to the amount of its unrecognized tax benefits over the next 12 months.

Note 15 — Stockholders’ Equity

Stock Award Plans

The Company’s 2005 Equity Incentive Plan (the “2005 Plan”) has reserved 13,600,000 shares of common stock for issuance. The 2005 Plan permits the grant of incentive stock options, nonstatutory stock options, restricted stock units, performance shares and other forms of equity compensation. As of December 31, 2014, approximately 2,241,000 shares of common stock were available for future issuance under the 2005 Plan.Under the 2005 Plan, options are exercisable upon conditions determined by the board of directors and expire ten years from the date of grant. Options are generally granted at fair market value on the date of grant and vest over time, generally four years, or on achievement of certain performance conditions. See Stock-Based Compensation.

The Company’s 2004 Outside Directors Stock Option Plan (the “2004 Director Plan”) hadreserved 1,765,000 shares of common stock for issuance. The 2004 Director Plan automatically granted nonqualified stock options to nonemployee directors on their appointment or first election to the Company’s board of directors (“Initial Grant”) and annually on their reelection to the board of directors at the Company’s Annual Meeting of Stockholders (“Annual Grant”). Under the 2004 Director Plan, options were granted at fair market value on the date of grant and expire ten years from the date of grant. Initial Grants become exercisable in three equal annual installments beginning on the first anniversary of the date of grant, and Annual Grants become exercisable in twelve equal monthly installments from the date of grant, subject in each case to the director’s continuous service on the Company’s board of directors. As of December 31, 2014,  no shares of common stock were available for future issuance under the 2004 Director Plan.Although the 2004 Director Plan has expired, the outstanding stock options relating to it are fully valid.

Certain stock option awards are subject to accelerated vesting if there is a change in control.

The Company issues new shares on exercise, for release of restricted stock units, and for issuance of stock under its employee stock ownership plan.

Stock-Based Compensation

The following table summarizes the stock-based compensation expenses included in the Company’s consolidated statements of income (in thousands):

	For the Year Ended December 31,
	2014		2013		2012
Sales and marketing	$	1,031	$	1,113	$	1,169
Research and development		104		122		212
General and administrative		2,330		2,772		2,516
	$	3,465	$	4,007	$	3,897

Compensation cost capitalized in inventory was approximately $0.1 million for the years ended December 31, 2014, 2013, and 2012. There has been no income tax benefit recognized in the income statement for share-based compensation arrangements.

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Valuation Assumptions

The fair value of awards granted under the Company’s stock option and ESPP plans is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the years ended December 31:

	2014		2013		2012
Risk-free interest rate:
Time-based stock options	1.61	%	1.02	%	0.92	%
Performance-based stock options	N/A		1.22		0.96
ESPP	0.04		0.06		0.09
Volatility factor of the market price of the Company's common stock:
Time-based stock options	57.96	%	64.12	%	63.79	%
Performance-based stock options	N/A		63.20		63.66
ESPP	42.50		37.36		56.79
Weighted-average expected life (years):
Time-based stock options	5.00		5.10		5.21
Performance-based stock options	N/A		5.04		5.22
ESPP	0.25		0.25		0.25
Dividend yield	0.00	%	0.00	%	0.00	%

The risk-free interest rate is based on the US Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s history and expectations of no dividend payouts. Expected volatility is based on the historical volatility of the Company’s stock. The expected term of options granted is derived from historical data on employee exercises and terminations.

Stock Options

The following table summarizes stock option activity as of December 31, 2014, 2013 and 2012, and changes during the years then ended are presented below (in thousands, except per share and term amounts):  

	Options Outstanding
			Weighted-	Weighted-
			Average	Average
	Number		Exercise	Remaining	Aggregate
	of		Price Per	Contractual	Intrinsic
	Shares		Share	Term (Years)	Value
Balance as of January 1, 2012	6,915	$	3.46	6.98	$	8,130
Options forfeited	(1,536)		5.13
Options granted	1,889		6.14
Options exercised	(1,270)		2.66
Balance as of December 31, 2012	5,998	$	4.05	6.06	$	5,575
Options forfeited	(966)		5.45
Options granted	1,637		4.76
Options exercised	(574)		2.82
Balance as of December 31, 2013	6,095	$	4.14	5.66	$	7,199
Options forfeited	(705)		5.10
Options granted	1,740		4.85
Options exercised	(1,233)		4.43
Balance as of December 31, 2014	5,897	$	4.17	6.08	$	27,066
Vested and expected to vest after December 31, 2014	5,445	$	4.11	5.84	$	25,342
Exercisable as of December 31, 2014	3,397	$	3.60	4.09	$	17,537

During 2013, the Company extended the period in which two of the Company’s board members could exercise their outstanding vested stock options following the cessation of their service to the Company from ninety days to the second anniversary of the date of cessation of service which was on June 27, 2013. The Company recorded expense of approximately $0.2 million for the year ended

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December 31, 2013 related to these modifications. In addition, the Company extended the period in which two former employees of the Company could exercise their outstanding vested stock options following the cessation of their service to the Company from ninety days to the one year anniversary of the date of cessation of their services. The Company recorded expense of approximately $0.1 million for the year ended December 31, 2013 related to these modifications.

The Company has granted certain performance-based options to purchase shares of the Company’s common stock at an exercise price equal to the closing price of a share of the Company’s common stock as of the grant date. The options will fully vest on meeting a performance goal within an established time frame. If the performance goal is met for the option within the established time frame, the option generally has a ten-year term measured from the date of grant. If the performance goal is not met within the established time frame, the option expires in its entirety. The Company recognizes expense related to a performance-based option over the period of time the Company determines that it is probable that the performance goal will be achieved. If it is subsequently determined that the performance goal is not probable of achievement, the expense related to the performance-based option is reversed. For years ended December 31, 2014, 2013, and 2012, the Company recognized approximately $0.1 million, $39,000,  and $36,000, respectively, of expense related to performance-based options.

The weighted-average fair value of stock options granted for the years ended December 31, 2014, 2013, and 2012 was $2.43,  $2.56,  and $3.36, respectively. The intrinsic value of options at time of exercise was $2.4 million, $1.3 million, and $4.5 million, for the years ended December 31, 2014, 2013, and 2012, respectively. The estimated fair value of options vested for the years ended December 31, 2014, 2013, and 2012 was $3.2 million, $3.8million, and $4.1 million, respectively. As of December 31, 2014, unamortized compensation expense related to unvested options was approximately $4.4 million, net of forfeitures. The weighted average period over which compensation expense related to these options will be recognized is approximately 2.58 years. Cash received from stock option exercises was $5.5 million, $1.6 million, and $3.4 million, for the years ended December 31, 2014, 2013, and 2012, respectively.

RSUs

The following table summarizes RSU activity as of December 31, 2014,  2013 and 2012 and changes during the years then ended are presented below (in thousands):

	Restricted Stock Units
	Outstanding
	Number	Aggregate
	of	Intrinsic
	Shares	Value
Balance as of January 1, 2012	177	$	758
Awarded	190
Vested/Released	(47)
Forfeited	(60)
Balance as of December 31, 2012	260	$	1,121
Awarded	170
Vested/Released	(39)
Forfeited	(23)
Balance as of December 31, 2013	368	$	1,857
Awarded	7
Vested/Released	(212)
Forfeited	(4)
Balance as of December 31, 2014	159	$	1,393
Vested and expected to vest after December 31, 2014	140	$	1,222
Exercisable as of December 31, 2014 (Vested and deferred)	—		—

The RSUs generally vest 25% approximately one year after grant date with the remaining shares vesting either approximately annually or quarterly in equal installments over a three-year period, depending on the terms of the grant. The weighted average fair value at grant date of the RSUs was $4.52,  $4.98, and $6.49 for the years ended December 31, 2014, 2013, and 2012, respectively. As

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of December 31, 2014, there was approximately $0.3 million of unrecognized compensation cost, net of forfeitures, related to non-vested RSUs, which is expected to be recognized over a weighted average remaining period of approximately 1.28 years.

Employee Stock Purchase Plan

As of December 31, 2014,  1,300,000 shares of the Company’s common stock are reserved for issuance under the Company’s Employee Stock Purchase Plan (“ESPP”). Under the terms of the ESPP, eligible employees may choose to have up to 15% of their salary withheld to purchase the Company's common stock and may purchase up to 1,000 shares per offering period. Each offering under the ESPP is for a three-month period. The purchase price of the stock issued under the ESPP will be equal to 85% of the lower of the fair market value of a share of common stock on the first day of the offering or on the final day of the offering period. As of December 31, 2014, 456,819 shares of common stock were available for issuance under the ESPP.

Repurchase of Common Stock

In July 2014, the Company’s Board of Directors approved an increase of $15.0 million to the existing $50.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $65.5 million. In addition, the Board of Directors approved extending the repurchase program through December 31, 2015. The Company repurchased and retired 3,822,434,  2,404,034,  and 4,709,651 shares at a cost of $24.4 million, $12.5 million, and $24.8 million during the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014, $0.3 million of the $65.5 million share repurchase program authorized by the Board was available for future share repurchases.

Repurchased shares have been retired and constitute authorized but unissued shares. Upon repurchase, the Company eliminates the par value associated with the retired shares, and the excess price of the repurchase above par value is charged to retained earnings (accumulated deficit).

Stockholder Rights Agreement

On December 18, 2006, the Company’s Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (collectively, the “Rights”) for each outstanding share of the Company’s Common Stock, each Right which entitles the registered holder to purchase from the Company one one-thousandth of a share of the Company’s Series D Preferred Stock, $0.001 par value, at a price of $25.00 pursuant to a Rights Agreement dated as of December 19, 2006, between the Company and Mellon Investor Services LLC (the “Rights Agreement”). The Rights, which will initially trade with the Common Stock, become exercisable when a person or group acquires 15% or more of the Company’s Common Stock without prior board approval. In that event, the Rights permit the Company’s stockholders, other than the acquirer, to purchase the Company’s Common Stock having a market value of twice the exercise price of the Rights, in lieu of the Preferred Stock. Alternatively, when the Rights become exercisable, the Company’s Board of Directors may authorize the issuance of one share of the Company’s Common Stock in exchange for each Right that is then exercisable. In addition, in the event of certain business combinations, the Rights permit the purchase of the Common Stock of an acquirer at a 50% discount. Rights held by the acquirer will become null and void in each case. Prior to a person or group acquiring 15%, the Rights can be redeemed for $0.001 each by action of the Board. The Rights Agreement contains an exception to the 15% ownership threshold for shares currently beneficially owned by Sigma-Tau Finanziaria S.p.A. The Rights expire on December 19, 2016. The Rights Agreement includes a requirement that a committee of independent directors evaluate the Rights Agreement at least every three years.

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Note 16 — Accumulated Other Comprehensive Income (Loss)

Changes in the composition of accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	Foreign
	Currency		Available-for-Sale
	Translation		Investments		Total
Balances as of January 1, 2012	$	2,430	$	(86)	$	2,344
Other comprehensive income		625		19		644
Balances as of December 31, 2012		3,055		(67)		2,988
Other comprehensive income (loss) before reclassifications		1,121		(4)		1,117
Amounts reclassified out of accumulated other comprehensive income (loss) to other income (expense), net		—		71		71
Net other comprehensive income		1,121		67		1,188
Balances as of December 31, 2013		4,176		—		4,176
Other comprehensive loss		(912)		—		(912)
Balances as of December 31, 2014	$	3,264	$	—	$	3,264

Note 17 — 401(k) Plan

The Company has a pre-tax savings plan covering most US employees, which qualifies under Section 401(k) of the Internal Revenue Code. Under the plan, eligible employees may contribute a portion of their pre-tax salary, subject to certain limitations. The Company contributes and matches 50% of the employee contributions. Company contributions, which can be terminated at the Company's discretion, were approximately $0.1 million, $0.2 million, and $0.2 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Note 18 — Licensing Agreements

The Medicines Company

In December 2014, the Company entered into a strategic partnership for two cardiovascular products in China. The partnership includes an agreement granting SciClone a license and the exclusive rights in China to promote two products of The Medicines Company including Angiomax®(bivalirudin) for Injection for which a Phase 3 registration trial was completed in China and is currently under review by the China Food and Drug Administration for marketing approval, and Cleviprex®(clevidipine) Injectable Emulsion, for which a clinical trial application (CTA) for China was filed in 2013. Under the terms of the agreement, SciClone will be responsible for all aspects of commercialization, including pre-and post-launch activities, for both products in the China market (excluding Hong Kong and Macao). SciClone has also agreed to participate in the China registration process for both products. Financial terms of the agreement, in addition to net sales royalties payable to The Medicines Company, include the following additional payments to The Medicines Company: an upfront payment; a product support services fee; and regulatory/commercial success milestone payments of up to an aggregate of $50.5 million.

Zensun

On May 13, 2013, the Company, through a designated affiliate, entered into a framework agreement with Zensun for the exclusive promotion, marketing, distribution and sale of NeucardinTM in China, Hong Kong and Macao. Neucardin is a novel, first-in-class therapeutic for the treatment of patients with intermediate to advanced heart failure, for which a New Drug Application was submitted to and accepted for review by the China Food and Drug Administration (“CFDA”) in 2012. The China food and Drug Administration informed Zensun in 2014 that its Phase 2 clinical study data is insufficient, and has asked Zensun to submit a New Drug Application once the ongoing Phase 3 clinical study reaches its endpoints.

The Zensun framework agreement provides the principal terms of the arrangement and the two parties have also entered into a supplemental license and supply agreement.

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Subject to certain conditions, the Company has agreed to make payments of up to $18.5 million to Zensun, consisting of an upfront payment amount and further amounts on the achievement of certain milestones, including the approval of a new drug application for Neucardin™,the granting of a manufacturing license, good manufacturing practices certificate and drug approval number in China. The Company has agreed under certain conditions to make milestone payments to Zensun of $10 million if approval is received for a new device to deliver Neucardin™ and up to $25 million if approval is received for the use of Neucardin™ in additional indications.

Zensun will be responsible for manufacture of the product and the Company has agreed to purchase the product exclusively from Zensun for the duration of the agreement.

In addition, the Company has agreed to provide a collateralized loan to Zensun of up to approximately $12.0 million. Refer to Note 6 “Loans Receivable” for further information on the loans to Zensun.

Taiwan Liposome Company (“TLC”)

In June 2013, the Company entered into an agreement with TLC granting the Company a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell ProFlow®  for the treatment of peripheral arterial disease (“PAD”) and other indications. Under the terms of the agreement, TLC will be responsible for the continued development, including potential clinical trials and regulatory activities, as well as the manufacture and supply of ProFlow, and the Company will be responsible for all aspects of commercialization including pre-and post-launch activities. TLC was recently notified by the CFDA that ProFlow did not receive clinical trial approval and TLC is in the process of appealing the decision.

The agreement provides for the principal terms of the arrangement between SciClone and TLC, and in March 2014, the companiesentered into a collaboration and license agreement.Financial terms of the agreement include clinical and regulatory milestone payments and sales milestone payments up to an aggregate of $39.5 million.

For the years ended December 31, 2014 and 2013, the Company recorded upfront payments totaling $11.0 million and $5.0 million, respectively, in research and development expense related to its licensing arrangements.

Note 19 — Contingencies

Legal Matters

The Company is a party to various legal proceedings and subject to government investigations, as noted in this section below. All legal proceedings and any government investigations are subject to inherent uncertainties, unfavorable rulings or other adverse events which could occur. Unfavorable outcomes could include substantial monetary damages or awards, injunctions or other remedies, and if any of these were to occur, the possibility exists for a material adverse impact on the Company’s business, results of operations, financial position, and overall trends. The Company might also conclude that settling one or more such matters is in the best interests of its stockholders and its business, and any such settlement could include substantial payments.

On August 5, 2010, SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone, and the SEC issued a subpoena to SciClone requesting a variety of documents and other information including, but not limited to, potential payments or transfers of anything of value to regulators and government-owned entities in China, bids or contracts with state or government-owned entities in China, any joint venture partner, intermediary or local agent of the Company in China, the Company's ethics and anti-corruption policies, training, and audits, and certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the US Department of Justice (“DOJ”) indicating that the DOJ was investigating Foreign Corrupt Practices Act (“FCPA”) issues in the pharmaceutical industry generally, and that the DOJ had information about the Company’s practices suggesting possible violations. The Company received a further subpoena from the SEC in the fourth quarter of fiscal 2012 on additional matters including, but not limited to, matters related to its acquisition of NovaMed Pharmaceuticals, Inc. (”NovaMed”) on April 18, 2011 and FCPA matters, and certain sales and marketing expenses.  

In response to these matters, the Company’s Board of Directors appointed a Special Committee of independent directors (the “Special Committee”) to oversee the Company’s response to the government inquiry. The Special Committee has undertaken independent investigations as to matters reflected in and arising from the SEC and DOJ investigations in order to evaluate whether any

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violation of the FCPA or other laws occurred. The Company will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations.

The Company cannot predict what the outcome of those investigations will be, or the timing of any resolution. However, the Company previously determined that a payment of at least $2.0 million to the government in penalties, fines and/or other remedies is probable. Accordingly, the Company recorded $2.0 million of operating expense in its fourth quarter 2013 results of operations to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. The Company has monitored developments in the investigations since that time and has not determined that any further adjustments to the estimated loss are both probable and reasonable estimable. Any actual fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could materially differ and could be higher than the amount of the $2.0 million estimated loss and could materially impact the Company’s financial statements. The Company will re-assess the potential liability each quarter and may adjust its estimates accordingly in future periods if it determines that a different amount is both probable of being incurred and is reasonably estimable.

NovaMed was a party to a Distribution and Supply Agreement with MEDA Pharma GmbH & Co. KG (“MEDA”). Following the Company’s acquisition of NovaMed, MEDA claimed it had a right to terminate the agreement under a change of control provision. NovaMed does not believe that MEDA had a right of termination under the agreement. NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On April 3, 2014, CIETAC issued the final Award of the Arbitral Tribunal. The Arbitral Tribunal found that MEDA did have a right to terminate the agreement upon a change of control, but that MEDA must make reasonable reimbursement to NovaMed before any products rights are returned to MEDA. The amount that must be paid includes $333,333 as “unjust enrichment” plus an amount for reasonable compensation for such services provided by NovaMed to MEDA. The amount of such payment for services was not determined by the Arbitral Tribunal, but was left to be determined by NovaMed. On April 30, 2014, NovaMed informed MEDA that its determination of reasonable compensation for its services was $3,314,629, including the $333,333 for unjust enrichment. MEDA made a counter offer and the parties were attempting to resolve the matter without an additional arbitration proceeding. In December 2014, NovaMed filed a “Request for Second Arbitration” with CIETAC in order to enforce its right to compensation. The arbitration case is pending with CIETAC and no hearing has taken place yet. The amount of any final payment to NovaMed remains uncertain, and as such the Company has not recognized it as a gain contingency.

On March 11, 2013, Adam Crum filed a derivative lawsuit, purportedly in the name of SciClone, against Friedhelm Blobel, Gary Titus, Jon Saxe, Peter Barrett, Richard Hawkins, Gregg Lapointe and Ira Lawrence in California Superior Court, San Mateo County, captioned Crum v. Blobel, et al., Case No. CIV520331. The lawsuit alleges, based on the restatement of the Company’s consolidated financial statements for the year ended December 31, 2011 and certain quarters of 2011 and 2012, that the Board of Directors and management breached their fiduciary duties to the Company by not exercising oversight in such a way that they allowed the Company to file consolidated financial statements that were materially inaccurate. Plaintiff asserts claims for breach of fiduciary duty, abuse of control and mismanagement. Plaintiff seeks, among other things, injunctive relief, disgorgement, undisclosed damages and attorneys’ fees and costs. The Company and other defendants filed motions to dismiss the complaint. The court granted the motions to dismiss but allowed plaintiff to amend the complaint. An amended complaint was filed on September 19, 2014. On October 24, 2014, the defendants filed motions to dismiss the amended complaint. On December 5, 2014, the court dismissed the lawsuit in its entirety. Plaintiff did not file an appeal and the matter is finally resolved.

Note 20 — Segment Information and Geographic Data

The Company reports segment information based on the internal reporting used by management for evaluating segment performance based on management’s estimates of the appropriate allocation of resources to segments.

The Company operates and manages its business primarily on a geographic basis. Accordingly, the Company determined its operating segments and reporting units, which are generally based on the nature and location of its customers, to be 1) China, and 2) Rest of the World, including the US and Hong Kong.

The Company evaluates the performance of its operating segments based on revenues and operating income (loss). Revenues for geographic segments are generally based on the location of customers. Operating income (loss) for each segment includes revenues,

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related cost of sales and operating expenses directly attributable to the segment. Operating income (loss) for each segment excludes non-operating income and expense.

Summary information by operating segments is as follows (in thousands):

	For the Year Ended December 31,
	2014			2013			2012
Revenue:
China	$	130,311		$	122,616		$	152,227
Rest of the World (including the US and Hong Kong)		4,479			4,442			4,042
Total net revenues	$	134,790		$	127,058		$	156,269
Income (loss) from operations:
China	$	35,630	(1)	$	30,557	(2)	$	4,216	(5)
Rest of the World (including the US and Hong Kong)		(9,646)			(20,128)	(3)		2,194	(6)
Total income from operations	$	25,984		$	10,429		$	6,410
Non-operating income (expense):
China	$	412		$	233		$	(122)
Rest of the World (including the US and Hong Kong)		(19)			2,544	(4)		(16)
Total non-operating income (expense)	$	393		$	2,777		$	(138)
Income (loss) before provision (benefit) for income tax:
China	$	36,042		$	30,790		$	4,094
Rest of the World (including the US and Hong Kong)		(9,665)			(17,584)			2,178
Total income before provision (benefit) for income tax	$	26,377		$	13,206		$	6,272

(1) Operating income for the China segment for the year ended December 31, 2014 includes upfront payments totaling $11.0 million related to the Company’s licensing arrangements.

(2) Operating income for the China segment for the year ended December 31, 2013 includes upfront payments totaling $5.0 million related to the Company’s licensing arrangements and $1.2 million in restructuring charges related to the non-renewal of the Company’s promotional agreements with Sanofi.

(3) Operating loss for the Rest of the World segment includes$2.0 million of expense that the Company recorded for the year ended December 31, 2013 to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

(4) Non-operating income (expense) for the Rest of the World segment for the year ended December 31, 2013 includes the escrow settlement of $2.6 million recorded to other income.

(5) The operating income for the China segment for the year ended December 31, 2012, includes the $42.7 million impairment charge for intangible assets.

(6) Operating income (loss) for the Rest of the World segment includes the change in the fair value of the contingent consideration in 2012.

Long-lived assets as of December 31, 2014 by operating segment are as follows (in thousands):

China	$	41,092
Rest of the World (including the US and Hong Kong)		542
Total long-lived assets	$	41,634

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Note 21 — Selected Quarterly Financial Data (unaudited)

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,		September 30,		December 31,
	2014		2014		2014		2014
Product sales, net	$	26,064	$	31,551	$	33,621	$	40,737
Promotion services revenue		501		962		666		688
Cost of product sales		4,561		5,011		6,005		7,425
Net income		4,134		9,640		7,915		3,519	(1)
Basic net income per share	$	0.08	$	0.19	$	0.16	$	0.07
Diluted net income per share	$	0.08	$	0.18	$	0.15	$	0.07

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,			September 30,			December 31,
	2013		2013			2013			2013
Product sales, net	$	20,533	$	21,683		$	25,273		$	31,925
Promotion services revenue		9,273		7,609			9,953			809
Cost of product sales		4,618		3,205			3,808			6,037
Net income (loss)		4,203		(1,983)	(2)		8,708	(3)		36	(4)
Basic net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00
Diluted net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00

(1) During the three months ended December 31, 2014, the Company recorded upfront payments totaling $11.0 million in research and development expense related to its licensing arrangements.

(2) During the three months ended June 30, 2013, the Company recorded upfront payments totaling $5.0 million in research and development expense related to its licensing arrangements.

(3) On July 8, 2013, the Company and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which the Company retained approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6 million on the settlement date that was recorded to other income during the three months ended September 30, 2013.

(4) During the three months ended December 31, 2013, the Company recorded $2.0 million of operating expense to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

Note 22 — Subsequent Event

In February 2015, the Company’s Board of Directors approved an increase of $15 million to the existing $65.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $80.5 million. The Company repurchased and retired 28,651 shares at a cost of $0.3 million from January 1, 2015 through March 10, 2015 under its share repurchase program. As of March 10, 2015, $15 million was available for future share repurchase.

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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and Chief Executive Officer (“CEO”) and our Senior Vice President and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, management carried out an evaluation under the supervision and with the participation of the CEO and the CFO of the effectiveness of the Company’s disclosure controls and procedures in ensuring that material information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, has been made known to them in a timely fashion. Based on this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures are effective at December 31, 2014.

Management's Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, we assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on the results of our assessment, our management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2014.

PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 as stated in their report, which is referenced in the index appearing under Item 8.

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Changes in Internal Controls

Changes in Internal Controls

During the quarter ended December 31, 2014, management continued its implementation and operation of corporate monitoring controls and other controls to provide increased oversight of our China operations. These changes have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended December 31, 2014.

Remediation of Previously Reported Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement affecting the financial statements will not be prevented or detected on a timely basis. At December 31, 2013, we concluded that a material weakness existed in our internal control over financial reporting related to the effectiveness of our corporate monitoring controls,including those designed to provide oversight of our China operations. For further description of this previously reported material weakness, please refer to our 2013 Annual Report on Form 10-K. In response to the material weakness previously reported, management had implemented in 2013, and continued to implement in 2014, additional corporate monitoring controls and other controls to provide increased oversight of our China operations. Certain of these controls had only been implemented and formalized as of the fourth quarter of 2013, and therefore previously had not yet operated for a sufficient number of consecutive quarterly periods, in order to permit us to conclude on the effectiveness of such controls. During the year ended December 31, 2014 and as of December 31, 2014, management assessed the implementation of additional controls and the operating effectiveness of existing controls. Due to our remediation efforts implemented during fiscal 2014, and given that sufficient time had passed to allow us to evaluate the effectiveness of such efforts, management was able to conclude that the previously reported material weakness had been remediated.

Item 9B.Other Information

None.

PART III

Certain information required by Part III is incorporated by reference from our definitive Proxy in connection with the solicitation of proxies for our 2015 Annual Meeting of Stockholders (the “Proxy Statement”) or in an amendment to this Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, in each case, not later than 120 days after the end of the fiscal year covered by this report, and certain information therein is incorporated in this report by reference.

Item 10.Directors, Executive Officers, and Corporate Governance

The information required by Item 401 of Regulation S-K is incorporated by reference from the Proxy Statement under the caption “Proposal No. 1 Election of Directors – Nominees,” and “Proposal No. 1 Corporate Governance – Board Meetings and Committees.” Information relating to the executive officers of the Company is incorporated by reference from the Proxy Statement under the caption “Executive Compensation and Other Matters – Executive Officers”.

The information required by Item 405 of Regulation S-K is incorporated by reference from the Proxy Statement under the caption “Executive Compensation and Other Matters – Section 16(a) Beneficial Ownership Reporting Compliance”.

Code of Ethics

We have adopted a code of business conduct and ethics, and a policy providing for the reporting of potential violations of the code, for directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller) and employees, known as the Corporate Code of Conduct and Ethics  (including “Whistle blowing” in the case of Violations of the Company Policies) (the “Code of Conduct”). The Code of Conduct is available on our website at www.sciclone.com under the section “Investor Relations – Corporate Governance”. Additionally, stockholders may request a free copy of the Code of Conduct by contacting the Investor Relations Department at our corporate offices by calling 800-724-2566 or by sending an e-mail message to investorrelations@sciclone.com.

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Item 11.Executive Compensation

The information required by this Item 11 is incorporated by reference from the Proxy Statement under the captions “Executive Compensation and Other Matters” and “Corporate Governance.”

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides certain information regarding our compensation plans in effect as of December 31, 2014(in thousands, except per share amounts):  

	Number of		Weighted-	Number of securities
	securities		average exercise	remaining available for
	to be issued upon		price of	future issuance under
	exercise of		outstanding	equity compensation
	outstanding		options,	plans (excluding
	options, warrants		warrants and	securities
	and rights		rights	reflected in column (a))
	(a)		(b)	(c)
Equity compensation plans approved by security holders:
SciClone Pharmaceuticals, Inc. Employee Stock Purchase Plan	—		—	457
2004 Outside Directors Stock Option Plan	921	$	4.14	—
2005 Equity Incentive Plan	5,135	$	4.18	2,241
Equity compensation plans not approved by security holders:	—		—	—
Total	6,056	$	4.17	2,698

The information required by Item 403 of Regulation S-K is incorporated by reference from the Proxy Statement under the caption “Executive Compensation and Other Matters – Security Ownership of Certain Beneficial Owners and Management.”

Item 13.Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference from the Proxy Statement under the captions “Executive Compensation and Other Matters  – Transactions with Related Persons” and “Corporate Governance – Director Independence.”

Item 14.Principal Accountant Fees and Services

The information required by this Item 14 is incorporated by reference from the Proxy Statement under the caption “Proposal No. 3 Ratification of Appointment of Independent Registered Public Accounting Firm – Principal Accountant Fees.”

PART IV

Item 15.Exhibits, Financial Statement Schedules

Item 15 (a).The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements. The following financial statements of the Company are contained in Item 8, Part II on pages 57-88 of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm.

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheets as ofDecember 31, 2014 and 2013.

Consolidated Statements of Income for each of the three years in the period ended December 31, 2014.

91

Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2014.

Consolidated Statements of Stockholders’ Equity for each of the three years ended December 31, 2014.

Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2014.

Notes to Consolidated Financial Statements.

(2) Financial Statement Schedules.  The following schedule required to be filed by Item 8 of this form and Item 15(d) is contained on page 98 of this Report:

Schedule II – Valuation and Qualifying Accounts for each of the three years in the period ended December 31, 2014.

All other schedules have been omitted because they are either inapplicable or the required information has been given in the consolidated financial statements or the notes thereto.

(3) Exhibits.

Refer to Item 15(b) below.

92

Item 15 (b).Exhibits.

Exhibits (numbered in accordance with Item 601 of Regulation S-K):

Exhibit
Number	Description
3(i).1(1)	Amended and Restated Certificate of Incorporation.
3(i).2(13)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation.
3(i).3(7)	Certificate of Designation, Preferences and Rights of the Terms of the Series D Preferred Stock, as filed by SciClone Pharmaceuticals, Inc. with the Secretary of State of the State of Delaware as of December 22, 2006.
3(ii).1(8)	Amended and Restated Bylaws.
4(6)	Rights Agreement, effective as of December 19, 2006, between the Company and Mellon Investor Services LLC, as rights agent (including as Exhibit A the form of Certificate of Designation, Preferences and Rights of the Series D Preferred Stock, as Exhibit B the form of Right Certificate, and as Exhibit C the Summary of Terms of Rights Agreement).
10.1(17)**	Registrant’s 2005 Equity Incentive Plan, effective as of June 7, 2005, as amended on June 25, 2012.
10.2(5)**	Registrant’s 2004 Outside Directors Stock Option Plan, as amendedon June 7, 2005 and as further amended on February 22, 2007.
10.3(2) **	Form of Indemnity Agreement by and between the Registrant and each director and executive officer of SciClone Pharmaceuticals, Inc.
10.4(3)*	Manufacturing and Supply Agreement between SciClone Pharmaceuticals International Ltd. and Patheon Italia S.p.A. dated as of November 1, 2002.
10.5(4)**	Employment Agreement between SciClone Pharmaceuticals, Inc. and Friedhelm Blobel, Ph.D. dated as of April 23, 2006 and effective as of June 2, 2006.
10.6(4)**	Change in Control Agreement between SciClone Pharmaceuticals, Inc. and Friedhelm Blobel, Ph.D. dated as of April 23, 2006 and effective as of June 2, 2006.
10.7(9)*	Manufacturing Supply Agreement Between SciClone Pharmaceuticals International Ltd. and Lonza Sales Ltd., executed as of May 23, 2008.
10.8(10)**	Amendment No. 1 to Change of Control Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. dated April 7, 2009.
10.9(10)**	Amendment No. 1 to Employment Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. dated April 7, 2009.
10.10(11)**	The SciClone Pharmaceuticals, Inc. Employee Stock Purchase Plan, as amended.
10.11(18)**	Description of Executive Incentive Plan.
10.12(12)*	Amendment No. 1 to Manufacturing and Supply Agreement between SciClone Pharmaceuticals International Ltd. and Lonza Sales Ltd., effective December 31, 2010.
10.13(12)**	Amendment No. 2 to Change of Control Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. effective May 4, 2010.
10.14(12)**	Amendment No. 2 to Employment Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. effective May 4, 2010.
10.15(15)**	Change in Control Agreement effective June 11, 2012 by and between Min Yin and SciClone Pharmaceuticals, Inc.

93

10.16(15)**	Executive Severance Agreement effective June 11, 2012 by and between Min Yin and SciClone Pharmaceuticals, Inc.
10.17(16)**	Change in Control Agreement effective August 3, 2012 by and between Lan Xie and SciClone Pharmaceuticals, Inc.
10.18(16)**	Executive Severance Agreement effective August 3, 2012 by and between Lan Xie and SciClone Pharmaceuticals, Inc.
10.19(14)**	Form of Amendment to Change in Control Agreements between SciClone Pharmaceuticals, Inc. and Executive Officers effective August 4, 2011.
10.20(18)*	Re-Exportation Agreement between SciClone Pharmaceuticals International China Holding Ltd., Sinopharm Holding Hong Kong Co., Limited and Sinopharm Holding Lingyun Biopharmaceutical (Shanghai) Co. Limited effective January 1, 2013.
10.21(19) **	Employment Agreement with Hong Zhao, effective April 1, 2013 by and between Hong Zhao and NovaMed Pharmaceuticals (Shanghai) Co. Ltd., an affiliate of SciClone Pharmaceuticals, Inc.
10.22(19) **	Change in Control Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.23(19) **	Executive Severance Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.24(19) **	Sign On Bonus Letter, effective April 1, 2013 by and between Hong Zhao and NovaMed Pharmaceuticals (Shanghai) Co. Ltd., an affiliate of SciClone Pharmaceuticals, Inc.
10.25(20) **	Employment Agreement with Wilson W. Cheung effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.26(20) **	Change in Control Agreement effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.27(20) **	Executive Severance Agreement effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.28(20) *	Framework Agreement effective May 13, 2013 between Zensun (Shanghai) Science & Technology Co., Ltd and SciClone Pharmaceuticals International China Holding Ltd.
10.29(20) *	Framework Agreement effective June 25, 2013 between Taiwan Liposome Company and SciClone Pharmaceuticals International China Holding Ltd.
10.30(21)**	Employment Agreement with Raymond Low, effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.31(21)**	Executive Severance Agreement effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.32(21)**	Change in Control Agreement with Raymond Low, effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.33(22)	Second Amendment, dated December 20, 2013, between SciClone Pharmaceuticals, Inc. and CA-Metro Center Limited Partnership.
10.34(23) **	Employment Agreement with Chun Cai Meng, effective February 9, 2014, by and between Chun Cai Meng and SciClone Pharmaceuticals Hong Kong Ltd.
10.35(23) **	Change in Control Agreement effective February 9, 2014 by and between Chun Cai Meng and SciClone Pharmaceuticals, Inc.
10.36(23) **	Executive Severance Agreement effective February 9, 2014 by and between Chun Cai Meng and SciClone Pharmaceuticals, Inc.

94

14	See “Code of Ethics” in Item 10: Executive Officers and Directors, of this Annual Report on Form 10-K.
21.1(24)	Subsidiaries of Registrant.
23.1(24)	Consent of Independent Registered Public Accounting Firm.
23.2(24)	Consent of Independent Registered Public Accounting Firm.
24.1(24)	Power of Attorney. See page 97.
31.1(24)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(24)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(25)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(25)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101(24)	The following materials from Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Consolidated Balance Sheets as of December 31, 2014 and 2013 (ii) Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013, and 2012, (iv) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2014, 2013 and 2012, (v) Consolidated Statements of Cash Flows for the years ended December 2014, 2013 and 2012 and (vi) Notes to the Consolidated Financial Statements.

**
*	Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.46.
**	Management compensatory plan or arrangement.
(1)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 28, 2003.
(2)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003, filed on October 31, 2003.
(3)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 15, 2004.
(4)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 25, 2006.
(5)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007, filed on August 8, 2007.
(6)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 22, 2006.
(7)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 28, 2006.
(8)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 16, 2014.
(9)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed on August 1, 2008.
(10)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 8, 2009.
(11)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010, filed on August 9, 2010.

95

(12)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on March 31, 2011.
(13)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 6, 2011.
(14)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, filed on November 9, 2011.
(15)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 8, 2012.
(16)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 9, 2012.
(17)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 7, 2012.
(18)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on April 1, 2013.
(19)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed on August 9, 2013.
(20)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed on August 9, 2013.
(21)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013, filed on November 12, 2013.
(22)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 2, 2014.
(23)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed on May 12, 2014.
(24)	Filed herewith.
(25)	Furnished herewith.

Item 15 (c). See Item 15(a) above.

96

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SCICLONE PHARMACEUTICALS, INC.
Date:  March 12, 2015	/s/ Wilson W. Cheung
	Wilson W. Cheung Senior Vice President, Finance and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Friedhelm Blobel, Ph.D. and Wilson W. Cheung, and each of them, his attorneys-in-fact and agents, each with the power of substitution and resubstitution, for him in any and all capacities, to sign any amendment to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary, to be done in connection therewith, as fully as to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.  

Signature	Title	Date
/S/ FRIEDHELM BLOBEL, PH.D. (Friedhelm Blobel, Ph.D.)	President and Chief Executive Officer, Director (Principal Executive Officer)	March 12, 2015
/S/ WILSON W. CHEUNG (Wilson W. Cheung)	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 12, 2015
/S/ JON S. SAXE (Jon S. Saxe)	Chairman of the Board of Directors	March 12, 2015
/S/ NANCY T. CHANG, PH.D. (Nancy T. Chang, Ph.D.)	Director	March 12, 2015
/S/ RICHARD J. HAWKINS (Richard J. Hawkins)	Director	March 12, 2015
/S/ GREGG A LAPOINTE (Gregg A. Lapointe)	Director	March 12, 2015
/S/ SIMON LI (Simon Li)	Director	March 12, 2015

97

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

SCICLONE PHARMACEUTICALS, INC.

Receivables and Product Returns Reserves (in thousands):

	Balance at		Charges for			Deductions for		Deductions for		Balance at
	Beginning of		Amounts			Amounts		Amounts		End of
	Period		Reserved			Recovered		Written Off		Period
Receivables Reserve:
Year Ended December 31, 2014	$	(3,587)	$	—		$	1,500	$	1,089	$	(998)
Year Ended December 31, 2013	$	(1,046)	$	(2,541)	(1)	$	—	$	—	$	(3,587)
Year Ended December 31, 2012	$	—	$	(1,046)	(2)	$	—	$	—	$	(1,046)
Reserve for Product Returns:
Year Ended December 31, 2014	$	—	$	(66)		$	—	$	—	$	(66)
Year Ended December 31, 2013	$	(123)	$	—		$	123	$	—	$	—
Year Ended December 31, 2012	$	(116)	$	(58)		$	51	$	—	$	(123)

(1) For the year ended December 31, 2013, the charges for amounts reserved included $2.5 million of general and administrative expense related to bad debt that was uncertain of collection.

(2) For the year ended December 31, 2012, the charges for amounts reserved included $1.0 million recorded as a reduction in product revenue relating to price concessions that were recorded to the accounts receivable reserve.

98

INDEX TO EXHIBITS

Exhibit
Number	Description
3(i).1(1)	Amended and Restated Certificate of Incorporation.
3(i).2(13)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation.
3(i).3(7)	Certificate of Designation, Preferences and Rights of the Terms of the Series D Preferred Stock, as filed by SciClone Pharmaceuticals, Inc. with the Secretary of State of the State of Delaware as of December 22, 2006.
3(ii).1(8)	Amended and Restated Bylaws.
4(6)	Rights Agreement, effective as of December 19, 2006, between the Company and Mellon Investor Services LLC, as rights agent (including as Exhibit A the form of Certificate of Designation, Preferences and Rights of the Series D Preferred Stock, as Exhibit B the form of Right Certificate, and as Exhibit C the Summary of Terms of Rights Agreement).
10.1(17)**	Registrant’s 2005 Equity Incentive Plan, effective as of June 7, 2005, as amended on June 25, 2012.
10.2(5)**	Registrant’s 2004 Outside Directors Stock Option Plan, as amendedon June 7, 2005 and as further amended on February 22, 2007.
10.3(2) **	Form of Indemnity Agreement by and between the Registrant and each director and executive officer of SciClone Pharmaceuticals, Inc.
10.4(3)*	Manufacturing and Supply Agreement between SciClone Pharmaceuticals International Ltd. and Patheon Italia S.p.A. dated as of November 1, 2002.
10.5(4)**	Employment Agreement between SciClone Pharmaceuticals, Inc. and Friedhelm Blobel, Ph.D. dated as of April 23, 2006 and effective as of June 2, 2006.
10.6(4)**	Change in Control Agreement between SciClone Pharmaceuticals, Inc. and Friedhelm Blobel, Ph.D. dated as of April 23, 2006 and effective as of June 2, 2006.
10.7(9)*	Manufacturing Supply Agreement Between SciClone Pharmaceuticals International Ltd. and Lonza Sales Ltd., executed as of May 23, 2008.
10.8(10)**	Amendment No. 1 to Change of Control Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. dated April 7, 2009.
10.9(10)**	Amendment No. 1 to Employment Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. dated April 7, 2009.
10.10(11)**	The SciClone Pharmaceuticals, Inc. Employee Stock Purchase Plan, as amended.
10.11(18)**	Description of Executive Incentive Plan.
10.12(12)*	Amendment No. 1 to Manufacturing and Supply Agreement between SciClone Pharmaceuticals International Ltd. and Lonza Sales Ltd., effective December 31, 2010.
10.13(12)**	Amendment No. 2 to Change of Control Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. effective May 4, 2010.
10.14(12)**	Amendment No. 2 to Employment Agreement between Dr. Friedhelm Blobel and SciClone Pharmaceuticals, Inc. effective May 4, 2010.
10.15(15)**	Change in Control Agreement effective June 11, 2012 by and between Min Yin and SciClone Pharmaceuticals, Inc.
10.16(15)**	Executive Severance Agreement effective June 11, 2012 by and between Min Yin and SciClone Pharmaceuticals, Inc.

99

10.17(16)**	Change in Control Agreement effective August 3, 2012 by and between Lan Xie and SciClone Pharmaceuticals, Inc.
10.18(16)**	Executive Severance Agreement effective August 3, 2012 by and between Lan Xie and SciClone Pharmaceuticals, Inc.
10.19(14)**	Form of Amendment to Change in Control Agreements between SciClone Pharmaceuticals, Inc. and Executive Officers effective August 4, 2011.
10.20(18)*	Re-Exportation Agreement between SciClone Pharmaceuticals International China Holding Ltd., Sinopharm Holding Hong Kong Co., Limited and Sinopharm Holding Lingyun Biopharmaceutical (Shanghai) Co. Limited effective January 1, 2013.
10.21(19) **	Employment Agreement with Hong Zhao, effective April 1, 2013 by and between Hong Zhao and NovaMed Pharmaceuticals (Shanghai) Co. Ltd., an affiliate of SciClone Pharmaceuticals, Inc.
10.22(19) **	Change in Control Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.23(19) **	Executive Severance Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.24(19) **	Sign On Bonus Letter, effective April 1, 2013 by and between Hong Zhao and NovaMed Pharmaceuticals (Shanghai) Co. Ltd., an affiliate of SciClone Pharmaceuticals, Inc.
10.25(20) **	Employment Agreement with Wilson W. Cheung effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.26(20) **	Change in Control Agreement effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.27(20) **	Executive Severance Agreement effective July 16, 2013 by and between Wilson W. Cheung and SciClone Pharmaceuticals, Inc.
10.28(20) *	Framework Agreement effective May 13, 2013 between Zensun (Shanghai) Science & Technology Co., Ltd and SciClone Pharmaceuticals International China Holding Ltd.
10.29(20) *	Framework Agreement effective June 25, 2013 between Taiwan Liposome Company and SciClone Pharmaceuticals International China Holding Ltd.
10.30(21)**	Employment Agreement with Raymond Low, effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.31(21)**	Executive Severance Agreement effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.32(21)**	Change in Control Agreement with Raymond Low, effective October 15, 2013 by and between Raymond Low and SciClone Pharmaceuticals, Inc.
10.33(22)	Second Amendment, dated December 20, 2013, between SciClone Pharmaceuticals, Inc. and CA-Metro Center Limited Partnership.
10.34(23) **	Employment Agreement with Chun Cai Meng, effective February 9, 2014, by and between Chun Cai Meng and SciClone Pharmaceuticals Hong Kong Ltd.
10.35(23) **	Change in Control Agreement effective February 9, 2014 by and between Chun Cai Meng and SciClone Pharmaceuticals, Inc.
10.36(23) **	Executive Severance Agreement effective February 9, 2014 by and between Chun Cai Meng and SciClone Pharmaceuticals, Inc.
14	See “Code of Ethics” in Item 10: Executive Officers and Directors, of this Annual Report on Form 10-K.

100

21.1(24)	Subsidiaries of Registrant.
23.1(24)	Consent of Independent Registered Public Accounting Firm.
23.2(24)	Consent of Independent Registered Public Accounting Firm.
24.1(24)	Power of Attorney. See page 97.
31.1(24)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(24)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(25)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(25)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101(24)	The following materials from Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Consolidated Balance Sheets as of December 31, 2014 and 2013 (ii) Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013, and 2012, (iv) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2014, 2013 and 2012, (v) Consolidated Statements of Cash Flows for the years ended December 2014, 2013 and 2012 and (vi) Notes to the Consolidated Financial Statements.

*	Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.46.
**	Management compensatory plan or arrangement.
(1)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 28, 2003.
(2)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003, filed on October 31, 2003.
(3)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 15, 2004.
(4)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 25, 2006.
(5)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007, filed on August 8, 2007.
(6)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 22, 2006.
(7)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 28, 2006.
(8)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 16, 2014.
(9)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed on August 1, 2008.
(10)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 8, 2009.
(11)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010, filed on August 9, 2010.
(12)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on March 31, 2011.

101

(13)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 6, 2011.
(14)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, filed on November 9, 2011.
(15)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 8, 2012.
(16)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 9, 2012.
(17)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 7, 2012.
(18)	Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on April 1, 2013.
(19)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed on August 9, 2013.
(20)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed on August 9, 2013.
(21)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, filed on November 12, 2013.
(22)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 2, 2014.
(23)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed on May 12, 2014.
(24)	Filed herewith.
(25)	Furnished herewith.

102

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF REGISTRANT

SCICLONE PHARMACEUTICALS INTERNATIONAL LIMITED

SCICLONE PHARMACEUTICALS ITALY SRL

SCICLONE PHARMACEUTICALS INTERNATIONAL CHINA HOLDING LTD

SCICLONE PHARMACEUTICALS (CHINA) LTD

SCICLONE PHARMACEUTICALS (CHINA) CO., LTD.

SCICLONE PHARMA LIMITED

SCICLONE PHARMACEUTICALS INTERNATIONAL (CAYMAN) DEVELOPMENT LIMITED

SCICLONE PHARMACEUTICALS HONG KONG LIMITED

NOVAMED PHARMACEUTICALS INC.

NOVAMED PHARMACEUTICALS (SHANGHAI) CO. LTD.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-52471, 333-62309, 333-77543, 333-81481, 333-84487, 333-85673, 333-30938, 333-72798, 333-72800, 333-107538, 333-38773, 333-159364, 333-176209 and 333-180131) and Form S-8  (Nos. 333-145281, 333-128482, 333-120008, 33-109256, 333-66832, 333-98081, 333-45820, 333-62059, 333-12169, 333-168668 and 333-183171) of SciClone Pharmaceuticals, Inc. of our reportdated March 12, 2015 relating to the financial statements, financial statement scheduleand the effectiveness of internal control over financial reporting, which appears in this Form 10‑K.

/s/ PricewaterhouseCoopers Zhong Tian, LLP

Shanghai, the People’s Republic of China

March 12, 2015

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statements (Form S-3 Nos. 333-52471, 333-62309, 333-77543, 333-81481, 333-84487, 333-85673, 333-30938, 333-72798, 333-72800, 333-107538, 333-38773, 333-159364, 333-176209 and 333-180131) of SciClone Pharmaceuticals, Inc., and in the related prospectuses,

(2) Registration Statement (Form S-8 No. 333-145281) pertaining to the 2005 Equity Incentive Plan and the 2004 Outside Directors Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(3) Registration Statement (Form S-8 No. 333-128482) pertaining to the 2005 Equity Incentive Plan and the 2004 Outside Directors Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(4) Registration Statement (Form S-8 No. 333-120008) pertaining to the 2004 Stock Option Plan and the 2004 Outside Directors Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(5) Registration Statement (Form S-8 No. 33-109256) pertaining to the 1996 Employee Stock Purchase Plan of SciClone Pharmaceuticals, Inc.,

(6) Registration Statement (Form S-8 No. 333-66832) pertaining to the 1991 Stock Plan, the 1992 Stock Plan, the 1996 Employee Stock Purchase Plan, the 1995 Equity Incentive Plan, and the 1995 Nonemployee Director Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(7) Registration Statement (Form S-8 No. 333-98081) pertaining to the 1995 Equity Incentive Plan and the 1995 Nonemployee Director Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(8) Registration Statement (Form S-8 No. 333-45820) pertaining to the 1995 Equity Incentive Plan and the 1995 Nonemployee Director Stock Option Plan of SciClone Pharmaceuticals, Inc.,

(9) Registration Statement (Form S-8 No. 333-62059) pertaining to the 1995 Equity Incentive Plan of SciClone Pharmaceuticals, Inc.,

(10) Registration Statement (Form S-8 No. 333-12169) pertaining to the 1996 Employee Stock Purchase Plan of SciClone Pharmaceuticals, Inc.,

(11) Registration Statement (Form S-8 No. 333-168668) pertaining to the 2005 Equity Incentive Plan and the Sciclone Pharmaceuticals Inc. Employee Stock Purchase Plan; and

(12) Registration Statement (Form S-8 No. 333-183171) pertaining to the 2005 Equity Incentive Plan

of our report dated April 1, 2013, with respect to the consolidated financial statements of SciClone Pharmaceuticals, Inc. for the year ended December 31, 2012,  included in this Annual Report (Form 10-K) for the year ended December 31, 2014.

/s/ Ernst & Young LLP

San Jose, California

March 11, 2015

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Friedhelm Blobel, Ph.D., certify that:

1. I have reviewed this Annual  Report on Form 10-K of SciClone Pharmaceuticals, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

u
Date: March 12, 2015	/s/    Friedhelm Blobel, Ph.D.
	Friedhelm Blobel, Ph.D.
	Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Wilson W. Cheung, certify that:

1. I have reviewed this Annual Report on Form 10-K of SciClone Pharmaceuticals, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2015	/s/    Wilson W. Cheung
	Wilson W. Cheung
	Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Friedhelm Blobel, Chief Executive Officer and President, of SciClone Pharmaceuticals, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Annual Report on Form 10-K of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

u
Date: March 12, 2015	/s/    Friedhelm Blobel, Ph.D.
	Friedhelm Blobel, Ph.D.
	Chief Executive Officer and President (Principal Executive Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to SciClone Pharmaceuticals, Inc. and will be retained by SciClone Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Wilson W. Cheung, Senior Vice President, Finance and Chief Financial Officer, of SciClone Pharmaceuticals, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Annual Report on Form 10-K of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

ovember
Date: March 12, 2015	/s/    Wilson W. Cheung
	Wilson W. Cheung
	Senior Vice President, Finance and Chief Financial Officer
	(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to SciClone Pharmaceuticals, Inc. and will beretained by SciClone Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Schedule Of Domestic And Foreign Components Of Income (Loss)

	2014		2013		2012
Domestic	$	(8,496)	$	(17,168)	$	(11,541)
Foreign		34,873		30,374		17,813
Pre-tax income	$	26,377	$	13,206	$	6,272

Schedule of Effective Income Tax Rate Reconciliation

	2014		2013		2012
Tax at federal statutory rate	$	8,968	$	4,490	$	2,132
Foreign income tax at different rates		(10,788)		(8,383)		(10,405)
Taxable dividend from foreign subsidiary		—		—		11,900
Uncertain tax positions accrual		127		297		999
Change in valuation allowance		2,672		5,254		(7,945)
Stock-based compensation		2		(87)		(41)
Non deductible expenses		189		670		11
Other		(1)		1		1
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

Schedule Of Components Of Income Tax Expense (Benefit)

	2014		2013		2012
Federal	$	—	$	—	$	—
State		1		1		1
Foreign		1,489		2,032		3,445
Total current		1,490		2,033		3,446
Federal		—		—		—
State		—		—		—
Foreign		(321)		209		(6,794)
Total deferred		(321)		209		(6,794)
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

Schedule Of Deferred Tax Assets And Liabilities

	2014		2013
Deferred tax assets:
Net operating loss carryforwards	$	37,513	$	33,654
Research and development credit carryforwards		10,615		10,498
Intangibles		395		337
Other		2,527		2,867
Gross deferred tax assets		51,050		47,356
Valuation allowance		(50,724)		(47,350)
Total deferred tax assets		326		6
Deferred tax liabilities:
Other		—		—
Total deferred tax liabilities		—		—
Net deferred tax assets	$	326	$	6

Schedule Of Unrecognized Tax Benefits

	2014		2013		2012
Balance beginning of period	$	6,138	$	6,053	$	5,715
Tax positions related to current year:
Additions for current year items		32		36		1,050
Additions for prior year items		—		88		—
Reductions for prior year items		(206)		(115)		(747)
Changes for foreign currency translation		(88)		76		35
Balance end of period	$	5,876	$	6,138	$	6,053

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Net Intangible Assets (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets estimated value			$ 0
Intangible asset impairment (Note 7)			42,728,000
Estimated useful life	13 years 6 months
Amortization of acquired intangible assets	$ 0	$ 0	$ 2,645,000
Intangible assets discount rate			20.00%

XML

Fair Value Measurements (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Apr. 18, 2011
Fair Value Measurements [Abstract]
Contingent consideration (earn-out) at estimated fair value	$ 0	$ 43,000,000
Non cash gain due to decrease in achieving targets	$ (15,422,000)

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Stockholders' Equity (Schedule Of Valuation Assumptions Used For Stock Options And ESPP Plans) (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Dividend yield	0.00%	0.00%	0.00%
Stock Option [Member]
Risk-free interest rate	1.61%	1.02%	0.92%
Volatility factor of the market price of common stock	57.96%	64.12%	63.79%
Weighted-average expected life (years)	5 years	5 years 1 month 6 days	5 years 2 months 16 days
Performance-Based Stock Options [Member]
Risk-free interest rate		1.22%	0.96%
Volatility factor of the market price of common stock		63.20%	63.66%
Weighted-average expected life (years)		5 years 15 days	5 years 2 months 19 days
ESPP [Member]
Risk-free interest rate	0.04%	0.06%	0.09%
Volatility factor of the market price of common stock	42.50%	37.36%	56.79%
Weighted-average expected life (years)	3 months	3 months	3 months

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Goodwill (Schedule Of Changes In Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Beginning balance	$ 35,357	$ 34,313	$ 33,868
Translation adjustments	(836)	1,044	445
Ending balance	$ 34,521	$ 35,357	$ 34,313

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Segment Information And Geographic Data (Long-Lived Assets By Operating Segment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Segment Reporting Information [Line Items]
Long-lived assets	$ 41,634
China [Member]
Segment Reporting Information [Line Items]
Long-lived assets	41,092
Rest Of The World (Including The U.S. And Hong Kong) [Member]
Segment Reporting Information [Line Items]
Long-lived assets	$ 542

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The Company And Summary Of Significant Accounting Policies (Reconciliation Of The Numerator And Denominators Of The Basic And Diluted Net Income Per Share Computations) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
The Company And Summary Of Significant Accounting Policies [Abstract]
Net income	$ 3,519	$ 7,915	$ 9,640	$ 4,134	$ 36	$ 8,708	$ (1,983)	$ 4,203	$ 25,208	$ 10,964	$ 9,620
Weighted-average shares outstanding used to compute basic net income per share									51,277	53,587	56,637
Effect of dilutive securities									1,407	1,349	1,846
Weighted-average shares outstanding used to compute diluted net income per share									52,684	54,936	58,483
Basic net income per share	$ 0.07	$ 0.16	$ 0.19	$ 0.08	$ 0.00	$ 0.16	$ (0.04)	$ 0.08	$ 0.49	$ 0.20	$ 0.17
Diluted net income per share	$ 0.07	$ 0.15	$ 0.18	$ 0.08	$ 0.00	$ 0.16	$ (0.04)	$ 0.08	$ 0.48	$ 0.20	$ 0.16

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Measurements [Abstract]

Financial Assets And Liability Measured At Fair Value On A Recurring Basis

	Fair Value Measurements as of December 31, 2014 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2014
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		19,678		—		—		19,678
Total	$	19,678	$	75	$	—	$	19,753

	Fair Value Measurements as of December 31, 2013 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		28,262		—		—		28,262
Total	$	28,262	$	75	$	—	$	28,337

Schedule Of Change In Estimated Fair Value Of Contingent Consideration

	Contingent
	Consideration
Balance as of January 1, 2012	$	15,400
Change in the estimated fair value of the contingent consideration liability		(15,422)
Translation adjustments		22
Balance as of December 31, 2012	$	—

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Selected Quarterly Financial Data (Details) (USD $)	3 Months Ended								12 Months Ended			0 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 08, 2013
Product sales, net	$ 40,737,000	$ 33,621,000	$ 31,551,000	$ 26,064,000	$ 31,925,000	$ 25,273,000	$ 21,683,000	$ 20,533,000	$ 131,973,000	$ 99,414,000	$ 123,171,000
Promotion services	688,000	666,000	962,000	501,000	809,000	9,953,000	7,609,000	9,273,000	2,817,000	27,644,000	33,098,000
Cost of product sales	7,425,000	6,005,000	5,011,000	4,561,000	6,037,000	3,808,000	3,205,000	4,618,000	23,002,000	17,668,000	21,996,000
Net income	3,519,000	7,915,000	9,640,000	4,134,000	36,000	8,708,000	(1,983,000)	4,203,000	25,208,000	10,964,000	9,620,000
Basic net income per share	$ 0.07	$ 0.16	$ 0.19	$ 0.08	$ 0.00	$ 0.16	$ (0.04)	$ 0.08	$ 0.49	$ 0.20	$ 0.17
Diluted net income per share	$ 0.07	$ 0.15	$ 0.18	$ 0.08	$ 0.00	$ 0.16	$ (0.04)	$ 0.08	$ 0.48	$ 0.20	$ 0.16
Upfront payments	11,000,000						5,000,000		11,000,000	5,000,000
Escrow settlement, cash and shares combined value										2,600,000
Estimated SEC/DOJ investigation loss					2,000,000					2,000,000
Probable payment to government in penalties, fines and/or other remedies									2,000,000
Goodwill and Intangible Asset Impairment											42,728,000
Non cash gain due to decrease in achieving targets											(15,422,000)
NovaMed [Member]
Escrow settlement, cash retained												800,000
Escrow settlement, common stock retained												342,300
Escrow settlement, cash and shares combined value						2,600,000						2,600,000
Sanofi [Member]
Promotion services			$ 200,000

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Accumulated Other Comprehensive Income (Loss) (Schedule Of Changes In The Composition Of Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss) [Abstract]
Foreign Currency Translation, Beginning balance	$ 4,176	$ 3,055	$ 2,430
Foreign Currency Translation, Other comprehensive income (loss) before reclassifications		1,121
Foreign Currency Translation, Amounts reclassified out of accumulated other comprehensive income to other income (expense), net
Foreign Currency Translation, Other comprehensive income (loss)	(912)	1,121	625
Foreign Currency Translation, Ending balance	3,264	4,176	3,055
Available-for-Sale Investments, Beginning balance		(67)	(86)
Available-for-Sale Investments, Other comprehensive income (loss) before reclassifications		(4)
Available-for-Sale Investments, Amounts reclassified out of accumulated other comprehensive income (loss) to other income (expense), net		71
Available-for-Sale Investments, Other comprehensive income		67	19
Available-for-Sale Investments, Ending balance			(67)
Beginning balance	4,176	2,988	2,344
Other comprehensive income (loss) before reclassifications		1,117
Amounts reclassified out of accumulated other comprehensive income to other income, net		71
Other comprehensive income (loss)	(912)	1,188	644
Ending balance	$ 3,264	$ 4,176	$ 2,988

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Escrow Settlement Agreement (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended	0 Months Ended		3 Months Ended
	Dec. 31, 2013	Jul. 08, 2013	Oct. 16, 2012	Sep. 30, 2013
Escrow Settlement Agreement [Line Items]
Escrow settlement, cash and shares combined value	$ 2.6
NovaMed [Member]
Escrow Settlement Agreement [Line Items]
Cash held in escrow not released			1.4
Common stock held in escrow not released			622,363
Escrow settlement, cash		0.8
Escrow settlement, common stock retained		342,300
Escrow settlement, cash and shares combined value		$ 2.6		$ 2.6

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Contingencies (Details) (USD $)	0 Months Ended	1 Months Ended	3 Months Ended	12 Months Ended
	Apr. 03, 2014	Apr. 30, 2013	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Contingencies [Abstract]
Probable payment to government in penalties, fines and/or other remedies				$ 2,000,000
Estimated SEC/DOJ investigation loss			2,000,000		2,000,000
Unjust enrichment	333,333
Reasonable reimbursement to be paid		$ 3,314,629

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Schedule II - Valuation And Qualifying Accounts (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Receivables Reserve [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	$ (3,587)	$ (1,046)
Charges for Amount Reserved		(2,541)	[1]	(1,046)	[2]
Deductions for Amounts Recovered	1,500
Deductions for Amounts Written Off	1,089
Balance at End of Period	(998)	(3,587)		(1,046)
Reserve For Product Returns [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period		(123)		(116)
Charges for Amount Reserved	(66)			(58)
Deductions for Amounts Recovered		123		51
Deductions for Amounts Written Off
Balance at End of Period	(66)			(123)
Reserve For Product Returns [Member] | General And Administrative [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Charges for Amount Reserved		(2,500)
Reserve For Product Returns [Member] | Product Revenue [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Charges for Amount Reserved		$ (1,000)

[1] For the year ended December 31, 2013, the charges for amounts reserved included $2.5 million of general and administrative expense related to bad debt that was uncertain of collection.

[2] For the year ended December 31, 2012, the charges for amounts reserved included $1.0 million recorded as a reduction in product revenue relating to price concessions that were recorded to the accounts receivable reserve.

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Segment Information And Geographic Data (Summary Information By Operating Segment) (Details) (USD $)	3 Months Ended			12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenue				$ 134,790,000	$ 127,058,000	$ 156,269,000
Income (loss) from operations				25,984,000	10,429,000	6,410,000
Non-operating income (expense), net				393,000	2,777,000	(138,000)
Income (loss) before provision for income tax				26,377,000	13,206,000	6,272,000
Upfront payments	11,000,000		5,000,000	11,000,000	5,000,000
Restructuring charges					1,181,000	1,096,000
Estimated SEC/DOJ investigation loss		2,000,000			2,000,000
Escrow settlement cash and shares combined value					2,600,000
Sanofi [Member]
Segment Reporting Information [Line Items]
Restructuring charges					1,200,000
China [Member]
Segment Reporting Information [Line Items]
Revenue				130,311,000	122,616,000	152,227,000
Income (loss) from operations				35,630,000	30,557,000	4,216,000
Non-operating income (expense), net				412,000	233,000	(122,000)
Income (loss) before provision for income tax				36,042,000	30,790,000	4,094,000
Impairment of intangible asset						42,700,000
Rest Of The World (Including The U.S. And Hong Kong) [Member]
Segment Reporting Information [Line Items]
Revenue				4,479,000	4,442,000	4,042,000
Income (loss) from operations				(9,646,000)	(20,128,000)	2,194,000
Non-operating income (expense), net				(19,000)	2,544,000	(16,000)
Income (loss) before provision for income tax				$ (9,665,000)	$ (17,584,000)	$ 2,178,000

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Stockholders' Equity (Schedule Of Stock Option Activity) (Details) (Stock Option [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock Option [Member]
Balance as of December 31, Number of Shares	6,095	5,998	6,915
Balance as of December 31, Weighted-Average Exercise Per Share	$ 4.14	$ 4.05	$ 3.46
Options forfeited, Number of Shares	(705)	(966)	(1,536)
Options forfeited, Weighted-Average Exercise Per Share	$ 5.10	$ 5.45	$ 5.13
Options granted, Number of Shares	1,740	1,637	1,889
Options granted, Weighted-Average Exercise Per Share	$ 4.85	$ 4.76	$ 6.14
Options exercised, Number of Shares	(1,233)	(574)	(1,270)
Options exercised, Weighted-Average Exercise Per Share	$ 4.43	$ 2.82	$ 2.66
Balance as of December 31, Number of Shares	5,897	6,095	5,998	6,915
Balance as of December 31, Weighted-Average Exercise Per Share	$ 4.17	$ 4.14	$ 4.05	$ 3.46
Options outstanding weighted average remaining contractual term (years)	6 years 29 days	5 years 7 months 28 days	6 years 22 days	6 years 11 months 23 days
Balance outstanding aggregate intrinsic value	$ 27,066	$ 7,199	$ 5,575	$ 8,130
Vested and expected to vest after December 31, 2014 Number of Shares	5,445
Vested and expected to vest after December 31, 2014 Weighted-Average Exercise Per Share	$ 4.11
Vested and expected to vest after December 31, 2014 Weighted-Average Remaining Contractual Term (Years)	5 years 10 months 2 days
Vested and expected to vest after December 31, 2014 Aggregate Intrinsic Value	25,342
Exercisable as of December 31, Number of Shares	3,397
Exercisable as of December 31, Weighted-Average Exercise Per Share	$ 3.60
Exercisable as of December 31, Weighted-Average Remaining Contractual Term (Years)	4 years 1 month 2 days
Exercisable as of December 31, Aggregate Intrinsic Value	$ 17,537

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Licensing Agreements

12 Months Ended

Dec. 31, 2014

Licensing Agreements [Abstract]

Licensing Agreements

Note 18 — Licensing Agreements

The Medicines Company

In December 2014, the Company entered into a strategic partnership for two cardiovascular products in China. The partnership includes an agreement granting SciClone a license and the exclusive rights in China to promote two products of The Medicines Company including Angiomax®(bivalirudin) for Injection for which a Phase 3 registration trial was completed in China and is currently under review by the China Food and Drug Administration for marketing approval, and Cleviprex®(clevidipine) Injectable Emulsion, for which a clinical trial application (CTA) for China was filed in 2013. Under the terms of the agreement, SciClone will be responsible for all aspects of commercialization, including pre-and post-launch activities, for both products in the China market (excluding Hong Kong and Macao). SciClone has also agreed to participate in the China registration process for both products. Financial terms of the agreement, in addition to net sales royalties payable to The Medicines Company, include the following additional payments to The Medicines Company: an upfront payment; a product support services fee; and regulatory/commercial success milestone payments of up to an aggregate of $50.5 million.

Zensun

On May 13, 2013, the Company, through a designated affiliate, entered into a framework agreement with Zensun for the exclusive promotion, marketing, distribution and sale of NeucardinTM in China, Hong Kong and Macao. Neucardin is a novel, first-in-class therapeutic for the treatment of patients with intermediate to advanced heart failure, for which a New Drug Application was submitted to and accepted for review by the China Food and Drug Administration (“CFDA”) in 2012. The China food and Drug Administration informed Zensun in 2014 that its Phase 2 clinical study data is insufficient, and has asked Zensun to submit a New Drug Application once the ongoing Phase 3 clinical study reaches its endpoints.

The Zensun framework agreement provides the principal terms of the arrangement and the two parties have also entered into a supplemental license and supply agreement.

Subject to certain conditions, the Company has agreed to make payments of up to $18.5 million to Zensun, consisting of an upfront payment amount and further amounts on the achievement of certain milestones, including the approval of a new drug application for Neucardin™,the granting of a manufacturing license, good manufacturing practices certificate and drug approval number in China. The Company has agreed under certain conditions to make milestone payments to Zensun of $10 million if approval is received for a new device to deliver Neucardin™ and up to $25 million if approval is received for the use of Neucardin™ in additional indications.

Zensun will be responsible for manufacture of the product and the Company has agreed to purchase the product exclusively from Zensun for the duration of the agreement.

In addition, the Company has agreed to provide a collateralized loan to Zensun of up to approximately $12.0 million. Refer to Note 6 “Loans Receivable” for further information on the loans to Zensun.

Taiwan Liposome Company (“TLC”)

In June 2013, the Company entered into an agreement with TLC granting the Company a license and the exclusive rights in China, Hong Kong and Macao to promote, market, distribute and sell ProFlow®  for the treatment of peripheral arterial disease (“PAD”) and other indications. Under the terms of the agreement, TLC will be responsible for the continued development, including potential clinical trials and regulatory activities, as well as the manufacture and supply of ProFlow, and the Company will be responsible for all aspects of commercialization including pre-and post-launch activities. TLC was recently notified by the CFDA that ProFlow did not receive clinical trial approval and TLC is in the process of appealing the decision.

The agreement provides for the principal terms of the arrangement between SciClone and TLC, and in March 2014, the companiesentered into a collaboration and license agreement.Financial terms of the agreement include clinical and regulatory milestone payments and sales milestone payments up to an aggregate of $39.5 million.

For the years ended December 31, 2014 and 2013, the Company recorded upfront payments totaling $11.0 million and $5.0 million, respectively, in research and development expense related to its licensing arrangements.

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Fair Value Measurements (Schedule Of Change In Estimated Fair Value Of Contingent Consideration) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Fair Value Measurements [Abstract]
Balance, Liability	$ 15,400
Change in the estimated fair value of the contingent liability	(15,422)
Translation adjustments	$ 22

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Segment Information And Geographic Data (Tables)

12 Months Ended

Dec. 31, 2014

Segment Information And Geographic Data [Abstract]

Summary Information By Operating Segment

	For the Year Ended December 31,
	2014			2013			2012
Revenue:
China	$	130,311		$	122,616		$	152,227
Rest of the World (including the US and Hong Kong)		4,479			4,442			4,042
Total net revenues	$	134,790		$	127,058		$	156,269
Income (loss) from operations:
China	$	35,630	(1)	$	30,557	(2)	$	4,216	(5)
Rest of the World (including the US and Hong Kong)		(9,646)			(20,128)	(3)		2,194	(6)
Total income from operations	$	25,984		$	10,429		$	6,410
Non-operating income (expense):
China	$	412		$	233		$	(122)
Rest of the World (including the US and Hong Kong)		(19)			2,544	(4)		(16)
Total non-operating income (expense)	$	393		$	2,777		$	(138)
Income (loss) before provision (benefit) for income tax:
China	$	36,042		$	30,790		$	4,094
Rest of the World (including the US and Hong Kong)		(9,665)			(17,584)			2,178
Total income before provision (benefit) for income tax	$	26,377		$	13,206		$	6,272

(1) Operating income for the China segment for the year ended December 31, 2014 includes upfront payments totaling $11.0 million related to the Company’s licensing arrangements.

(2) Operating income for the China segment for the year ended December 31, 2013 includes upfront payments totaling $5.0 million related to the Company’s licensing arrangements and $1.2 million in restructuring charges related to the non-renewal of the Company’s promotional agreements with Sanofi.

(3) Operating loss for the Rest of the World segment includes$2.0 million of expense that the Company recorded for the year ended December 31, 2013 to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

(4) Non-operating income (expense) for the Rest of the World segment for the year ended December 31, 2013 includes the escrow settlement of $2.6 million recorded to other income.

(5) The operating income for the China segment for the year ended December 31, 2012, includes the $42.7 million impairment charge for intangible assets.

(6) Operating income (loss) for the Rest of the World segment includes the change in the fair value of the contingent consideration in 2012.

Long-Lived Assets By Operating Segment

China	$	41,092
Rest of the World (including the US and Hong Kong)		542
Total long-lived assets	$	41,634

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Licensing Agreements (Details) (USD $)	1 Months Ended	12 Months Ended		1 Months Ended	0 Months Ended	1 Months Ended
	May 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014 item	May 13, 2013	Mar. 31, 2014
Collateralized loan amount, maximum	$ 12,000,000
Research and development expense related to in-licensing deals		11,000,000	5,000,000
The Medicines Company [Member]
Number of products				2
Commitment agreement payment amount		50,500,000
Zensun [Member]
Commitment agreement payment amount					18,500,000
Commitment agreement additional payment amount					10,000,000
Commitment agreement further payments upon approval for new indications of product					25,000,000
Collateralized loan amount, maximum		12,000,000
TLC [Member]
Commitment agreement payment amount						$ 39,500,000

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accrued Liabilities [Abstract]

Schedule Of Accrued And Other Current Liabilities

	December 31,
	2014		2013
Accrued sales and marketing expenses	$	5,383	$	6,419
Accrued taxes, tax reserves and interest		5,208		5,029
Accrued compensation and benefits		4,176		3,475
Accrued professional fees		1,819		1,601
Accrued manufacturing costs		95		1,617
Accrued estimated SEC and DOJ investigation loss (Note 19)		2,000		2,000
Accrued license fee		1,000		—
Other		855		797
Total	$	20,536	$	20,938

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Property And Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 5,176,000	$ 3,953,000
Less accumulated depreciation	(3,328,000)	(3,110,000)
Net property and equipment	1,848,000	843,000
Depreciation	900,000	900,000	600,000
Construction in Process [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	30,000	143,000
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,059,000	1,406,000
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	791,000	1,518,000
Office Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,463,000	606,000
Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	763,000	212,000
Vehicle [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 70,000	$ 68,000

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Income Taxes (Schedule Of Unrecognized Tax Benefits) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Balance beginning of period	$ 6,138	$ 6,053	$ 5,715
Additions for current year items	32	36	1,050
Additions for prior year items		88
Reductions for prior year items	(206)	(115)	(747)
Changes for foreign currency translation	(88)	76	35
Balance end of period	$ 5,876	$ 6,138	$ 6,053

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Restructuring Charges (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended
	Mar. 31, 2012 employee	Dec. 31, 2013 employee	Dec. 31, 2012
Restructuring Charges [Abstract]
Reduction in workforce, full-time employees	11	175
Number of full-time employees		650
Severance costs		$ 1.2	$ 1.1

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Available For Sale Investments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Certificate of deposit	$ 0.1	$ 0.1
Restricted Long-Term Italian State Bonds Maturing In 2013 [Member]
Schedule of Available-for-sale Securities [Line Items]
Realized loss on available-for-sale investment	$ 0.1

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Available For Sale Investments

12 Months Ended

Dec. 31, 2014

Available For Sale Investments [Abstract]

Available For Sale Investments

Note 2 — Available-for-Sale Investments

The Company realized $0.1 million in losses related to the maturity of its Italian state bonds for the year ended December 31, 2013 which were reclassified out of accumulated other comprehensive income and included in non-operating expenses.

The Company’s certificate of deposit for $0.1million included in short-term investments as of December 31, 2014 and 2013, secures the Company’s letter of credit required under its European value-added tax filing arrangements.

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Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Line Items]
Income tax provision (benefit)	$ (1,169,000)	$ (2,242,000)	$ 3,348,000
Undistributed Earnings of Foreign Subsidiaries	138,300,000
Deferred tax assets, change in valuation allowance	3,400,000	4,400,000	(7,700,000)
Federal Net operating loss carryforwards	110,300,000
Research and development, orphan drug and investment tax credit carryforwards gross amount	12,200,000
State net operating loss carryforwards	26,900,000
State research and development tax credit carryforwards	2,200,000
Valuation allowance related to stock option deductions	3,700,000
Unrecognized tax benefits	5,876,000	6,138,000	6,053,000	5,715,000
Unrecognized tax benefits that would impact effective tax rate	2,200,000
Unrecognized tax benefits, amount offset by valuation allowance	3,700,000
Promotion And Distribution Contract Rights [Member]
Income Tax Disclosure [Line Items]
Income tax provision (benefit)			6,800,000
Impairment of intangible asset			$ 42,700,000
China [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate	25.00%	25.00%	25.00%
Income tax examination, period	5 years

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Selected Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2014

Selected Quarterly Financial Data [Abstract]

Schedule Of Selected Quarterly Financial Data

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,		September 30,		December 31,
	2014		2014		2014		2014
Product sales, net	$	26,064	$	31,551	$	33,621	$	40,737
Promotion services revenue		501		962		666		688
Cost of product sales		4,561		5,011		6,005		7,425
Net income		4,134		9,640		7,915		3,519	(1)
Basic net income per share	$	0.08	$	0.19	$	0.16	$	0.07
Diluted net income per share	$	0.08	$	0.18	$	0.15	$	0.07

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,			September 30,			December 31,
	2013		2013			2013			2013
Product sales, net	$	20,533	$	21,683		$	25,273		$	31,925
Promotion services revenue		9,273		7,609			9,953			809
Cost of product sales		4,618		3,205			3,808			6,037
Net income (loss)		4,203		(1,983)	(2)		8,708	(3)		36	(4)
Basic net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00
Diluted net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00

(1) During the three months ended December 31, 2014, the Company recorded upfront payments totaling $11.0 million in research and development expense related to its licensing arrangements.

(2) During the three months ended June 30, 2013, the Company recorded upfront payments totaling $5.0 million in research and development expense related to its licensing arrangements.

(3) On July 8, 2013, the Company and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which the Company retained approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6 million on the settlement date that was recorded to other income during the three months ended September 30, 2013.

(4) During the three months ended December 31, 2013, the Company recorded $2.0 million of operating expense to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

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Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

Note 22 — Subsequent Event

In February 2015, the Company’s Board of Directors approved an increase of $15 million to the existing $65.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $80.5 million. The Company repurchased and retired 28,651 shares at a cost of $0.3 million from January 1, 2015 through March 10, 2015 under its share repurchase program. As of March 10, 2015, $15 million was available for future share repurchase.

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Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2014

Selected Quarterly Financial Data [Abstract]

Selected Quarterly Financial Data

Note 21 — Selected Quarterly Financial Data (unaudited)

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,		September 30,		December 31,
	2014		2014		2014		2014
Product sales, net	$	26,064	$	31,551	$	33,621	$	40,737
Promotion services revenue		501		962		666		688
Cost of product sales		4,561		5,011		6,005		7,425
Net income		4,134		9,640		7,915		3,519	(1)
Basic net income per share	$	0.08	$	0.19	$	0.16	$	0.07
Diluted net income per share	$	0.08	$	0.18	$	0.15	$	0.07

	Three Months Ended
	(in thousands, except per share amounts)
	March 31,		June 30,			September 30,			December 31,
	2013		2013			2013			2013
Product sales, net	$	20,533	$	21,683		$	25,273		$	31,925
Promotion services revenue		9,273		7,609			9,953			809
Cost of product sales		4,618		3,205			3,808			6,037
Net income (loss)		4,203		(1,983)	(2)		8,708	(3)		36	(4)
Basic net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00
Diluted net income (loss) per share	$	0.08	$	(0.04)		$	0.16		$	0.00

(1) During the three months ended December 31, 2014, the Company recorded upfront payments totaling $11.0 million in research and development expense related to its licensing arrangements.

(2) During the three months ended June 30, 2013, the Company recorded upfront payments totaling $5.0 million in research and development expense related to its licensing arrangements.

(3) On July 8, 2013, the Company and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which the Company retained approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6 million on the settlement date that was recorded to other income during the three months ended September 30, 2013.

(4) During the three months ended December 31, 2013, the Company recorded $2.0 million of operating expense to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accrued Liabilities [Abstract]
Accrued sales and marketing expenses	$ 5,383	$ 6,419
Accrued taxes, tax reserves and interest	5,208	5,029
Accrued compensation and benefits	4,176	3,475
Accrued professional fees	1,819	1,601
Accrued manufacturing costs	95	1,617
Accrued estimated SEC and DOJ investigation loss (Note 19)	2,000	2,000
Accrued license fee	1,000
Other	855	797
Accrued and other current liabilities, total	$ 20,536	$ 20,938

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The Company And Summary Of Significant Accounting Policies (Narrative) (Details)	0 Months Ended	3 Months Ended								12 Months Ended				12 Months Ended							12 Months Ended	0 Months Ended		3 Months Ended		12 Months Ended												1 Months Ended			3 Months Ended	12 Months Ended	1 Months Ended
	Oct. 21, 2012	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2013 USD ($)	Jun. 30, 2013 USD ($)	Mar. 31, 2013 USD ($)	Dec. 31, 2014 USD ($) segment loan	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Apr. 18, 2011 USD ($)	Dec. 31, 2014 Employee Stock Purchase Plan [Member]	Dec. 31, 2013 Deferred Tax [Member] USD ($)	Dec. 31, 2013 Prepaid Expenses [Member] USD ($)	Dec. 31, 2013 Accounts Payable [Member] USD ($)	Dec. 31, 2014 One Customer [Member] USD ($) customer	Dec. 31, 2013 One Customer [Member] USD ($) customer	Dec. 31, 2014 Accounts receivable attributable to One Customer [Member] USD ($)	Dec. 31, 2014 China [Member] item	Jul. 14, 2014 Sanofi [Member] USD ($)	Jul. 14, 2014 Sanofi [Member] CNY	Jun. 30, 2014 Sanofi [Member] USD ($)	Dec. 31, 2013 Sanofi [Member] USD ($)	Dec. 31, 2014 Aggrastat Product Sales [Member] USD ($)	Dec. 31, 2013 Aggrastat Product Sales [Member] USD ($)	Dec. 31, 2012 Aggrastat Product Sales [Member] USD ($)	Dec. 31, 2014 ZADAXIN [Member] site country	Dec. 31, 2014 Office Furniture and Fixtures [Member]	Dec. 31, 2014 Office Equipment And Computer Software [Member]	Dec. 31, 2014 Vehicle [Member]	Dec. 31, 2013 Research And Development [Member] USD ($)	Dec. 31, 2014 Minimum [Member]	Dec. 31, 2014 Minimum [Member] Stock Options And RSUs [Member]	Dec. 31, 2014 Maximum [Member]	Dec. 31, 2014 Maximum [Member] Stock Options And RSUs [Member]	Nov. 30, 2014 SPIL China [Member] One Customer [Member] USD ($)	Oct. 31, 2014 SPIL China [Member] One Customer [Member] USD ($)	Jul. 31, 2014 SPIL China [Member] One Customer [Member] USD ($)	Dec. 31, 2014 SPIL China [Member] One Customer [Member] USD ($)	Dec. 31, 2014 SPIL China [Member] One Customer [Member] USD ($)	Dec. 31, 2015 SPIL China [Member] Scenario, Forecast [Member] One Customer [Member] USD ($)	May 31, 2015 SPIL China [Member] Scenario, Forecast [Member] One Customer [Member] USD ($)
Basis of Presentation [Line Items]
Number of countries in which product is approved																													30
Number of partnered products to which the company markets																					7
Customer revenue percentage										10.00%
Accounts receivable gross																		$ 900,000		$ 38,900,000
Percentage of accounts receivable, gross																				94.00%
Number of customers																		1	1
Number of suppliers of key components																													2
Accounts receivable past due ninety days or more																		3,000,000	3,500,000
Allowance for doubtful accounts		998,000				3,587,000				998,000	3,587,000
Period past due																			1 year
Allowance for doubtful accounts, collected																																						500,000	500,000	500,000	1,000,000		500,000	400,000
Settlement between customer and company																		1,900,000				3,500,000	22,000,000
Write-down of accounts receivable																		1,100,000							2,600,000
General and administrative expense										22,746,000	32,496,000	21,344,000																														(1,500,000)
Product returns reserve amount										100,000	0
Property and equipment, useful life																														5 years	3 years	4 years
Number of loans receivable										2
Allowance for loan losses		0								0
Contingent consideration (earn-out) at estimated fair value												0	43,000,000
Agreement payment terms	60 days
Settlement between customer and company																		1,900,000				3,500,000	22,000,000
Promotion services		688,000	666,000	962,000	501,000	809,000	9,953,000	7,609,000	9,273,000	2,817,000	27,644,000	33,098,000												200,000
Decrease in deferred revenue																									(2,600,000)
Provision for expiring inventory										1,574,000																1,600,000	0	0
Business tax																																		5.00%		6.42%
Sales tax and surcharge costs										2,500,000	3,500,000	3,800,000
Advertising expenses										500,000	100,000	200,000
Vesting period														3 months																					1 year		4 years
Accrued interest related to tax positions		1,500,000				1,200,000				1,500,000	1,200,000
Interest recognized as tax expense										300,000	400,000
Shares excluded from the calculation of diluted net income per share										3,541,071	3,378,063	3,280,492
Shares excluded from calculation of diluted net income per share due to performance conditions										50,000	50,171	118,046
Reclassification adjustment															$ 400,000	$ 200,000	$ 500,000																$ 600,000
Number of operating segments										2

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Schedule II - Valuation And Qualifying Accounts

12 Months Ended

Dec. 31, 2014

Schedule II - Valuation And Qualifying Accounts [Abstract]

Schedule II - Valuation And Qualifying Accounts

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

SCICLONE PHARMACEUTICALS, INC.

Receivables and Product Returns Reserves (in thousands):

	Balance at		Charges for			Deductions for		Deductions for		Balance at
	Beginning of		Amounts			Amounts		Amounts		End of
	Period		Reserved			Recovered		Written Off		Period
Receivables Reserve:
Year Ended December 31, 2014	$	(3,587)	$	—		$	1,500	$	1,089	$	(998)
Year Ended December 31, 2013	$	(1,046)	$	(2,541)	(1)	$	—	$	—	$	(3,587)
Year Ended December 31, 2012	$	—	$	(1,046)	(2)	$	—	$	—	$	(1,046)
Reserve for Product Returns:
Year Ended December 31, 2014	$	—	$	(66)		$	—	$	—	$	(66)
Year Ended December 31, 2013	$	(123)	$	—		$	123	$	—	$	—
Year Ended December 31, 2012	$	(116)	$	(58)		$	51	$	—	$	(123)

(1) For the year ended December 31, 2013, the charges for amounts reserved included $2.5 million of general and administrative expense related to bad debt that was uncertain of collection.

(2) For the year ended December 31, 2012, the charges for amounts reserved included $1.0 million recorded as a reduction in product revenue relating to price concessions that were recorded to the accounts receivable reserve.

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The Company And Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2014

The Company And Summary Of Significant Accounting Policies [Abstract]

Description Of Business

Description of Business

SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”), incorporated in 1990, is a United States (“US”)-headquartered, China-focused, specialty pharmaceutical company with a substantial commercial business in China and a product portfolio of therapies for oncology, infectious diseases and cardiovascular disorders. The Company’s lead product, ZADAXIN® (thymalfasin) is approved in over 30 countries and may be used for the treatment of hepatitis B (HBV), hepatitis C (HCV), as a vaccine adjuvant, and certain cancers according to the local regulatory approvals. In addition to ZADAXIN, SciClone markets approximately 7 partnered and in-licensed products in China,  including Aggrastat®, an interventional cardiology product. SciClone is also pursuing the registration of several other therapeutic products in China.

Presentation

Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated from the consolidated financial statements.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make informed estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

Cash Equivalents And Investments

Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities of three months or less on the date of purchase. The Company records its investments at fair value, as determined by available information on the consolidated balance sheet date. The Company’s investment portfolio as of December 31, 2014 consisted of money market funds that were included in cash and cash equivalents, and a certificate of deposit that was included in short-term investments.

Unrealized gains or losses on available-for-sale securities are included in accumulated other comprehensive income on the consolidated balance sheets. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in earnings. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity and is included in earnings. The cost of securities sold is based on the specific identification method.

Available-for-sale investments are evaluated for impairment each reporting period. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the consolidated statement of income. No such losses were recorded in the periods presented.

Fair Value Of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined 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 must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. 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.

Where quoted prices are available in an active market, the Company determines fair value based on quoted market prices, and classifies these values in level 1 of the valuation hierarchy. If quoted market prices are not available, fair values are based on observable inputs 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 and are classified in level 2 of the valuation hierarchy. When quoted prices and observable inputs are unavailable, fair values are based on cash flow models and are classified in level 3 of the valuation hierarchy. The cash flow models use inputs specific to the asset or liabilities including estimates for interest rates and discount rates including yields of comparable traded instruments adjusted for illiquidity and other risk factors, amount of cash flows and expected holding periods of the assets and liabilities. These inputs reflect the Company’s assumptions about the assumptions market participants would use in pricing the assets and liabilities including assumptions about risk developed based on the best information available in the circumstances. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may materially affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Other financial instruments, including accrued short-term liabilities, are carried at cost, which the Company believes approximates fair value because of the short-term maturity of these instruments.

Concentration Of Risk

Concentration of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, accounts receivable and loans receivable. The Company is exposed to credit risk in the event of default by the institutions holding the cash, cash equivalents and investments, and by customers and partners in the event of default by the customer or partner to pay the amounts due to us on receivables and loans receivables, respectively, to the extent of the amounts recorded on the consolidated balance sheet. Most of the Company’s cash and cash equivalents are held by financial institutions that the Company believes are of high credit quality. At times, deposits may exceed government insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For the Company’s proprietary product ZADAXIN®, the Company manufactures its product using its US and European contract manufacturers, and it generates its product sales revenue through sales of ZADAXIN products to Sinopharm Holding Hong Kong Co. Ltd. (“Sinopharm”). Sinopharm and its affiliates act as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. The Company’s ZADAXIN sales occur when the importer purchases product from the Company, without any right of return except for damaged product or quality control issues and after passage of title and risk of loss are transferred to Sinopharm at the time of shipment. After the Company’s sale, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier local or regional distributors who, in turn, sell products to hospitals and pharmacies. The Company’s other product sales revenues result from the sale of the Company’s in-licensed products to importing agents and distributors.

Promotion services revenues result from fees received for exclusively promoting products for certain pharmaceutical partners. These importing agents, distributors and partners are the Company’s customers.

Customers that exceeded 10% of the Company’s total net revenue and related to our China segment were as follows:

	For the Year Ended December 31,
	2014		2013	2012
Customer A		94%	75%	59%
Customer B		—	20%	20%
Customer C		—	—	12%

As of December 31, 2014, approximately $38.9 million, or 94%, of the Company's gross accounts receivable was attributable to one customer in China. The Company generally does not require collateral from its customers. The Company maintains reserves for potential credit losses and such actual losses may vary significantly from its estimates.

The Company currently relies on two suppliers to provide key components to its ZADAXIN manufacturing supply. Although there are a limited number of manufacturers who would be able to meet the requirements to manufacture these components, the Company believes that other suppliers could provide similar components on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would affect operating results adversely.

The majority of the Company’s product sales are in US dollars. However, a significant portion of the Company’s revenues and expenses are denominated in Chinese Yuan Renminbi (“RMB”) and a significant portion of the Company’s assets and liabilities are denominated in RMB and are exposed to foreign exchange risk. RMB is not freely convertible into foreign currencies. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates quoted by People’s Bank of China. Remittances in currencies other than RMB by the Company in China require certain supporting documentation in order to affect the remittance.

Accounts Receivable Reserve

Accounts Receivable Reserve

The Company records a receivable reserve based on a specific review of its overdue invoices. The Company’s estimate for a reserve is determined after considering its existing contractual payment terms, payment patterns of its customers and individual customer circumstances, the age of any outstanding receivables and its current customer relationships. Accounts receivable are charged off at the point when they are considered uncollectible.

As of December 31, 2013, the Company had $3.5 million in fully reserved accounts receivable from one customer that were more than one year past due. As a result of its negotiations with the customer, the Company collected $0.5 million in July 2014 and in October 2014, the Company’s subsidiary, SciClone Pharmaceuticals International China Holding Ltd (“SPIL China”) executed an agreement with this customer providing for settlement of $1.9 million of the remaining outstanding $3.0 million due in installments. The settlement agreement provided that the customer will pay SPIL China $1.9 million in installment payments to be made as follows: $500,000 before October 31, 2014; $500,000 before November 30, 2014; $400,000 before May 31, 2015; and the remaining balance of $500,000 to be made by December 31, 2015. The terms of the settlement agreement resulted in the write-off of $1.1 million in previously fully reserved accounts receivable with an equivalent charge-off of the allowance for bad debt, which had no impact on net income in 2014, as the subsequent agreement provided direct evidence that the $1.1 million previously reserved will not be collected in the future. The Company received the first and second payments under the terms of the settlement agreement in October and December 2014 totaling $1.0 million, and these gains on recovery, as well as the $0.5 million payment received in July 2014, were recorded as $1.5 million of reductions to general and administrative expense for the year ended December 31, 2014. The remaining outstanding receivable balance of $0.9 million as of December 31, 2014 will remain fully reserved until payments are received.

Inventories

Inventories

Inventories consist of raw materials, work in progress and finished goods products. Inventories are valued at the lower of cost or market (net realizable value), with cost determined on a first-in, first-out basis, and include amounts related to materials, labor and overhead.The Company periodically reviews the inventory in order to identify excess and obsolete items. If obsolete or excess items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the impairment is first recognized. During the years ended December 31, 2014, 2013, and 2012, the Company recorded inventory write-downs of $1.6 million, $0, and $0, respectively, principally related to carrying value reductions for excess Aggrastat product.

Property And Equipment

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recorded over the estimated useful lives of the respective assets on the straight-line basis. Office furniture and fixtures are generally amortized over five years, office equipment and computer software are generally amortized over three years, and the Company’s vehicle is being amortized over four years. Leasehold improvements are amortized over the shorter of the estimated useful life or lease term on the straight-line basis. The Company’s policy is to identify and record impairment losses, if necessary, on property and equipment when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.

Intangible Assets

Intangible Assets

Intangible assets are reviewed for impairment when changes in facts or circumstances suggest that the carrying value of these assets may not be recoverable. The Company's policy is to identify and record impairment losses, if necessary, on intangible product rights when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.It is the Company’s policy to expense costs as incurred in connection with the renewal or extension of its intangible assets.

As part of the acquisition of NovaMed Pharmaceuticals Ltd. (“NovaMed”) in April 2011, the Company recorded intangible assets related to promotion and distribution contract rights. During the year ended December 31, 2012, the Company identified impairment indicators related to the intangible assets and fully wrote off the intangible assets. Refer to Net Intangible Assets in Note 7 for further information.

Goodwill

Goodwill

The Company accounted for the acquisition of NovaMed under the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under the acquisition method of accounting, the total acquisition-date fair value of the assets and liabilities are recognized as of the closing date. The total consideration paid by SciClone to NovaMed consisted of cash, SciClone common stock, and contingent consideration. The excess of the fair value of the total consideration transferred over the acquisition-date fair value of net tangible and intangible assets and liabilities assumed was allocated to goodwill. Goodwill is tested for impairment at least annually, or whenever events or circumstances occur that indicate impairment might have occurred in accordance with ASC Topic 350, Intangibles — Goodwill and Other. Goodwill relates to the Company’s China segment which focuses on the Company’s primary pharmaceutical distribution market, consisting of the NovaMed business and the legacy China business, which represent a single reporting unit. As of December 31, 2014, 2013 and 2012, the Company tested for goodwill impairment by quantitatively comparing the fair value of the reporting unit to its carrying amount - step one of the two-step impairment test. In addition, during the third quarter of fiscal 2013, the Company performed an interim goodwill impairment analysis to determine if the goodwill was impaired as a result of the non-renewal of the Sanofi Aventis S.A. (“Sanofi”) promotional agreements as of December 31, 2013, by comparing the fair value of the reporting unit to its carrying amount. The Company estimated the fair value of the China reporting unit using a discounted cash flow model. This valuation approach considers a number of factors that include, but are not limited to, expected future cash flows, growth rates, discount rates, and requires us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. If the Company determines that the carrying value of its reporting unit exceeds its fair value, the Company would then calculate the implied fair value of the reporting unit goodwill as compared to its carrying value to determine the appropriate impairment charge. After completing the Company’s impairment review for the reporting unit during the third quarter of 2013, and as of December 31, 2014, 2013, and 2012, the Company concluded that goodwill was not impaired in any of these years.

Loans Receivable

Loans Receivable

Loans receivable consist of two loans to one third party (see Note 6). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the consolidated balance sheet. Carried balances are subsequently adjusted for payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote.

Although the measurement basis is unpaid principal (as adjusted for subsequent payments or impairment), not fair value, the loans receivable would qualify as Level 3 measurements under the fair value hierarchy (Note 3) due to the presence of significant unobservable inputs related to the counterparty, which is a private entity.

Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date. As of December 31, 2014, management concluded the loans receivable were not impaired, and there was no allowance for loan losses.

Contingent Consideration

Contingent Consideration

As part of the acquisition of NovaMed, the Company would have been required to pay up to an additional $43.0 million in earn-out on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn-out” or “contingent consideration”). The fair value of the earn-out was re-measured each period, and changes in the fair value were recorded to “contingent consideration” in operating expenses. As of December 31, 2012, the earn-out was determined to be zero. Through September 30, 2012, the Company used the assistance of a third-party valuation expert to estimate the fair value of the contingent consideration using a Monte Carlo simulation model. Refer to Contingent Consideration in Note 3 and Escrow Settlement Agreement Note 10 for further information.

Accrued Expenses

Accrued Expenses

The Company makes estimates of its accrued expenses as of each balance sheet date in its consolidated financial statements based on facts and circumstances known to them. Examples of estimated accrued expenses include fees paid to contract research organizations and investigative sites in connection with clinical trials, fees paid to contract manufacturers in connection with the production of clinical trial materials, and professional services.The Company periodically confirms the accuracy of its estimates with selected service providers and makes adjustments, if necessary, in the periods identified.

Expenses related to clinical trials charged to research and development expense generally are accrued based on estimates of work performed or the level of patient enrollment and activities according to the protocols and agreements. The Company makes adjustments, if necessary, in the periods identified to reflect actual levels of work performed, and such adjustments have historically not been material. 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 certain 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 the Company’s accrual policy is to match the recording of expenses to the actual services received and efforts expended. The Company monitors planned protocols, work performed, patient enrollment levels and related activities to the extent possible and adjusts estimates accordingly.

The Company records as liabilities estimated amounts for litigation, claims or other legal actions that are probable and can be reasonably estimated. The likelihood of a material change in these estimated reserves is dependent on the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and circumstances in extended litigation which could change claims or assessments when both the amount and range of loss on some outstanding litigation is uncertain. The Company discloses in the footnotes to the financial statements when it is unable to make a reasonable estimate of a material liability that is reasonably possible to result from unfavorable outcomes. As events occur, the Company assesses the potential liability related to any pending litigation, claims or other legal actions and adjusts its estimates accordingly. Such adjustments could materially impact its financial statements.

Foreign Currency Translation

Foreign Currency Translation

The Company translates the assets and liabilities of its foreign subsidiaries stated in local functional currencies to US dollars at the rates of exchange in effect at the end of the period. Revenues and expenses are translated using average rates of exchange in effect during the period.Goodwill, and certain other balances, are generally recorded in the local currency which is the functional currency of the Company’s subsidiaries located in China. As a result, the carrying value of goodwill and certain other balances may fluctuate with the value of the RMB as compared to the US dollar.Gains and losses from the translation of financial statements denominated in foreign currencies are included as a separate component of accumulated other comprehensive income in the statement of stockholders' equity.

The Company records foreign currency transactions at the exchange rate prevailing at the date of the transaction with resultant gains and losses being included in results of operations. Foreign currency transaction gains and losses have not been significant for any period presented.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured.

Product Revenue.The Company recognizes product revenue from selling manufactured ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm and its affiliates are recognized at time of shipment when title to the product is transferred to them. The Company also earns product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. Sales of Pfizer International Trading (Shanghai) Ltd. (“Pfizer”) products through October 2012 were based on the “sell-through” method as the Company’s distribution arrangement for these products allowed for payment terms dependent on when the distributor sold the product. The Company did not maintain information on the timing of “sell-through” of the Pfizer products by the distributor through this period; therefore, the Company applied the cash receipts approach for the application of the “sell-through” method as it was the most reliable information available. Accordingly, during this period of time, revenue for sales of the Pfizer products was recognized on receipt of cash from the distributor. On October 21, 2012, the Company amended the agreement with the distributor which amendment removed any contingent payment terms. Prior to the amendment, the agreement allowed for delayed payment based on the timing of sales from the distributor to the next tier customer. The amendment changed the payment terms to 60 days, thus ensuring that the distributor could not withhold payment until after the distributor received payment on sale of product to its next tier customer. The combination of the revised payment terms, together with all of the other contractual restrictions on the distributor (e.g., no return rights or other terms that may raise question as to whether or not they had taken title and assumed “risk of loss”), permitted revenue to be recognized on a “sell-in” basis upon the amendment. Therefore, from October 21, 2012 onward, the “sell-in” method was used by the Company for recognition of related revenue. All other product sales are also recognized on the “sell-in” method, or when the medical products have been delivered to the importers or distributors.

Promotion Services Revenue.The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in a promotion services contract, which marks the period when marketing and promotion services have been rendered and the revenue recognition criteria are met. In certain arrangements, the Company was required to return or refund a portion of promotion services fees received during interim periods from a pharmaceutical customer if defined annual sales targets were not achieved. Under the Company’s agreements with this customer, if an agreement was terminated, and provided such targets had been met on a “pro rata” basis at the date of contract termination, the Company was entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets had been met on a “pro rata” basis at any interim date, the Company elected to recognize revenue during interim periods without reduction for amounts subject to refund based on Method 2 of Accounting Standards Codification 605-20-S99-1, “Accounting for Management Fees Based on a Formula.”

The Company’s promotion agreements with Sanofi, consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”) and Sanofi negotiated a settlement of certain amounts in dispute, effective July 14, 2014, and NovaMed Shanghai received approximately 22 million RMB (approximately $3.5 million) in August 2014 as final payment from Sanofi. The terms of the settlement resulted in the recognition of promotion services revenue for the second quarter of 2014 of approximately $0.2 million of Sanofi revenue that had been deferred in the fourth quarter of 2013. The remaining approximately $2.6 million of deferred revenue recorded during the fourth quarter of 2013, was reversed with an equivalent write-down of accounts receivable. This contemporaneous write-down of accounts receivable and deferred revenue had no impact on net income during the second quarter of 2014 or the year ended December 31, 2014.

Revenue Reserve: The Company generally maintains a revenue reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired or damaged product on delivery or for price reductions on the related sales and is based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, the Company is expected to replace products that have expired on delivery or are deemed to be damaged or defective when delivered. The calculation of the revenue reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the revenue reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions.

As of December 31, 2014 and 2013, the Company’s revenue reserves were  $0.1 million and $0, respectively, on its consolidated balance sheets.

The Company evaluates the need for a returns reserve quarterly and adjusts it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect the Company’s results of operations or financial position. It is possible that the Company may need to adjust its estimates in future periods.

Sales Tax And Surcharge Expense

Sales Tax and Surcharge Expense

Sales taxes and surcharge costs are expensed as incurred and are included in sales and marketing expense. The Company is generally subject to a 5-6.42% business tax and surcharge for services provided related to marketing products under the relevant taxation laws in China. Sales tax and surcharge costs amounted to approximately $2.5 million, $3.5 million, and $3.8 million, for the years ended December 31, 2014, 2013, and 2012, respectively.

Research And Development Expenses

Research and Development Expenses

Research and development costs are expensed as incurred. These costs include salaries and other personnel-related expenses, including associated stock-based compensation, facility-related expenses, depreciation of facilities and equipment, upfront payments under in-licensing agreements with certain business partners and other license-related fees, and services performed by clinical research organizations and research institutions and other outside service providers.

Shipping And Handling Costs

Shipping and Handling Costs

Shipping and handling costs incurred for inventory purchases and product shipments are included in cost of product sales for all periods presented.

Advertising Expenses

Advertising Expenses

Advertising costs are expensed as incurred and are included in sales and marketing expenses for all periods presented. Advertising expenses for the years ended December 31, 2014, 2013, and 2012, were $0.5 million, $0.1 million, and $0.2 million, respectively.

Legal Costs

Legal Costs

Legal costs related to loss contingencies are expensed to general and administrative expense as incurred.

Stock-Based Compensation

Stock-Based Compensation

The Company records stock-based compensation costs relating to share-based payment transactions, including stock options, restricted stock units (“RSUs”) and the employee stock purchase plan. Stock-based compensation expense for stock options and the employee stock purchase plan is estimated at the date of grant based on the fair value of the award using the Black-Scholes option-pricing model. Stock-based compensation expense for RSUs is estimated at the date of grant based on the number of shares granted and the quoted price of the Company’s common stock on the grant date. Stock-based compensation expense values are recognized as expense on a straight-line basis over the requisite service period, net of estimated forfeitures. The stock-based compensation costs that are ultimately expected to vest are recognized as expense ratably (as the awards vest) over the requisite service period, which is generally one or four years for stock options and RSUs and three months for the employee stock purchase plan. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.

Income Taxes

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more-likely-than-not that the deferred tax assets will not be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company records liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe any such uncertain tax positions currently pending will have a material adverse effect on its consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period. The Company’s policy is to recognize interest and penalties related to the liabilities for uncertain tax positions as a component of income tax expense. The amount of accrued interest related to tax positions taken on the Company’s tax returns and included in accrued and other current liabilities was $1.5 million and $1.2 million, as of December 31, 2014 and 2013, respectively. The amount of interest recognized as tax expense related to uncertain tax positions in the consolidated statements of income was $0.3million and$0.4 million for the years ended December 31, 2014 and2013, respectively.

Net Income Per Share

Net Income Per Share

Basic net income per share has been computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common equivalent shares outstanding for the period. Diluted net income per share includes any dilutive impact from outstanding stock options and the employee stock purchase plan using the treasury stock method.

The following is a reconciliation of the numerator and denominators of the basic and diluted net income per share computations for the years ended December 31 (in thousands, except per share amounts):

	2014		2013		2012
Numerator:
Net income	$	25,208	$	10,964	$	9,620
Denominator:
Weighted-average shares outstanding used to compute basic net income per share		51,277		53,587		56,637
Effect of dilutive securities		1,407		1,349		1,846
Weighted-average shares outstanding used to compute diluted net income per share		52,684		54,936		58,483
Basic net income per share	$	0.49	$	0.20	$	0.17
Diluted net income per share	$	0.48	$	0.20	$	0.16

For the years ended December 31, 2014, 2013, and 2012, approximately 3,541,071,  3,378,063, and 3,280,492 shares, respectively, related to outstanding stock options were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive. In addition, for the years ended December 31, 2014, 2013, and 2012, 50,000,  50,171, and 118,046 shares, respectively, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met.

Segment Information

Segment Information

The Company operates in two segments (refer to Note 20).

Reclassifications

Reclassifications

The Company reclassified approximately $0.4 million of deferred tax balances as of December 31, 2013 to conform to the current year presentation, as permitted by the optional retrospective presentation provisions of Accounting Standards Update (ASU) 2013-11 “Income Taxes:Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists”. These reclassifications had no effect on prior years’ net income or stockholders’ equity.

The Company revised its December 31, 2013 consolidated balance sheet and consolidated statement of cash flows by reducing accounts receivable and increasing prepaid expenses and other current assets by $0.2 million to conform to the current year presentation, and reclassified $0.5 million in accrued liabilities to accounts payable to conform to the current year presentation. In addition, the Company revised its consolidated statement of income for the year ended December 31, 2013 by reducing sales and marketing expense and increasing research and development expense by $0.6 million for costs incurred related to pre-market research activities.

Accounting Standards Updates

Accounting Standards Updates

Recently Effective Accounting Standards.  In March of 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The amendments in the ASU clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should generally be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss, similar tax loss, or tax credit carryforward, with certain limited exceptions. The amendments were effective for the Company beginning January 1, 2014 and they have been applied since the first quarter of 2014. The Company also has retrospectively applied the guidance to deferred tax and unrecognized tax benefit amounts as of December 31, 2013, as retrospective application is optional but not required – see Reclassifications above. The adoption of this ASU had an immaterial impact on consolidated deferred tax balances as of December 31, 2014 and 2013.

Accounting Standards Issued and Not Yet Effective.  In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for the Company’s fiscal year beginning January 1, 2017, with early application not permitted. The Company is in the process of determining what impact, if any, the adoption of ASU 2014-09 will have on its financial statements and related disclosures. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

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The Company And Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

The Company And Summary Of Significant Accounting Policies [Abstract]

The Company And Summary Of Significant Accounting Policies

Note 1 — The Company and Summary of Significant Accounting Policies

Description of Business

SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”), incorporated in 1990, is a United States (“US”)-headquartered, China-focused, specialty pharmaceutical company with a substantial commercial business in China and a product portfolio of therapies for oncology, infectious diseases and cardiovascular disorders. The Company’s lead product, ZADAXIN® (thymalfasin) is approved in over 30 countries and may be used for the treatment of hepatitis B (HBV), hepatitis C (HCV), as a vaccine adjuvant, and certain cancers according to the local regulatory approvals. In addition to ZADAXIN, SciClone markets approximately 7 partnered and in-licensed products in China,  including Aggrastat®, an interventional cardiology product. SciClone is also pursuing the registration of several other therapeutic products in China.

Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated from the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make informed estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities of three months or less on the date of purchase. The Company records its investments at fair value, as determined by available information on the consolidated balance sheet date. The Company’s investment portfolio as of December 31, 2014 consisted of money market funds that were included in cash and cash equivalents, and a certificate of deposit that was included in short-term investments.

Unrealized gains or losses on available-for-sale securities are included in accumulated other comprehensive income on the consolidated balance sheets. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in earnings. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity and is included in earnings. The cost of securities sold is based on the specific identification method.

Available-for-sale investments are evaluated for impairment each reporting period. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the consolidated statement of income. No such losses were recorded in the periods presented.

Fair Value of Financial Instruments

Fair value is defined 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 must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. 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.

Where quoted prices are available in an active market, the Company determines fair value based on quoted market prices, and classifies these values in level 1 of the valuation hierarchy. If quoted market prices are not available, fair values are based on observable inputs 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 and are classified in level 2 of the valuation hierarchy. When quoted prices and observable inputs are unavailable, fair values are based on cash flow models and are classified in level 3 of the valuation hierarchy. The cash flow models use inputs specific to the asset or liabilities including estimates for interest rates and discount rates including yields of comparable traded instruments adjusted for illiquidity and other risk factors, amount of cash flows and expected holding periods of the assets and liabilities. These inputs reflect the Company’s assumptions about the assumptions market participants would use in pricing the assets and liabilities including assumptions about risk developed based on the best information available in the circumstances. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may materially affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Other financial instruments, including accrued short-term liabilities, are carried at cost, which the Company believes approximates fair value because of the short-term maturity of these instruments.

Concentration of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, accounts receivable and loans receivable. The Company is exposed to credit risk in the event of default by the institutions holding the cash, cash equivalents and investments, and by customers and partners in the event of default by the customer or partner to pay the amounts due to us on receivables and loans receivables, respectively, to the extent of the amounts recorded on the consolidated balance sheet. Most of the Company’s cash and cash equivalents are held by financial institutions that the Company believes are of high credit quality. At times, deposits may exceed government insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For the Company’s proprietary product ZADAXIN®, the Company manufactures its product using its US and European contract manufacturers, and it generates its product sales revenue through sales of ZADAXIN products to Sinopharm Holding Hong Kong Co. Ltd. (“Sinopharm”). Sinopharm and its affiliates act as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. The Company’s ZADAXIN sales occur when the importer purchases product from the Company, without any right of return except for damaged product or quality control issues and after passage of title and risk of loss are transferred to Sinopharm at the time of shipment. After the Company’s sale, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier local or regional distributors who, in turn, sell products to hospitals and pharmacies. The Company’s other product sales revenues result from the sale of the Company’s in-licensed products to importing agents and distributors.

Promotion services revenues result from fees received for exclusively promoting products for certain pharmaceutical partners. These importing agents, distributors and partners are the Company’s customers.

Customers that exceeded 10% of the Company’s total net revenue and related to our China segment were as follows:

	For the Year Ended December 31,
	2014		2013	2012
Customer A		94%	75%	59%
Customer B		—	20%	20%
Customer C		—	—	12%

As of December 31, 2014, approximately $38.9 million, or 94%, of the Company's gross accounts receivable was attributable to one customer in China. The Company generally does not require collateral from its customers. The Company maintains reserves for potential credit losses and such actual losses may vary significantly from its estimates.

The Company currently relies on two suppliers to provide key components to its ZADAXIN manufacturing supply. Although there are a limited number of manufacturers who would be able to meet the requirements to manufacture these components, the Company believes that other suppliers could provide similar components on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would affect operating results adversely.

The majority of the Company’s product sales are in US dollars. However, a significant portion of the Company’s revenues and expenses are denominated in Chinese Yuan Renminbi (“RMB”) and a significant portion of the Company’s assets and liabilities are denominated in RMB and are exposed to foreign exchange risk. RMB is not freely convertible into foreign currencies. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates quoted by People’s Bank of China. Remittances in currencies other than RMB by the Company in China require certain supporting documentation in order to affect the remittance.

Accounts Receivable Reserve

The Company records a receivable reserve based on a specific review of its overdue invoices. The Company’s estimate for a reserve is determined after considering its existing contractual payment terms, payment patterns of its customers and individual customer circumstances, the age of any outstanding receivables and its current customer relationships. Accounts receivable are charged off at the point when they are considered uncollectible.

As of December 31, 2013, the Company had $3.5 million in fully reserved accounts receivable from one customer that were more than one year past due. As a result of its negotiations with the customer, the Company collected $0.5 million in July 2014 and in October 2014, the Company’s subsidiary, SciClone Pharmaceuticals International China Holding Ltd (“SPIL China”) executed an agreement with this customer providing for settlement of $1.9 million of the remaining outstanding $3.0 million due in installments. The settlement agreement provided that the customer will pay SPIL China $1.9 million in installment payments to be made as follows: $500,000 before October 31, 2014; $500,000 before November 30, 2014; $400,000 before May 31, 2015; and the remaining balance of $500,000 to be made by December 31, 2015. The terms of the settlement agreement resulted in the write-off of $1.1 million in previously fully reserved accounts receivable with an equivalent charge-off of the allowance for bad debt, which had no impact on net income in 2014, as the subsequent agreement provided direct evidence that the $1.1 million previously reserved will not be collected in the future. The Company received the first and second payments under the terms of the settlement agreement in October and December 2014 totaling $1.0 million, and these gains on recovery, as well as the $0.5 million payment received in July 2014, were recorded as $1.5 million of reductions to general and administrative expense for the year ended December 31, 2014. The remaining outstanding receivable balance of $0.9 million as of December 31, 2014 will remain fully reserved until payments are received.

Inventories

Inventories consist of raw materials, work in progress and finished goods products. Inventories are valued at the lower of cost or market (net realizable value), with cost determined on a first-in, first-out basis, and include amounts related to materials, labor and overhead.The Company periodically reviews the inventory in order to identify excess and obsolete items. If obsolete or excess items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the impairment is first recognized. During the years ended December 31, 2014, 2013, and 2012, the Company recorded inventory write-downs of $1.6 million, $0, and $0, respectively, principally related to carrying value reductions for excess Aggrastat product.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recorded over the estimated useful lives of the respective assets on the straight-line basis. Office furniture and fixtures are generally amortized over five years, office equipment and computer software are generally amortized over three years, and the Company’s vehicle is being amortized over four years. Leasehold improvements are amortized over the shorter of the estimated useful life or lease term on the straight-line basis. The Company’s policy is to identify and record impairment losses, if necessary, on property and equipment when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.

Intangible Assets

Intangible assets are reviewed for impairment when changes in facts or circumstances suggest that the carrying value of these assets may not be recoverable. The Company's policy is to identify and record impairment losses, if necessary, on intangible product rights when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.It is the Company’s policy to expense costs as incurred in connection with the renewal or extension of its intangible assets.

As part of the acquisition of NovaMed Pharmaceuticals Ltd. (“NovaMed”) in April 2011, the Company recorded intangible assets related to promotion and distribution contract rights. During the year ended December 31, 2012, the Company identified impairment indicators related to the intangible assets and fully wrote off the intangible assets. Refer to Net Intangible Assets in Note 7 for further information.

Goodwill

The Company accounted for the acquisition of NovaMed under the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under the acquisition method of accounting, the total acquisition-date fair value of the assets and liabilities are recognized as of the closing date. The total consideration paid by SciClone to NovaMed consisted of cash, SciClone common stock, and contingent consideration. The excess of the fair value of the total consideration transferred over the acquisition-date fair value of net tangible and intangible assets and liabilities assumed was allocated to goodwill. Goodwill is tested for impairment at least annually, or whenever events or circumstances occur that indicate impairment might have occurred in accordance with ASC Topic 350, Intangibles — Goodwill and Other. Goodwill relates to the Company’s China segment which focuses on the Company’s primary pharmaceutical distribution market, consisting of the NovaMed business and the legacy China business, which represent a single reporting unit. As of December 31, 2014, 2013 and 2012, the Company tested for goodwill impairment by quantitatively comparing the fair value of the reporting unit to its carrying amount - step one of the two-step impairment test. In addition, during the third quarter of fiscal 2013, the Company performed an interim goodwill impairment analysis to determine if the goodwill was impaired as a result of the non-renewal of the Sanofi Aventis S.A. (“Sanofi”) promotional agreements as of December 31, 2013, by comparing the fair value of the reporting unit to its carrying amount. The Company estimated the fair value of the China reporting unit using a discounted cash flow model. This valuation approach considers a number of factors that include, but are not limited to, expected future cash flows, growth rates, discount rates, and requires us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. If the Company determines that the carrying value of its reporting unit exceeds its fair value, the Company would then calculate the implied fair value of the reporting unit goodwill as compared to its carrying value to determine the appropriate impairment charge. After completing the Company’s impairment review for the reporting unit during the third quarter of 2013, and as of December 31, 2014, 2013, and 2012, the Company concluded that goodwill was not impaired in any of these years.

Loans Receivable

Loans receivable consist of two loans to one third party (see Note 6). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the consolidated balance sheet. Carried balances are subsequently adjusted for payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote.

Although the measurement basis is unpaid principal (as adjusted for subsequent payments or impairment), not fair value, the loans receivable would qualify as Level 3 measurements under the fair value hierarchy (Note 3) due to the presence of significant unobservable inputs related to the counterparty, which is a private entity.

Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date. As of December 31, 2014, management concluded the loans receivable were not impaired, and there was no allowance for loan losses.

Contingent Consideration

As part of the acquisition of NovaMed, the Company would have been required to pay up to an additional $43.0 million in earn-out on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn-out” or “contingent consideration”). The fair value of the earn-out was re-measured each period, and changes in the fair value were recorded to “contingent consideration” in operating expenses. As of December 31, 2012, the earn-out was determined to be zero. Through September 30, 2012, the Company used the assistance of a third-party valuation expert to estimate the fair value of the contingent consideration using a Monte Carlo simulation model. Refer to Contingent Consideration in Note 3 and Escrow Settlement Agreement Note 10 for further information.

Accrued Expenses

The Company makes estimates of its accrued expenses as of each balance sheet date in its consolidated financial statements based on facts and circumstances known to them. Examples of estimated accrued expenses include fees paid to contract research organizations and investigative sites in connection with clinical trials, fees paid to contract manufacturers in connection with the production of clinical trial materials, and professional services.The Company periodically confirms the accuracy of its estimates with selected service providers and makes adjustments, if necessary, in the periods identified.

Expenses related to clinical trials charged to research and development expense generally are accrued based on estimates of work performed or the level of patient enrollment and activities according to the protocols and agreements. The Company makes adjustments, if necessary, in the periods identified to reflect actual levels of work performed, and such adjustments have historically not been material. 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 certain 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 the Company’s accrual policy is to match the recording of expenses to the actual services received and efforts expended. The Company monitors planned protocols, work performed, patient enrollment levels and related activities to the extent possible and adjusts estimates accordingly.

The Company records as liabilities estimated amounts for litigation, claims or other legal actions that are probable and can be reasonably estimated. The likelihood of a material change in these estimated reserves is dependent on the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and circumstances in extended litigation which could change claims or assessments when both the amount and range of loss on some outstanding litigation is uncertain. The Company discloses in the footnotes to the financial statements when it is unable to make a reasonable estimate of a material liability that is reasonably possible to result from unfavorable outcomes. As events occur, the Company assesses the potential liability related to any pending litigation, claims or other legal actions and adjusts its estimates accordingly. Such adjustments could materially impact its financial statements.

Foreign Currency Translation

The Company translates the assets and liabilities of its foreign subsidiaries stated in local functional currencies to US dollars at the rates of exchange in effect at the end of the period. Revenues and expenses are translated using average rates of exchange in effect during the period.Goodwill, and certain other balances, are generally recorded in the local currency which is the functional currency of the Company’s subsidiaries located in China. As a result, the carrying value of goodwill and certain other balances may fluctuate with the value of the RMB as compared to the US dollar.Gains and losses from the translation of financial statements denominated in foreign currencies are included as a separate component of accumulated other comprehensive income in the statement of stockholders' equity.

The Company records foreign currency transactions at the exchange rate prevailing at the date of the transaction with resultant gains and losses being included in results of operations. Foreign currency transaction gains and losses have not been significant for any period presented.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured.

Product Revenue.The Company recognizes product revenue from selling manufactured ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm and its affiliates are recognized at time of shipment when title to the product is transferred to them. The Company also earns product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. Sales of Pfizer International Trading (Shanghai) Ltd. (“Pfizer”) products through October 2012 were based on the “sell-through” method as the Company’s distribution arrangement for these products allowed for payment terms dependent on when the distributor sold the product. The Company did not maintain information on the timing of “sell-through” of the Pfizer products by the distributor through this period; therefore, the Company applied the cash receipts approach for the application of the “sell-through” method as it was the most reliable information available. Accordingly, during this period of time, revenue for sales of the Pfizer products was recognized on receipt of cash from the distributor. On October 21, 2012, the Company amended the agreement with the distributor which amendment removed any contingent payment terms. Prior to the amendment, the agreement allowed for delayed payment based on the timing of sales from the distributor to the next tier customer. The amendment changed the payment terms to 60 days, thus ensuring that the distributor could not withhold payment until after the distributor received payment on sale of product to its next tier customer. The combination of the revised payment terms, together with all of the other contractual restrictions on the distributor (e.g., no return rights or other terms that may raise question as to whether or not they had taken title and assumed “risk of loss”), permitted revenue to be recognized on a “sell-in” basis upon the amendment. Therefore, from October 21, 2012 onward, the “sell-in” method was used by the Company for recognition of related revenue. All other product sales are also recognized on the “sell-in” method, or when the medical products have been delivered to the importers or distributors.

Promotion Services Revenue.The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in a promotion services contract, which marks the period when marketing and promotion services have been rendered and the revenue recognition criteria are met. In certain arrangements, the Company was required to return or refund a portion of promotion services fees received during interim periods from a pharmaceutical customer if defined annual sales targets were not achieved. Under the Company’s agreements with this customer, if an agreement was terminated, and provided such targets had been met on a “pro rata” basis at the date of contract termination, the Company was entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets had been met on a “pro rata” basis at any interim date, the Company elected to recognize revenue during interim periods without reduction for amounts subject to refund based on Method 2 of Accounting Standards Codification 605-20-S99-1, “Accounting for Management Fees Based on a Formula.”

The Company’s promotion agreements with Sanofi, consisting of individual promotional agreements for certain pharmaceutical products and supplementary agreements extending the terms thereof, were not renewed and expired on December 31, 2013. NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”) and Sanofi negotiated a settlement of certain amounts in dispute, effective July 14, 2014, and NovaMed Shanghai received approximately 22 million RMB (approximately $3.5 million) in August 2014 as final payment from Sanofi. The terms of the settlement resulted in the recognition of promotion services revenue for the second quarter of 2014 of approximately $0.2 million of Sanofi revenue that had been deferred in the fourth quarter of 2013. The remaining approximately $2.6 million of deferred revenue recorded during the fourth quarter of 2013, was reversed with an equivalent write-down of accounts receivable. This contemporaneous write-down of accounts receivable and deferred revenue had no impact on net income during the second quarter of 2014 or the year ended December 31, 2014.

Revenue Reserve: The Company generally maintains a revenue reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired or damaged product on delivery or for price reductions on the related sales and is based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, the Company is expected to replace products that have expired on delivery or are deemed to be damaged or defective when delivered. The calculation of the revenue reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the revenue reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions.

As of December 31, 2014 and 2013, the Company’s revenue reserves were  $0.1 million and $0, respectively, on its consolidated balance sheets.

The Company evaluates the need for a returns reserve quarterly and adjusts it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect the Company’s results of operations or financial position. It is possible that the Company may need to adjust its estimates in future periods.

Sales Tax and Surcharge Expense

Sales taxes and surcharge costs are expensed as incurred and are included in sales and marketing expense. The Company is generally subject to a 5-6.42% business tax and surcharge for services provided related to marketing products under the relevant taxation laws in China. Sales tax and surcharge costs amounted to approximately $2.5 million, $3.5 million, and $3.8 million, for the years ended December 31, 2014, 2013, and 2012, respectively.

Research and Development Expenses

Research and development costs are expensed as incurred. These costs include salaries and other personnel-related expenses, including associated stock-based compensation, facility-related expenses, depreciation of facilities and equipment, upfront payments under in-licensing agreements with certain business partners and other license-related fees, and services performed by clinical research organizations and research institutions and other outside service providers.

Shipping and Handling Costs

Shipping and handling costs incurred for inventory purchases and product shipments are included in cost of product sales for all periods presented.

Advertising Expenses

Advertising costs are expensed as incurred and are included in sales and marketing expenses for all periods presented. Advertising expenses for the years ended December 31, 2014, 2013, and 2012, were $0.5 million, $0.1 million, and $0.2 million, respectively.

Legal Costs

Legal costs related to loss contingencies are expensed to general and administrative expense as incurred.

Stock-Based Compensation

The Company records stock-based compensation costs relating to share-based payment transactions, including stock options, restricted stock units (“RSUs”) and the employee stock purchase plan. Stock-based compensation expense for stock options and the employee stock purchase plan is estimated at the date of grant based on the fair value of the award using the Black-Scholes option-pricing model. Stock-based compensation expense for RSUs is estimated at the date of grant based on the number of shares granted and the quoted price of the Company’s common stock on the grant date. Stock-based compensation expense values are recognized as expense on a straight-line basis over the requisite service period, net of estimated forfeitures. The stock-based compensation costs that are ultimately expected to vest are recognized as expense ratably (as the awards vest) over the requisite service period, which is generally one or four years for stock options and RSUs and three months for the employee stock purchase plan. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more-likely-than-not that the deferred tax assets will not be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company records liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe any such uncertain tax positions currently pending will have a material adverse effect on its consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period. The Company’s policy is to recognize interest and penalties related to the liabilities for uncertain tax positions as a component of income tax expense. The amount of accrued interest related to tax positions taken on the Company’s tax returns and included in accrued and other current liabilities was $1.5 million and $1.2 million, as of December 31, 2014 and 2013, respectively. The amount of interest recognized as tax expense related to uncertain tax positions in the consolidated statements of income was $0.3million and$0.4 million for the years ended December 31, 2014 and2013, respectively.

Net Income Per Share

Basic net income per share has been computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common equivalent shares outstanding for the period. Diluted net income per share includes any dilutive impact from outstanding stock options and the employee stock purchase plan using the treasury stock method.

The following is a reconciliation of the numerator and denominators of the basic and diluted net income per share computations for the years ended December 31 (in thousands, except per share amounts):

	2014		2013		2012
Numerator:
Net income	$	25,208	$	10,964	$	9,620
Denominator:
Weighted-average shares outstanding used to compute basic net income per share		51,277		53,587		56,637
Effect of dilutive securities		1,407		1,349		1,846
Weighted-average shares outstanding used to compute diluted net income per share		52,684		54,936		58,483
Basic net income per share	$	0.49	$	0.20	$	0.17
Diluted net income per share	$	0.48	$	0.20	$	0.16

For the years ended December 31, 2014, 2013, and 2012, approximately 3,541,071,  3,378,063, and 3,280,492 shares, respectively, related to outstanding stock options were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive. In addition, for the years ended December 31, 2014, 2013, and 2012, 50,000,  50,171, and 118,046 shares, respectively, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met.

Segment Information

The Company operates in two segments (refer to Note 20).

Reclassifications

The Company reclassified approximately $0.4 million of deferred tax balances as of December 31, 2013 to conform to the current year presentation, as permitted by the optional retrospective presentation provisions of Accounting Standards Update (ASU) 2013-11 “Income Taxes:Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists”. These reclassifications had no effect on prior years’ net income or stockholders’ equity.

The Company revised its December 31, 2013 consolidated balance sheet and consolidated statement of cash flows by reducing accounts receivable and increasing prepaid expenses and other current assets by $0.2 million to conform to the current year presentation, and reclassified $0.5 million in accrued liabilities to accounts payable to conform to the current year presentation. In addition, the Company revised its consolidated statement of income for the year ended December 31, 2013 by reducing sales and marketing expense and increasing research and development expense by $0.6 million for costs incurred related to pre-market research activities.

Accounting Standards Updates

Recently Effective Accounting Standards.  In March of 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The amendments in the ASU clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should generally be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss, similar tax loss, or tax credit carryforward, with certain limited exceptions. The amendments were effective for the Company beginning January 1, 2014 and they have been applied since the first quarter of 2014. The Company also has retrospectively applied the guidance to deferred tax and unrecognized tax benefit amounts as of December 31, 2013, as retrospective application is optional but not required – see Reclassifications above. The adoption of this ASU had an immaterial impact on consolidated deferred tax balances as of December 31, 2014 and 2013.

Accounting Standards Issued and Not Yet Effective.  In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for the Company’s fiscal year beginning January 1, 2017, with early application not permitted. The Company is in the process of determining what impact, if any, the adoption of ASU 2014-09 will have on its financial statements and related disclosures. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

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The Company And Summary Of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

The Company And Summary Of Significant Accounting Policies [Abstract]

Schedule Of Revenue By Major Customers By Reporting Segments

	For the Year Ended December 31,
	2014		2013	2012
Customer A		94%	75%	59%
Customer B		—	20%	20%
Customer C		—	—	12%

Reconciliation Of The Numerator And Denominators Of The Basic And Diluted Net Income Per Share Computations

	2014		2013		2012
Numerator:
Net income	$	25,208	$	10,964	$	9,620
Denominator:
Weighted-average shares outstanding used to compute basic net income per share		51,277		53,587		56,637
Effect of dilutive securities		1,407		1,349		1,846
Weighted-average shares outstanding used to compute diluted net income per share		52,684		54,936		58,483
Basic net income per share	$	0.49	$	0.20	$	0.17
Diluted net income per share	$	0.48	$	0.20	$	0.16

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Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Stockholders' Equity [Abstract]

Stock-Based Compensation Expenses Included In The Condensed Consolidated Statements Of Operations

	For the Year Ended December 31,
	2014		2013		2012
Sales and marketing	$	1,031	$	1,113	$	1,169
Research and development		104		122		212
General and administrative		2,330		2,772		2,516
	$	3,465	$	4,007	$	3,897

Schedule Of Valuation Assumptions Used For Stock Options And ESPP Plans

	2014		2013		2012
Risk-free interest rate:
Time-based stock options	1.61	%	1.02	%	0.92	%
Performance-based stock options	N/A		1.22		0.96
ESPP	0.04		0.06		0.09
Volatility factor of the market price of the Company's common stock:
Time-based stock options	57.96	%	64.12	%	63.79	%
Performance-based stock options	N/A		63.20		63.66
ESPP	42.50		37.36		56.79
Weighted-average expected life (years):
Time-based stock options	5.00		5.10		5.21
Performance-based stock options	N/A		5.04		5.22
ESPP	0.25		0.25		0.25
Dividend yield	0.00	%	0.00	%	0.00	%

Schedule Of Stock Option Activity

	Options Outstanding
			Weighted-	Weighted-
			Average	Average
	Number		Exercise	Remaining	Aggregate
	of		Price Per	Contractual	Intrinsic
	Shares		Share	Term (Years)	Value
Balance as of January 1, 2012	6,915	$	3.46	6.98	$	8,130
Options forfeited	(1,536)		5.13
Options granted	1,889		6.14
Options exercised	(1,270)		2.66
Balance as of December 31, 2012	5,998	$	4.05	6.06	$	5,575
Options forfeited	(966)		5.45
Options granted	1,637		4.76
Options exercised	(574)		2.82
Balance as of December 31, 2013	6,095	$	4.14	5.66	$	7,199
Options forfeited	(705)		5.10
Options granted	1,740		4.85
Options exercised	(1,233)		4.43
Balance as of December 31, 2014	5,897	$	4.17	6.08	$	27,066
Vested and expected to vest after December 31, 2014	5,445	$	4.11	5.84	$	25,342
Exercisable as of December 31, 2014	3,397	$	3.60	4.09	$	17,537

Schedule Of RSU Activity

	Restricted Stock Units
	Outstanding
	Number	Aggregate
	of	Intrinsic
	Shares	Value
Balance as of January 1, 2012	177	$	758
Awarded	190
Vested/Released	(47)
Forfeited	(60)
Balance as of December 31, 2012	260	$	1,121
Awarded	170
Vested/Released	(39)
Forfeited	(23)
Balance as of December 31, 2013	368	$	1,857
Awarded	7
Vested/Released	(212)
Forfeited	(4)
Balance as of December 31, 2014	159	$	1,393
Vested and expected to vest after December 31, 2014	140	$	1,222
Exercisable as of December 31, 2014 (Vested and deferred)	—		—

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Loans Receivable (Details)	1 Months Ended	12 Months Ended							12 Months Ended
	May 31, 2013 USD ($)	Dec. 31, 2014 USD ($) loan	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2014 Zensun [Member] USD ($)	Dec. 31, 2014 SPIL China [Member] USD ($)	Dec. 31, 2014 SciClone Pharmaceuticals (China) Ltd [Member] CNY	Dec. 31, 2014 SciClone Pharmaceuticals (China) Ltd [Member] USD ($)	Dec. 31, 2014 SPIL China and SciClone Pharmaceuticals (China) Ltd [Member USD ($)	Sep. 30, 2014 Loan One [Member] SPIL China [Member] USD ($)	Dec. 31, 2014 Loan Two [Member] SPIL China [Member] USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateralized loan amount, maximum	$ 12,000,000				$ 12,000,000	$ 11,750,000	1,550,000
Loan receivable		4,750,000				4,500,000	1,550,000	250,000		2,250,000	2,250,000
Interest rate						7.50%		7.50%
Expiration date						Sep. 26, 2017
Commitment agreement, number of loan agreements		2
Collateralized loan, option to extend, period						2 years
Term							66 months
Interest and investment income		161,000	85,000	89,000					100,000
Loans receivable, fair value									$ 5,200,000

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Stockholders' Equity (Schedule Of RSU Activity) (Details) (RSUs [Member], USD $) Share data in Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
RSUs [Member]
Balance as of December 31, Number of Shares	368	260	177
Options awarded, Number of Shares	7	170	190
Options Vested/Released, Number of shares	(212)	(39)	(47)
Options forfeited, Number of Shares	(4)	(23)	(60)
Balance as of December 31, Number of Shares	159	368	260
Balance outstanding aggregate intrinsic value	$ 1,393,000	$ 1,857,000	$ 1,121,000	$ 758,000
Vested and expected to vest after December 31, 2014 Number of Shares	140
Vested and expected to vest after December 31, 2014 Aggregate Intrinsic Value	1,222,000
Exercisable as of December 31, 2014 (Vested and deferred), shares
Exercisable as of December 31, 2014 (Vested and deferred), intrinstic value

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Consolidated Balance Sheets (USD $)	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 86,228,000	$ 85,803,000
Accounts receivable (net of allowances of $998 and $3,587 as of December 31, 2014 and 2013, respectively)	40,268,000	39,771,000
Inventories	10,703,000	15,238,000
Short-term investments	75,000	75,000
Prepaid expenses and other current assets	2,597,000	2,524,000
Deferred tax assets	326,000	6,000
Total current assets	140,197,000	143,417,000
Property and equipment, net	1,848,000	843,000
Goodwill	34,521,000	35,357,000
Other assets	5,265,000	242,000
Total assets	181,831,000	179,859,000
Current liabilities:
Accounts payable	5,311,000	7,716,000
Accrued and other current liabilities	20,536,000	20,938,000
Deferred revenue	596,000	2,915,000
Short-term borrowings on loan facility		1,651,000
Total current liabilities	26,443,000	33,220,000
Other long-term liabilities	114,000	44,000
Commitments and contingencies (Notes 11 and 19)
Stockholders' equity:
Preferred stock; $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding
Common stock; $0.001 par value; 100,000,000 shares authorized; 49,948,897 and 52,371,664 shares issued and outstanding as of December 31, 2014 and 2013, respectively	50,000	52,000
Additional paid-in capital	287,108,000	278,327,000
Accumulated other comprehensive income	3,264,000	4,176,000
Accumulated deficit	(135,148,000)	(135,960,000)
Total stockholders' equity	155,274,000	146,595,000
Total liabilities and stockholders' equity	$ 181,831,000	$ 179,859,000

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The Company And Summary Of Significant Accounting Policies (Schedule Of Revenue By Major Customers By Reporting Segments) (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Customer A [Member]
Revenue, Major Customer [Line Items]
Percentage of sales to importing or distributor agents	94.00%	75.00%	59.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Percentage of sales to importing or distributor agents		20.00%	20.00%
Customer C [Member]
Revenue, Major Customer [Line Items]
Percentage of sales to importing or distributor agents			12.00%

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Consolidated Statements Of Stockholders’ Equity (USD $) In Thousands, except Share data	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2011	$ 58	$ 266,913	$ 2,344	$ (119,196)	$ 150,119
Balance, shares at Dec. 31, 2011	57,847,000
Net income				9,620	9,620
Other comprehensive income (loss)			644		644
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net	1	3,491			3,492
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net, shares	1,346,000
Compensation related to stock option awards		3,983			3,983
Repurchase of common stock	(5)			(24,831)	(24,836)
Repurchase of common stock, shares	(4,709,000)				(4,709,651)
Balance at Dec. 31, 2012	54	274,387	2,988	(134,407)	143,022
Balance, shares at Dec. 31, 2012	54,484,000
Net income				10,964	10,964
Other comprehensive income (loss)			1,188		1,188
Escrow shares received in settlement and immediately retired		(1,866)			(1,866)
Escrow shares received in settlement and immediately retired, shares	(342,000)
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net		1,705			1,705
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net, shares	634,000
Compensation related to stock option awards		4,101			4,101
Repurchase of common stock	(2)			(12,517)	(12,519)
Repurchase of common stock, shares	(2,404,000)				(2,404,034)
Balance at Dec. 31, 2013	52	278,327	4,176	(135,960)	146,595
Balance, shares at Dec. 31, 2013	52,372,000
Net income				25,208	25,208
Other comprehensive income (loss)			(912)		(912)
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net	2	5,212			5,214
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan, net, shares	1,399,000
Compensation related to stock option awards		3,569			3,569
Repurchase of common stock	(4)			(24,396)	(24,400)
Repurchase of common stock, shares	(3,822,000)				(3,822,434)
Balance at Dec. 31, 2014	$ 50	$ 287,108	$ 3,264	$ (135,148)	$ 155,274
Balance, shares at Dec. 31, 2014	49,949,000

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Commitments (Schedule Of Future Minimum Lease Payments And Sublease Rental Income Under Non-Canceable Operating Lease Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Commitments [Abstract]
Minimum Lease Payments, 2015	$ 2,290
Minimum Lease Payments, 2016	1,931
Minimum Lease Payments, 2017	1,629
Minimum Lease Payments, 2018	619
Minimum Lease Payments, 2019
Minimum Lease Payments, Total	$ 6,469

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Property And Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property And Equipment [Abstract]

Schedule Of Property And Equipment

	December 31,
	2014		2013
Construction in process	$	30	$	143
Office equipment		2,059		1,406
Leasehold improvements		791		1,518
Office furniture and fixtures		1,463		606
Software		763		212
Vehicle		70		68
		5,176		3,953
Less accumulated depreciation		(3,328)		(3,110)
Net property and equipment	$	1,848	$	843

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Income Taxes (Schedule Of Components Of Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Federal
State	1	1	1
Foreign	1,489	2,032	3,445
Total current	1,490	2,033	3,446
Federal
State
Foreign	(321)	209	(6,794)
Total deferred	(321)	209	(6,794)
Income tax provision (benefit)	$ 1,169	$ 2,242	$ (3,348)

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Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 15 — Stockholders’ Equity

Stock Award Plans

The Company’s 2005 Equity Incentive Plan (the “2005 Plan”) has reserved 13,600,000 shares of common stock for issuance. The 2005 Plan permits the grant of incentive stock options, nonstatutory stock options, restricted stock units, performance shares and other forms of equity compensation. As of December 31, 2014, approximately 2,241,000 shares of common stock were available for future issuance under the 2005 Plan.Under the 2005 Plan, options are exercisable upon conditions determined by the board of directors and expire ten years from the date of grant. Options are generally granted at fair market value on the date of grant and vest over time, generally four years, or on achievement of certain performance conditions. See Stock-Based Compensation.

The Company’s 2004 Outside Directors Stock Option Plan (the “2004 Director Plan”) hadreserved 1,765,000 shares of common stock for issuance. The 2004 Director Plan automatically granted nonqualified stock options to nonemployee directors on their appointment or first election to the Company’s board of directors (“Initial Grant”) and annually on their reelection to the board of directors at the Company’s Annual Meeting of Stockholders (“Annual Grant”). Under the 2004 Director Plan, options were granted at fair market value on the date of grant and expire ten years from the date of grant. Initial Grants become exercisable in three equal annual installments beginning on the first anniversary of the date of grant, and Annual Grants become exercisable in twelve equal monthly installments from the date of grant, subject in each case to the director’s continuous service on the Company’s board of directors. As of December 31, 2014,  no shares of common stock were available for future issuance under the 2004 Director Plan.Although the 2004 Director Plan has expired, the outstanding stock options relating to it are fully valid.

Certain stock option awards are subject to accelerated vesting if there is a change in control.

The Company issues new shares on exercise, for release of restricted stock units, and for issuance of stock under its employee stock ownership plan.

Stock-Based Compensation

The following table summarizes the stock-based compensation expenses included in the Company’s consolidated statements of income (in thousands):

	For the Year Ended December 31,
	2014		2013		2012
Sales and marketing	$	1,031	$	1,113	$	1,169
Research and development		104		122		212
General and administrative		2,330		2,772		2,516
	$	3,465	$	4,007	$	3,897

Compensation cost capitalized in inventory was approximately $0.1 million for the years ended December 31, 2014, 2013, and 2012. There has been no income tax benefit recognized in the income statement for share-based compensation arrangements.

Valuation Assumptions

The fair value of awards granted under the Company’s stock option and ESPP plans is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the years ended December 31:

	2014		2013		2012
Risk-free interest rate:
Time-based stock options	1.61	%	1.02	%	0.92	%
Performance-based stock options	N/A		1.22		0.96
ESPP	0.04		0.06		0.09
Volatility factor of the market price of the Company's common stock:
Time-based stock options	57.96	%	64.12	%	63.79	%
Performance-based stock options	N/A		63.20		63.66
ESPP	42.50		37.36		56.79
Weighted-average expected life (years):
Time-based stock options	5.00		5.10		5.21
Performance-based stock options	N/A		5.04		5.22
ESPP	0.25		0.25		0.25
Dividend yield	0.00	%	0.00	%	0.00	%

The risk-free interest rate is based on the US Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s history and expectations of no dividend payouts. Expected volatility is based on the historical volatility of the Company’s stock. The expected term of options granted is derived from historical data on employee exercises and terminations.

Stock Options

The following table summarizes stock option activity as of December 31, 2014, 2013 and 2012, and changes during the years then ended are presented below (in thousands, except per share and term amounts):  

	Options Outstanding
			Weighted-	Weighted-
			Average	Average
	Number		Exercise	Remaining	Aggregate
	of		Price Per	Contractual	Intrinsic
	Shares		Share	Term (Years)	Value
Balance as of January 1, 2012	6,915	$	3.46	6.98	$	8,130
Options forfeited	(1,536)		5.13
Options granted	1,889		6.14
Options exercised	(1,270)		2.66
Balance as of December 31, 2012	5,998	$	4.05	6.06	$	5,575
Options forfeited	(966)		5.45
Options granted	1,637		4.76
Options exercised	(574)		2.82
Balance as of December 31, 2013	6,095	$	4.14	5.66	$	7,199
Options forfeited	(705)		5.10
Options granted	1,740		4.85
Options exercised	(1,233)		4.43
Balance as of December 31, 2014	5,897	$	4.17	6.08	$	27,066
Vested and expected to vest after December 31, 2014	5,445	$	4.11	5.84	$	25,342
Exercisable as of December 31, 2014	3,397	$	3.60	4.09	$	17,537

During 2013, the Company extended the period in which two of the Company’s board members could exercise their outstanding vested stock options following the cessation of their service to the Company from ninety days to the second anniversary of the date of cessation of service which was on June 27, 2013. The Company recorded expense of approximately $0.2 million for the year ended December 31, 2013 related to these modifications. In addition, the Company extended the period in which two former employees of the Company could exercise their outstanding vested stock options following the cessation of their service to the Company from ninety days to the one year anniversary of the date of cessation of their services. The Company recorded expense of approximately $0.1 million for the year ended December 31, 2013 related to these modifications.

The Company has granted certain performance-based options to purchase shares of the Company’s common stock at an exercise price equal to the closing price of a share of the Company’s common stock as of the grant date. The options will fully vest on meeting a performance goal within an established time frame. If the performance goal is met for the option within the established time frame, the option generally has a ten-year term measured from the date of grant. If the performance goal is not met within the established time frame, the option expires in its entirety. The Company recognizes expense related to a performance-based option over the period of time the Company determines that it is probable that the performance goal will be achieved. If it is subsequently determined that the performance goal is not probable of achievement, the expense related to the performance-based option is reversed. For years ended December 31, 2014, 2013, and 2012, the Company recognized approximately $0.1 million, $39,000,  and $36,000, respectively, of expense related to performance-based options.

The weighted-average fair value of stock options granted for the years ended December 31, 2014, 2013, and 2012 was $2.43,  $2.56,  and $3.36, respectively. The intrinsic value of options at time of exercise was $2.4 million, $1.3 million, and $4.5 million, for the years ended December 31, 2014, 2013, and 2012, respectively. The estimated fair value of options vested for the years ended December 31, 2014, 2013, and 2012 was $3.2 million, $3.8million, and $4.1 million, respectively. As of December 31, 2014, unamortized compensation expense related to unvested options was approximately $4.4 million, net of forfeitures. The weighted average period over which compensation expense related to these options will be recognized is approximately 2.58 years. Cash received from stock option exercises was $5.5 million, $1.6 million, and $3.4 million, for the years ended December 31, 2014, 2013, and 2012, respectively.

RSUs

The following table summarizes RSU activity as of December 31, 2014,  2013 and 2012 and changes during the years then ended are presented below (in thousands):

	Restricted Stock Units
	Outstanding
	Number	Aggregate
	of	Intrinsic
	Shares	Value
Balance as of January 1, 2012	177	$	758
Awarded	190
Vested/Released	(47)
Forfeited	(60)
Balance as of December 31, 2012	260	$	1,121
Awarded	170
Vested/Released	(39)
Forfeited	(23)
Balance as of December 31, 2013	368	$	1,857
Awarded	7
Vested/Released	(212)
Forfeited	(4)
Balance as of December 31, 2014	159	$	1,393
Vested and expected to vest after December 31, 2014	140	$	1,222
Exercisable as of December 31, 2014 (Vested and deferred)	—		—

The RSUs generally vest 25% approximately one year after grant date with the remaining shares vesting either approximately annually or quarterly in equal installments over a three-year period, depending on the terms of the grant. The weighted average fair value at grant date of the RSUs was $4.52,  $4.98, and $6.49 for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014, there was approximately $0.3 million of unrecognized compensation cost, net of forfeitures, related to non-vested RSUs, which is expected to be recognized over a weighted average remaining period of approximately 1.28 years.

Employee Stock Purchase Plan

As of December 31, 2014,  1,300,000 shares of the Company’s common stock are reserved for issuance under the Company’s Employee Stock Purchase Plan (“ESPP”). Under the terms of the ESPP, eligible employees may choose to have up to 15% of their salary withheld to purchase the Company's common stock and may purchase up to 1,000 shares per offering period. Each offering under the ESPP is for a three-month period. The purchase price of the stock issued under the ESPP will be equal to 85% of the lower of the fair market value of a share of common stock on the first day of the offering or on the final day of the offering period. As of December 31, 2014, 456,819 shares of common stock were available for issuance under the ESPP.

Repurchase of Common Stock

In July 2014, the Company’s Board of Directors approved an increase of $15.0 million to the existing $50.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $65.5 million. In addition, the Board of Directors approved extending the repurchase program through December 31, 2015. The Company repurchased and retired 3,822,434,  2,404,034,  and 4,709,651 shares at a cost of $24.4 million, $12.5 million, and $24.8million during the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014, $0.3 million of the $65.5million share repurchase program authorized by the Board was available for future share repurchases.

Repurchased shares have been retired and constitute authorized but unissued shares. Upon repurchase, the Company eliminates the par value associated with the retired shares, and the excess price of the repurchase above par value is charged to retained earnings (accumulated deficit).

Stockholder Rights Agreement

On December 18, 2006, the Company’s Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (collectively, the “Rights”) for each outstanding share of the Company’s Common Stock, each Right which entitles the registered holder to purchase from the Company one one-thousandth of a share of the Company’s Series D Preferred Stock, $0.001 par value, at a price of $25.00 pursuant to a Rights Agreement dated as of December 19, 2006, between the Company and Mellon Investor Services LLC (the “Rights Agreement”). The Rights, which will initially trade with the Common Stock, become exercisable when a person or group acquires 15% or more of the Company’s Common Stock without prior board approval. In that event, the Rights permit the Company’s stockholders, other than the acquirer, to purchase the Company’s Common Stock having a market value of twice the exercise price of the Rights, in lieu of the Preferred Stock. Alternatively, when the Rights become exercisable, the Company’s Board of Directors may authorize the issuance of one share of the Company’s Common Stock in exchange for each Right that is then exercisable. In addition, in the event of certain business combinations, the Rights permit the purchase of the Common Stock of an acquirer at a 50% discount. Rights held by the acquirer will become null and void in each case. Prior to a person or group acquiring 15%, the Rights can be redeemed for $0.001 each by action of the Board. The Rights Agreement contains an exception to the 15% ownership threshold for shares currently beneficially owned by Sigma-Tau Finanziaria S.p.A. The Rights expire on December 19, 2016. The Rights Agreement includes a requirement that a committee of independent directors evaluate the Rights Agreement at least every three years.

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule Of Changes In Goodwill

Balance as of January 1,  2012	$	33,868
Translation adjustments		445
Balance as of December 31, 2012	$	34,313
Translation adjustments		1,044
Balance as of December 31, 2013	$	35,357
Translation adjustments		(836)
Balance as of December 31, 2014	$	34,521

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401k Plan

12 Months Ended

Dec. 31, 2014

401k Plan [Abstract]

401k Plan

Note 17 — 401(k) Plan

The Company has a pre-tax savings plan covering most US employees, which qualifies under Section 401(k) of the Internal Revenue Code. Under the plan, eligible employees may contribute a portion of their pre-tax salary, subject to certain limitations. The Company contributes and matches 50% of the employee contributions. Company contributions, which can be terminated at the Company's discretion, were approximately $0.1 million, $0.2million, and $0.2 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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Stockholders' Equity (Narrative) (Details) (USD $)	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 30, 2013	Jul. 31, 2014	Oct. 31, 2011	Dec. 18, 2006	Dec. 19, 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expenses recognized	$ 3,465,000	$ 4,007,000	$ 3,897,000
Share-based compensation, income tax benefit	0
Unrecognized compensation expense, net of forfeitures	4,400,000
Weighted average grant date fair value of options per share	$ 2.43	$ 2.56	$ 3.36
Estimated fair value of shares vested	3,200,000	3,800,000	4,100,000
Compensation expense weighted average period recognized	2 years 6 months 29 days
Stock repurchased and retired, shares	3,822,434	2,404,034	4,709,651
Stock repurchased and retired, value	24,400,000	12,519,000	24,836,000
Share repurchase program, remaining amount authorized	300,000
Share repurchase program, approved increase						15,000,000
Share repurchase program, amount authorized	65,500,000						50,500,000
Dividend distribution declared, number of preferred stock purchase right per outstanding share of common stock								1
Number of common stock entitled to purchase per preferred stock purchase right								0.001
Preferred stock par value	$ 0.001	$ 0.001		0.001
Agreement, period of required evaluation	3 years
Series D Preferred Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred stock par value									$ 0.001
Preferred stock redemption price per share									$ 25.00
Minimum percentage of company common stock being acquired for the rights to become exercisable									15.00%
Common stock purchase discount percentage in the even of certain business combinations									50.00%
Redemmed price per share authorized by the board prior to a group or person acquiring 15% of common stock									$ 0.001
Two Company Board Members [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation costs		200,000
Number of employees affected by plan modification		2
Two Former Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration				1 year	90 days
Share based compensation costs		100,000
Number of employees affected by plan modification		2
Plan 2005 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance	13,600,000
Shares available for future issuance	2,241,000
Director Plan 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance	1,765,000
Shares available for future issuance	0
Award expiration	10 years
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance	1,300,000
Shares available for future issuance	456,819
Stock discount percentage	85.00%
Stock plan maximum percentage withheld by employee	15.00%
Common stock shares that can be purchased	1,000
Offering period	3 months
Vesting period	3 months
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, option exercises, shares	1,233,000	574,000	1,270,000
Intrinsic value of options at exercise	2,400,000	1,300,000	4,500,000	1,300,000
Cash from stock option exercise	5,500,000	1,600,000	3,400,000
Performance-Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration	10 years
Share based compensation expense related to performance-based options	100,000	39,000	36,000
RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, net of forfeitures	300,000
Unrecognized compensation expense, weighted-average remaining period for recognition, in years	1 year 3 months 11 days
Vesting percentage after one year	25.00%
Weighted average grant date fair value of options per share	$ 4.52	$ 4.98	$ 6.49
Intrinsic value of options at exercise
Minimum [Member] | RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Maximum [Member] | Two Company Board Members [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration				2 years	90 days
Maximum [Member] | RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Inventory [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expenses recognized	$ 100,000	$ 100,000	$ 100,000

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities:
Net income	$ 25,208	$ 10,964	$ 9,620
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash expense related to stock-based compensation	3,465	4,007	3,897
Non-cash escrow share settlement		(1,866)
Provision for doubtful accounts		2,540
Provision for expiring inventory	1,574
Depreciation and amortization	852	860	3,449
Intangible asset impairment			42,728
Loss on maturity of available-for-sale investment		75
Loss on disposal of fixed assets	26	17
Change in fair value of contingent consideration (Note 3)			(15,422)
Deferred income taxes	(321)	191	(6,785)
Other long-term liabilities	10	(133)	(232)
Changes in operating assets and liabilities:
Accounts receivable, net	(3,276)	(3,999)	356
Inventories	5,907	(4,685)	801
Prepaid expenses and other assets	(277)	(202)	(156)
Accounts payable	(5,485)	(134)	2,195
Accrued and other current liabilities	(414)	(1,006)	3,070
Deferred revenue	340	2,873
Net cash provided by operating activities	27,609	9,502	43,521
Investing activities:
Purchases of available-for-sale investments			(75)
Proceeds from the maturity of available-for-sale securities		379
Loans to third party (Note 6)	(4,751)
Purchases of property and equipment	(1,452)	(324)	(1,128)
Net cash (used in) provided by investing activities	(6,203)	55	(1,203)
Financing activities:
Repurchase of common stock including commissions	(24,400)	(12,519)	(24,836)
Repayment of credit facilities	(1,620)	(2,035)	(2,500)
Proceeds from borrowing on credit facilities		2,196	1,445
Decrease (increase) in restricted cash related to loan facility		2,300	(2,300)
Proceeds from issuances of common stock, net	5,214	1,705	3,492
Net cash used in financing activities	(20,806)	(8,353)	(24,699)
Effect of exchange rate changes on cash and cash equivalents	(175)	371	(45)
Net increase in cash and cash equivalents	425	1,575	17,574
Cash and cash equivalents, beginning of period	85,803	84,228	66,654
Cash and cash equivalents, end of period	86,228	85,803	84,228
Supplemental disclosure of cash flow information:
Net income taxes paid related to foreign operations	944	2,237	1,893
Interest and unused line fees paid related to borrowings	$ 48	$ 81	$ 136

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts	$ 998	$ 3,587
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	49,948,897	52,371,664
Common stock, shares outstanding	49,948,897	52,371,664

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Escrow Settlement Agreement

12 Months Ended

Dec. 31, 2014

Escrow Settlement Agreement [Abstract]

Escrow Settlement Agreement

Note 10 — Escrow Settlement Agreement

On October 16, 2012, the Company made a claim against the former stockholders of NovaMed pursuant to the acquisition agreement relating to its acquisition of NovaMed. As a result of the Company’s claim, approximately $1.4 million in cash that was held in escrow and 622,363 shares of the Company’s common stock that were held in escrow were not released to the former NovaMed stockholders pending the outcome of the Company’s claim. The claim related to damages the Company incurred as a result of misrepresentations made by NovaMed regarding various matters, including the estimated product return reserves for Aggrastat product on the date of the acquisition, and related expenses and damages. On July 8, 2013, the Company and the representatives of the former stockholders of NovaMed entered into a “Confidential Escrow Settlement Agreement” pursuant to which the Company retained approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6 million on the settlement date that was recorded to other income during the year ended December 31, 2013. As of December 31, 2013, the Company has canceled and retired the shares.

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 04, 2015	Jun. 30, 2014
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	scln
Entity Registrant Name	SCICLONE PHARMACEUTICALS INC
Entity Central Index Key	0000880771
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		50,056,030
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 268,337,000

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Commitments

12 Months Ended

Dec. 31, 2014

Commitments [Abstract]

Commitments

Note 11 — Commitments

Purchase Obligations

Under agreements with certain of the Company’s pharmaceutical partners, the Company is committed to certain annual minimum product purchases where the contract is subject to termination if the annual minimum order is not met. As of December 31, 2014, the Company did not have any material unmet purchase obligations.

Leases

In May 2007, the Company entered into a non-cancelable operating lease agreement for its corporate headquarters ("the Lease”) effective from July 1, 2007 through June 30, 2014. In September 2008, the Company entered into an amendment to the Lease for additional office space (“the Amendment”) that expired on June 30, 2014. Both the Lease and Amendment contained rent escalations of approximately 4% and 6% per year, respectively. In December 2013, the Company entered into a second amendment to the Lease extending the term of the lease for an additional four years through June 30, 2018, with an option to renew for an additional five year period. Beginning on July 1, 2014, the second amendment reduced the amount of leased office space from approximately 21,517 square feet leased to approximately 11,886 square feet. It also reduced the monthly base rent of $120,824to $51,704 in the first year, with rent escalations of approximately 3% per year. In addition, the Company received a rent abatement for the first four months of the extended lease term.

The Company is recognizing the rental expense on a straight-line basis over the lease term. Under the terms of the Lease and the Amendment, the Company was provided allowances in the amounts of approximately $0.2 million and $0.5 million, respectively, towards the cost of its leasehold improvements and as an incentive to rent, respectively. The Company has recorded these allowances as deferred rent which is being amortized over the lease term as a reduction of rent expense. The Lease requires the Company to pay insurance and taxes and its pro-rata share of operating expenses.

In June 2014, the Company entered into a non-cancelable operating lease agreement for its primary office space in China (“the China Lease”) for a fixed lease term from October 15, 2014 through April 14, 2018, with options to renew for an additional two years. The Company is recognizing the rental expense on a straight-line basis over the lease term. The leases require the Company to pay insurance and its pro-rata share of operating expenses.

The Company also leases other office facilities and equipment outside the US under non-cancelable operating lease agreements. Through May 2014, the Company also subleased certain office facilities to a third party. Rent expense for the years ended December 31, 2014, 2013, and 2012, was $2.2 million, $2.9 million, and $2.9 million, respectively, net of sublease income. Future minimum lease payments under non-cancelable facility and equipment operating lease agreements as of December 31, 2014, were as follows (in thousands):  

	Minimum Lease
Year ended:	Payments
2015	$	2,290
2016		1,931
2017		1,629
2018		619
2019		—
	$	6,469

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Subsequent Events (Details) (USD $)	12 Months Ended			2 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 10, 2015	Jul. 31, 2014	Oct. 31, 2011	Feb. 28, 2015
Subsequent Event [Line Items]
Share repurchase program, approved increase					$ 15,000,000
Share repurchase program, amount authorized	65,500,000					50,500,000
Stock repurchased and retired, shares	3,822,434	2,404,034	4,709,651
Stock repurchased and retired, value	24,400,000	12,519,000	24,836,000
Share repurchase program, remaining amount authorized	300,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Share repurchase program, approved increase							15,000,000
Share repurchase program, amount authorized							80,500,000
Stock repurchased and retired, shares				28,651
Stock repurchased and retired, value				300,000
Share repurchase program, remaining amount authorized				$ 15,000,000

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Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net revenues:
Product sales, net	$ 131,973	$ 99,414	$ 123,171
Promotion services	2,817	27,644	33,098
Total net revenues	134,790	127,058	156,269
Operating expenses:
Cost of product sales	23,002	17,668	21,996
Sales and marketing	48,477	55,240	70,327
Research and development	14,581	8,044	5,145
General and administrative	22,746	32,496	21,344
Restructuring charges		1,181	1,096
Estimated SEC and DOJ investigation loss (Note 19)		2,000
Intangible asset impairment (Note 7)			42,728
Amortization of acquired intangible assets	0	0	2,645
Change in fair value of contingent consideration (Note 3)			(15,422)
Total operating expenses	108,806	116,629	149,859
Income from operations	25,984	10,429	6,410
Non-operating income (expense):
Interest and investment income	161	85	89
Interest and investment expense	(48)	(103)	(185)
Other income (expense), net	280	2,795	(42)
Income before income tax provision (benefit)	26,377	13,206	6,272
Income tax provision (benefit)	1,169	2,242	(3,348)
Net income	$ 25,208	$ 10,964	$ 9,620
Basic net income per share	$ 0.49	$ 0.20	$ 0.17
Diluted net income per share	$ 0.48	$ 0.20	$ 0.16
Weighted average shares used in computing:
Basic net income per share	51,277	53,587	56,637
Diluted net income per share	52,684	54,936	58,483

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Property And Equipment

12 Months Ended

Dec. 31, 2014

Property And Equipment [Abstract]

Property And Equipment

Note 5 — Property and Equipment

Property and equipment consisted of the following (in thousands):  

	December 31,
	2014		2013
Construction in process	$	30	$	143
Office equipment		2,059		1,406
Leasehold improvements		791		1,518
Office furniture and fixtures		1,463		606
Software		763		212
Vehicle		70		68
		5,176		3,953
Less accumulated depreciation		(3,328)		(3,110)
Net property and equipment	$	1,848	$	843

Depreciation expense was $0.9 million, $0.9 million, and $0.6 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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Inventories

12 Months Ended

Dec. 31, 2014

Inventories [Abstract]

Inventories

Note 4 — Inventories

Inventories consisted of the following (in thousands):

	December 31,
	2014		2013
Raw materials	$	5,009	$	7,746
Work in progress		761		319
Finished goods		4,933		7,173
Total	$	10,703	$	15,238

As of December 31, 2014 and 2013, the Company had $3.1 million and $2.4 million, respectively, in net inventory held at distributors related to products sold by its NovaMed subsidiary.

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2014

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 16 — Accumulated Other Comprehensive Income (Loss)

Changes in the composition of accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	Foreign
	Currency		Available-for-Sale
	Translation		Investments		Total
Balances as of January 1, 2012	$	2,430	$	(86)	$	2,344
Other comprehensive income		625		19		644
Balances as of December 31, 2012		3,055		(67)		2,988
Other comprehensive income (loss) before reclassifications		1,121		(4)		1,117
Amounts reclassified out of accumulated other comprehensive income (loss) to other income (expense), net		—		71		71
Net other comprehensive income		1,121		67		1,188
Balances as of December 31, 2013		4,176		—		4,176
Other comprehensive loss		(912)		—		(912)
Balances as of December 31, 2014	$	3,264	$	—	$	3,264

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Credit Facilities

12 Months Ended

Dec. 31, 2014

Credit Facilities [Abstract]

Credit Facilities

Note 12 — Credit Facilities

Credit Facility

In December 2013, the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed Shanghai”) entered into a 10.0 million RMB revolving line of credit facility (approximately $1.6 million USD) and a maximum 15.0 million RMB loan facility (approximately $2.4 million USD) with Shanghai Pudong Development Bank Co. Ltd. (“the Credit Facility”) that was secured by its accounts receivable. The Credit Facility bore interest on borrowed funds at the People’s Bank of China 6-month base rate plus 15%  (6.44% in 2014 and 2013) on outstanding balances. The Credit Facility expired November 30, 2014, and all amounts borrowed were repaid by the expiration date. For the year ended December 31, 2014, the Company paid interest of approximately $48,000 related to the Credit Facility.

Loan Agreement

The Company’s 2012 loan agreement for 12.5 million RMB (approximately $2.0 million) with Shanghai Pudong Development Bank Co. Ltd. expired August 29, 2013. All amounts borrowed were repaid by the expiration date. The loan bore interest on borrowed funds at 7.5%. For the years ended December 31, 2013 and 2012, the Company paid interest of approximately $81,000 and $11,000, respectively, related to this loan agreement.

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Goodwill

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note 8 — Goodwill

The following table represents the changes in goodwill for the years ended December 31, 2014, 2013 and 2012 (in thousands):

Balance as of January 1,  2012	$	33,868
Translation adjustments		445
Balance as of December 31, 2012	$	34,313
Translation adjustments		1,044
Balance as of December 31, 2013	$	35,357
Translation adjustments		(836)
Balance as of December 31, 2014	$	34,521

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Credit Facilities (Details)	12 Months Ended
	Dec. 31, 2014 Shanghai Pudong Development Bank Co. Ltd. [Member] USD ($)	Dec. 31, 2013 Shanghai Pudong Development Bank Co. Ltd. [Member] USD ($)	Dec. 31, 2012 Shanghai Pudong Development Bank Co. Ltd. [Member] USD ($)	Dec. 31, 2012 Shanghai Pudong Development Bank Co. Ltd. [Member] CNY	Dec. 31, 2013 Shanghai Pudong Development Bank Co. Ltd. [Member] CNY	Dec. 31, 2013 NovaMed [Member] USD ($)	Dec. 31, 2013 NovaMed [Member] CNY
Line of Credit Facility [Line Items]
Line of credit facility, amount terminated			$ 2,000,000	12,500,000
Debt financing facility, maximum borrowing capacity		2,400,000			15,000,000	1,600,000	10,000,000
Percentage points added to reference rate	15.00%
Effective interest rate	6.44%	6.44%	7.50%	7.50%
Debt financing facility, expiration date	Nov. 30, 2014		Aug. 29, 2013	Aug. 29, 2013
Interest paid	$ 48,000	$ 81,000	$ 11,000

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Loans Receivable

12 Months Ended

Dec. 31, 2014

Loans Receivable [Abstract]

Loans Receivable

Note 6 —Loans Receivable

As part of the Company’s May 2013 license and supply agreement with Zensun (Shanghai) Science & Technology Co. Ltd (“Zensun”), the Company previously agreed to loan up to $12 million to Zensun. The entry into the license and supply agreement in the second quarter of 2013, pursuant to which the Company licensed the exclusive rights to promote, market, distribute, and sell NeucardinTM, a chronic heart failure product under development by Zensun (such rights licensed for the People’s Republic of China, Hong Kong and Macao) is more fully described in Note 18.

Pursuant to its agreement to loan funds, the Company loaned $4.75 million to Zensun in the second half of 2014. The extension of credit and funding to Zensun was accomplished through two of the Company's subsidiaries, SciClone Pharmaceuticals International China Holding Ltd. (“SPIL China”) and SciClone Pharmaceuticals (China) Ltd. (“SciClone China”).

With respect to lender SPIL China, Zensun can request US-dollar denominated borrowings up to $11.75 million. As of December 31, 2014, borrowings totaling $4.5 million had been requested by Zensun and paid by SPIL China with $2.25 million lent in the third quarter of 2014 and $2.25 million lent in the fourth quarter of 2014. These borrowings bear interest at a fixed rate of 7.5% per annum payable annually in arrears at each interest payment date as defined in the overall loan agreement. These borrowings mature on September 26, 2017, with an option electable by Zensun to extend for two additional years provided certain conditions are met. All outstanding balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice.

With respect to lender SciClone China, Zensun can make RMB-denominated borrowings for up to RMB 1,550,000 using an entrustment mechanism with a bank as an intermediary. In the third quarter of 2014, SciClone China entered into an entrusted loan agreement for RMB 1,550,000 (approximately US$250,000 as of December 31, 2014) with Zensun, using a major Chinese bank as the lending agent. SciClone China is the principal and ultimately bears the credit risk, not the bank. The loan bears interest at a fixed rate of 7.5% per annum and Zensun is subject to obligations of the borrower as specified in the loan agreements. The loan term is sixty-six months. All outstanding principal and interest balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice.

The proceeds of the separate but related loans are to be used for working capital and general corporate purposes by Zensun. To secure the loans, Zensun pledged its entire equity interest in its subsidiary, Shanghai Dongxin Biochemical Technology Co. Ltd. (whose assets include real property) to SPIL China.

Management, on the basis of (i) a creditworthiness evaluation using recent Zensun financial information, (ii) consideration of the market value of the pledged security, and (iii) consideration of Zensun’s compliance with the terms of the loans and timely payment of interest, concluded there were no indications of loan impairment at December 31, 2014; accordingly, there is no allowance for losses.

The two loans are included in “other assets” on the Company’s consolidated balance sheet as of December 31, 2014. Interest income on the loans amounted to $0.1 million for the year ended December 31, 2014 and is included in interest and investment income in the statement of operations. The Company estimates the fair value of the loans receivable approximates $5.2 million as of December 31, 2014, based upon prevailing market rates of interest as published by major Chinese banks.

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Net Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Net Intangible Assets

Note 7 — Net Intangible Assets

As part of the acquisition of NovaMed, the Company recorded intangible assets related to promotion and distribution contract rights that were included in the Company’s China segment. During the third quarter of 2012, the Company identified impairment indicators related to the intangible assets. The Company determined that the undiscounted cash flows estimated to be generated by the intangible assets were less than the carrying amounts. The Company further performed a discounted cash flow analysis related to the intangible assets and recorded a full impairment charge, as the estimated fair value was determined to be zero. As a result, the Company recognized a non-cash impairment loss of approximately $42.7million on its consolidated statement of operations for the year ended December 31, 2012. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value (see Note 1). The significant Level 3 unobservable inputs used in the fair value measurement of the intangible assets were estimates of projected revenues and earnings, a discount rate of approximately 20%, and assumptions regarding the probability of renewal of the customer contracts. Significant changes in the estimated revenues and earnings would have resulted in adjustments in the fair value measurement. A change in the renewal probability rates of the customer contracts would have also resulted in a significant change in the fair value measurement.

Acquired promotion and distribution contract intangible assets were being amortized on a straight-line basis over 13.5 years, based on their estimated useful life. Amortization expense was $0,  $0, and $2.6 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2014

Accrued Liabilities [Abstract]

Accrued Liabilities

Note 9 — Accrued Liabilities

The following is a summary of accrued liabilities (in thousands):  

	December 31,
	2014		2013
Accrued sales and marketing expenses	$	5,383	$	6,419
Accrued taxes, tax reserves and interest		5,208		5,029
Accrued compensation and benefits		4,176		3,475
Accrued professional fees		1,819		1,601
Accrued manufacturing costs		95		1,617
Accrued estimated SEC and DOJ investigation loss (Note 19)		2,000		2,000
Accrued license fee		1,000		—
Other		855		797
Total	$	20,536	$	20,938

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Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Tax at federal statutory rate	$ 8,968	$ 4,490	$ 2,132
Foreign income tax at different rates	(10,788)	(8,383)	(10,405)
Taxable dividend from foreign subsidiary			11,900
Uncertain tax positions accrual	127	297	999
Change in valuation allowance	2,672	5,254	(7,945)
Stock-based compensation	2	(87)	(41)
Non deductible expenses	189	670	11
Other	(1)	1	1
Income tax provision (benefit)	$ 1,169	$ 2,242	$ (3,348)

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Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Abstract]
Net operating loss carryforwards	$ 37,513	$ 33,654
Research and development credit carryforwards	10,615	10,498
Intangibles	395	337
Other	2,527	2,867
Deferred tax assets, gross	51,050	47,356
Valuation allowance	(50,724)	(47,350)
Total deferred tax assets	326	6
Net deferred tax liabilities	$ 326	$ 6

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Income Taxes (Schedule Of Domestic And Foreign Components Of Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Domestic	$ (8,496)	$ (17,168)	$ (11,541)
Foreign	34,873	30,374	17,813
Income before income tax provision (benefit)	$ 26,377	$ 13,206	$ 6,272

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Inventories (Tables)

12 Months Ended

Dec. 31, 2014

Inventories [Abstract]

Schedule Of Inventories

	December 31,
	2014		2013
Raw materials	$	5,009	$	7,746
Work in progress		761		319
Finished goods		4,933		7,173
Total	$	10,703	$	15,238

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Inventories (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Inventories [Abstract]
Raw materials	$ 5,009,000	$ 7,746,000
Work in progress	761,000	319,000
Finished goods	4,933,000	7,173,000
Inventory	10,703,000	15,238,000
Inventory held at distributors	$ 3,100,000	$ 2,400,000

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Income Taxes

Note 14 — Income Taxes

The Company recorded income tax provision (benefit) of $1.2 million, $2.2 million, and ($3.3) million, for the years ended December 31, 2014, 2013, and 2012, respectively, related to its operations in China. The Company’s statutory tax rate in China was 25% in 2014, 2013 and 2012. The Company has not recorded any significant US federal or state income taxes for the years ended December 31, 2014, 2013, and 2012. Undistributed earnings of the Company’s foreign subsidiaries that are considered to be indefinitely reinvested outside the US and for which no US taxes have been provided amounted to approximately $138.3 million as of December 31, 2014. Upon distribution of those earnings, the Company may be subject to US federal and state income taxes, although determining the amount is not practicable as it is dependent on a variety of factors, including but not limited to the amounts of US tax loss carryforwards and tax credit carryforwards available at the time of the repatriation.Based on our current operating plan, the Company does not anticipate the need to repatriate cash and cash equivalents held by foreign subsidiaries in the foreseeable future. Should circumstances change and it becomes apparent that some or all of the undistributed earnings will be remitted, the Company will accrue for income taxes not previously recognized.

The domestic and foreign components of income (loss) before provision (benefit) for tax for the years ended December 31 are as follows (in thousands):  

	2014		2013		2012
Domestic	$	(8,496)	$	(17,168)	$	(11,541)
Foreign		34,873		30,374		17,813
Pre-tax income	$	26,377	$	13,206	$	6,272

A reconciliation of tax at the statutory federal income tax rate of 34% to the actual tax provision (benefit) for the years ended December 31 is as follows (in thousands):  

	2014		2013		2012
Tax at federal statutory rate	$	8,968	$	4,490	$	2,132
Foreign income tax at different rates		(10,788)		(8,383)		(10,405)
Taxable dividend from foreign subsidiary		—		—		11,900
Uncertain tax positions accrual		127		297		999
Change in valuation allowance		2,672		5,254		(7,945)
Stock-based compensation		2		(87)		(41)
Non deductible expenses		189		670		11
Other		(1)		1		1
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

The provision (benefit) for income taxes for the years ended December 31 consisted of the following (in thousands):

	2014		2013		2012
Federal	$	—	$	—	$	—
State		1		1		1
Foreign		1,489		2,032		3,445
Total current		1,490		2,033		3,446
Federal		—		—		—
State		—		—		—
Foreign		(321)		209		(6,794)
Total deferred		(321)		209		(6,794)
Income tax provision (benefit)	$	1,169	$	2,242	$	(3,348)

During the year ended December 31, 2012, the Company identified an impairment indicator with respect to its intangible assets related to its promotion and distribution contract rights and recorded a charge of$42.7 million to recognize the full impairment of the assets. The Company recorded an income tax benefit of $6.8 million due to the impairment of the intangible assets as a result of the reversal of the deferred tax liabilities associated with the intangible assets.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows (in thousands):

	2014		2013
Deferred tax assets:
Net operating loss carryforwards	$	37,513	$	33,654
Research and development credit carryforwards		10,615		10,498
Intangibles		395		337
Other		2,527		2,867
Gross deferred tax assets		51,050		47,356
Valuation allowance		(50,724)		(47,350)
Total deferred tax assets		326		6
Deferred tax liabilities:
Other		—		—
Total deferred tax liabilities		—		—
Net deferred tax assets	$	326	$	6

Realization of deferred tax assets is dependent upon the Company generating future taxable income, the timing and amount of which are uncertain. Accordingly, the deferred tax assets have been largely offset by a valuation allowance. The valuation allowance increased (decreased) by approximately $3.4 million, $4.4 million, and ($7.7) million in the years ended December 31, 2014, 2013, and 2012, respectively.

As of December 31, 2014, the Company had federal net operating loss carryforwards of approximately $110.3 million that expire in the years 2020 through 2034, and federal research and development, orphan drug and investment tax credit carryforwards of approximately $12.2 million that expire in the years 2018 through 2034. As of December 31, 2014, the Company had state net operating loss carryforwards of approximately $26.9 million that expire in the years 2015 through 2030, if not utilized, and state research and development tax credit carryforwards of approximately $2.2 million that do not expire. Approximately $3.7 million of the valuation allowance relates to benefits associated with stock option deductions that, when recognized, will be credited directly to stockholders' equity.

Utilization of the Company’s net operating loss and credit carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitation could result in the expiration of the net operating loss and credit carryforwards before utilization.

As of December 31, 2014, the unrecognized tax benefit was $5.9million, of which $2.2 million, if recognized would affect the effective tax rate, and $3.7 million, if recognized, would be offset by a change in the valuation allowance. A reconciliation of the beginning and ending amount of unrecognized tax benefit for the years ended December 31 is as follows (in thousands):

	2014		2013		2012
Balance beginning of period	$	6,138	$	6,053	$	5,715
Tax positions related to current year:
Additions for current year items		32		36		1,050
Additions for prior year items		—		88		—
Reductions for prior year items		(206)		(115)		(747)
Changes for foreign currency translation		(88)		76		35
Balance end of period	$	5,876	$	6,138	$	6,053

Tax years 1995-2014 remain open to examination by the major US taxing jurisdictions to which the Company is subject. The Internal Revenue Service concluded its examinations of the Company’s 2011, 2009 and 2008 US federal tax returns with no additional tax assessments or proposed adjustments relating to taxable income for any years. The Company’s China operations are generally subject to examination under China tax law for a period of five years and those five years remain open for examination. Although the outcome of income tax examinations is uncertain, and the amounts ultimately paid, if any, on resolution of any issues raised by the taxing authorities may differ materially from the amounts accrued for each year, the Company does not anticipate any material change to the amount of its unrecognized tax benefits over the next 12 months.

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Contingencies

12 Months Ended

Dec. 31, 2014

Contingencies [Abstract]

Contingencies

Note 19 — Contingencies

Legal Matters

The Company is a party to various legal proceedings and subject to government investigations, as noted in this section below. All legal proceedings and any government investigations are subject to inherent uncertainties, unfavorable rulings or other adverse events which could occur. Unfavorable outcomes could include substantial monetary damages or awards, injunctions or other remedies, and if any of these were to occur, the possibility exists for a material adverse impact on the Company’s business, results of operations, financial position, and overall trends. The Company might also conclude that settling one or more such matters is in the best interests of its stockholders and its business, and any such settlement could include substantial payments.

On August 5, 2010, SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone, and the SEC issued a subpoena to SciClone requesting a variety of documents and other information including, but not limited to, potential payments or transfers of anything of value to regulators and government-owned entities in China, bids or contracts with state or government-owned entities in China, any joint venture partner, intermediary or local agent of the Company in China, the Company's ethics and anti-corruption policies, training, and audits, and certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the US Department of Justice (“DOJ”) indicating that the DOJ was investigating Foreign Corrupt Practices Act (“FCPA”) issues in the pharmaceutical industry generally, and that the DOJ had information about the Company’s practices suggesting possible violations. The Company received a further subpoena from the SEC in the fourth quarter of fiscal 2012 on additional matters including, but not limited to, matters related to its acquisition of NovaMed Pharmaceuticals, Inc. (”NovaMed”) on April 18, 2011 and FCPA matters, and certain sales and marketing expenses.  

In response to these matters, the Company’s Board of Directors appointed a Special Committee of independent directors (the “Special Committee”) to oversee the Company’s response to the government inquiry. The Special Committee has undertaken independent investigations as to matters reflected in and arising from the SEC and DOJ investigations in order to evaluate whether any violation of the FCPA or other laws occurred. The Company will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations.

The Company cannot predict what the outcome of those investigations will be, or the timing of any resolution. However, the Company previously determined that a payment of at least $2.0 million to the government in penalties, fines and/or other remedies is probable. Accordingly, the Company recorded $2.0 million of operating expense in its fourth quarter 2013 results of operations to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies in the ongoing investigations with the SEC and DOJ. The Company has monitored developments in the investigations since that time and has not determined that any further adjustments to the estimated loss are both probable and reasonable estimable. Any actual fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could materially differ and could be higher than the amount of the $2.0 million estimated loss and could materially impact the Company’s financial statements. The Company will re-assess the potential liability each quarter and may adjust its estimates accordingly in future periods if it determines that a different amount is both probable of being incurred and is reasonably estimable.

NovaMed was a party to a Distribution and Supply Agreement with MEDA Pharma GmbH & Co. KG (“MEDA”). Following the Company’s acquisition of NovaMed, MEDA claimed it had a right to terminate the agreement under a change of control provision. NovaMed does not believe that MEDA had a right of termination under the agreement. NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On April 3, 2014, CIETAC issued the final Award of the Arbitral Tribunal. The Arbitral Tribunal found that MEDA did have a right to terminate the agreement upon a change of control, but that MEDA must make reasonable reimbursement to NovaMed before any products rights are returned to MEDA. The amount that must be paid includes $333,333 as “unjust enrichment” plus an amount for reasonable compensation for such services provided by NovaMed to MEDA. The amount of such payment for services was not determined by the Arbitral Tribunal, but was left to be determined by NovaMed. On April 30, 2014, NovaMed informed MEDA that its determination of reasonable compensation for its services was $3,314,629, including the $333,333 for unjust enrichment. MEDA made a counter offer and the parties were attempting to resolve the matter without an additional arbitration proceeding. In December 2014, NovaMed filed a “Request for Second Arbitration” with CIETAC in order to enforce its right to compensation. The arbitration case is pending with CIETAC and no hearing has taken place yet. The amount of any final payment to NovaMed remains uncertain, and as such the Company has not recognized it as a gain contingency.

On March 11, 2013, Adam Crum filed a derivative lawsuit, purportedly in the name of SciClone, against Friedhelm Blobel, Gary Titus, Jon Saxe, Peter Barrett, Richard Hawkins, Gregg Lapointe and Ira Lawrence in California Superior Court, San Mateo County, captioned Crum v. Blobel, et al., Case No. CIV520331. The lawsuit alleges, based on the restatement of the Company’s consolidated financial statements for the year ended December 31, 2011 and certain quarters of 2011 and 2012, that the Board of Directors and management breached their fiduciary duties to the Company by not exercising oversight in such a way that they allowed the Company to file consolidated financial statements that were materially inaccurate. Plaintiff asserts claims for breach of fiduciary duty, abuse of control and mismanagement. Plaintiff seeks, among other things, injunctive relief, disgorgement, undisclosed damages and attorneys’ fees and costs. The Company and other defendants filed motions to dismiss the complaint. The court granted the motions to dismiss but allowed plaintiff to amend the complaint. An amended complaint was filed on September 19, 2014. On October 24, 2014, the defendants filed motions to dismiss the amended complaint. On December 5, 2014, the court dismissed the lawsuit in its entirety. Plaintiff did not file an appeal and the matter is finally resolved.

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Fair Value Measurements (Financial Assets And Liability Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	$ 19,753	$ 28,337
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	19,678	28,262
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	75	75
Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	75	75
Certificates of Deposit [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	75	75
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	19,678	28,262
Money Market Funds [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	$ 19,678	$ 28,262

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2014

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

	Foreign
	Currency		Available-for-Sale
	Translation		Investments		Total
Balances as of January 1, 2012	$	2,430	$	(86)	$	2,344
Other comprehensive income		625		19		644
Balances as of December 31, 2012		3,055		(67)		2,988
Other comprehensive income (loss) before reclassifications		1,121		(4)		1,117
Amounts reclassified out of accumulated other comprehensive income (loss) to other income (expense), net		—		71		71
Net other comprehensive income		1,121		67		1,188
Balances as of December 31, 2013		4,176		—		4,176
Other comprehensive loss		(912)		—		(912)
Balances as of December 31, 2014	$	3,264	$	—	$	3,264

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Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements Of Comprehensive Income [Abstract]
Net income	$ 25,208	$ 10,964	$ 9,620
Other comprehensive income, net of income tax:
Unrealized gain (loss) and foreign currency translation arising during the period on foreign currency denominated available-for-sale securities		(4)	19
Reclassification adjustment for losses included in net income		71
Net change		67	19
Foreign currency translation	(912)	1,121	625
Total other comprehensive income (loss)	(912)	1,188	644
Total comprehensive income	$ 24,296	$ 12,152	$ 10,264

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Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 3 — Fair Value Measurements

The following tables represent the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements as of December 31, 2014 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2014
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		19,678		—		—		19,678
Total	$	19,678	$	75	$	—	$	19,753

	Fair Value Measurements as of December 31, 2013 Using
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for		Observable		Unobservable		Balance
		Identical Assets		Inputs		Inputs		as of
Description		(Level 1)		(Level 2)		(Level 3)		December 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		28,262		—		—		28,262
Total	$	28,262	$	75	$	—	$	28,337

The following table provides a summary of changes in fair value of the Company’s level 3 liability during fiscal 2012 (in thousands):

	Contingent
	Consideration
Balance as of January 1, 2012	$	15,400
Change in the estimated fair value of the contingent consideration liability		(15,422)
Translation adjustments		22
Balance as of December 31, 2012	$	—

Contingent Consideration

As part of the acquisition of NovaMed which occurred on April 18, 2011, the Company would have been required to pay up to an additional $43.0million in earn-out payments on the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn out” or “contingent consideration”).

The earn-out period ended on December 31, 2012 with none of the targets met. Through September 30, 2012, the Company used the assistance of a third-party valuation expert to estimate the fair value of the contingent consideration using a Monte Carlo simulation model. The fair value of the contingent consideration was remeasured each period, and changes to the fair value were recorded as expense or gains. As of December 31, 2012, the Company estimated the fair value of the contingent consideration to be $0, given none of the performance targets were met, resulting in a non-cash gain of $15.4 million for the year ended December 31, 2012. The Company subsequently settled various matters with the former stockholders of NovaMed, confirming among other things, that the Company had no liability for earn-out contingent payments.

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Commitments (Narrative) (Details) (USD $)	1 Months Ended	12 Months Ended			1 Months Ended		0 Months Ended	1 Months Ended
	Dec. 31, 2013 sqft	Dec. 31, 2014	Dec. 31, 2013 sqft	Dec. 31, 2012	May 31, 2007	Sep. 30, 2008	Jul. 01, 2014	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Office space square footage	21,517		21,517
Base monthly rent expense	$ 120,824
Rent expense		2,200,000	2,900,000	2,900,000
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Rent escalation, percentage					4.00%
Allowance toward cost of leasehold improvements					200,000
Expansion Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Rent escalation, percentage						6.00%
Allowance toward cost of leasehold improvements						500,000
Second Amendment Agreement [Member]
Finite-Lived Intangible Assets [Line Items]
Lease term	4 years
Lease renewal	5 years
Office space square footage							11,886
Base monthly rent expense							$ 51,704
Annual rent escalation per year							3.00%
China Lease [Member]
Finite-Lived Intangible Assets [Line Items]
Lease renewal								2 years

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Stockholders' Equity (Stock-Based Compensation Expenses Included In The Condensed Consolidated Statements Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	$ 3,465	$ 4,007	$ 3,897
Sales And Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	1,031	1,113	1,169
Research And Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	104	122	212
General And Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	$ 2,330	$ 2,772	$ 2,516

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Segment Information And Geographic Data

12 Months Ended

Dec. 31, 2014

Segment Information And Geographic Data [Abstract]

Segment Information And Geographic Data

Note 20 — Segment Information and Geographic Data

The Company reports segment information based on the internal reporting used by management for evaluating segment performance based on management’s estimates of the appropriate allocation of resources to segments.

The Company operates and manages its business primarily on a geographic basis. Accordingly, the Company determined its operating segments and reporting units, which are generally based on the nature and location of its customers, to be 1) China, and 2) Rest of the World, including the US and Hong Kong.

The Company evaluates the performance of its operating segments based on revenues and operating income (loss). Revenues for geographic segments are generally based on the location of customers. Operating income (loss) for each segment includes revenues, related cost of sales and operating expenses directly attributable to the segment. Operating income (loss) for each segment excludes non-operating income and expense.

Summary information by operating segments is as follows (in thousands):

	For the Year Ended December 31,
	2014			2013			2012
Revenue:
China	$	130,311		$	122,616		$	152,227
Rest of the World (including the US and Hong Kong)		4,479			4,442			4,042
Total net revenues	$	134,790		$	127,058		$	156,269
Income (loss) from operations:
China	$	35,630	(1)	$	30,557	(2)	$	4,216	(5)
Rest of the World (including the US and Hong Kong)		(9,646)			(20,128)	(3)		2,194	(6)
Total income from operations	$	25,984		$	10,429		$	6,410
Non-operating income (expense):
China	$	412		$	233		$	(122)
Rest of the World (including the US and Hong Kong)		(19)			2,544	(4)		(16)
Total non-operating income (expense)	$	393		$	2,777		$	(138)
Income (loss) before provision (benefit) for income tax:
China	$	36,042		$	30,790		$	4,094
Rest of the World (including the US and Hong Kong)		(9,665)			(17,584)			2,178
Total income before provision (benefit) for income tax	$	26,377		$	13,206		$	6,272

(1) Operating income for the China segment for the year ended December 31, 2014 includes upfront payments totaling $11.0 million related to the Company’s licensing arrangements.

(2) Operating income for the China segment for the year ended December 31, 2013 includes upfront payments totaling $5.0 million related to the Company’s licensing arrangements and $1.2 million in restructuring charges related to the non-renewal of the Company’s promotional agreements with Sanofi.

(3) Operating loss for the Rest of the World segment includes$2.0 million of expense that the Company recorded for the year ended December 31, 2013 to reflect the Company’s estimate of a probable loss incurred related to potential penalties, fines and/or other remedies related to the SEC and DOJ ongoing investigations.

(4) Non-operating income (expense) for the Rest of the World segment for the year ended December 31, 2013 includes the escrow settlement of $2.6 million recorded to other income.

(5) The operating income for the China segment for the year ended December 31, 2012, includes the $42.7 million impairment charge for intangible assets.

(6) Operating income (loss) for the Rest of the World segment includes the change in the fair value of the contingent consideration in 2012.

Long-lived assets as of December 31, 2014 by operating segment are as follows (in thousands):

China	$	41,092
Rest of the World (including the US and Hong Kong)		542
Total long-lived assets	$	41,634

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401k Plan (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
401k Plan [Abstract]
Company 401k match, percentage	50.00%
Company contributions	$ 0.1	$ 0.2	$ 0.2

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Commitments (Tables)

12 Months Ended

Dec. 31, 2014

Commitments [Abstract]

Schedule Of Future Minimum Lease Payments And Sublease Rental Income Under Non-Canceable Operating Lease Agreements

	Minimum Lease
Year ended:	Payments
2015	$	2,290
2016		1,931
2017		1,629
2018		619
2019		—
	$	6,469

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Restructuring Charges

12 Months Ended

Dec. 31, 2014

Restructuring Charges [Abstract]

Restructuring Charges

Note 13 — Restructuring Charges

In December 2013, the Company announced a plan to significantly reduce its workforce by approximately 175 employees, from approximately 650 full-time employees, primarily in sales and marketing that were included in the Company's China segment. The restructuring was decided as a result of the non-renewal of the Company’s distribution agreement with Sanofi as of December 31, 2013. The decision resulted in severance-related charges of approximately $1.2 million recognized to restructuring expense in the consolidated statement of income for the year ended December 31, 2013. As of December 31, 2014, the Company had paid all but an insignificant portion of the restructuring related charges.

In March 2012, the Company implemented a reduction in its workforce of 11 full-time employees, primarily in research and development that were included in the Company’s Rest of the World (including the US and Hong Kong) segment. The restructuring followed the discontinuation of the Company’s SCV-07 phase 2b clinical trial. The reduction in workforce resulted in severance-related charges of approximately $1.1 million recognized to restructuring expense in the consolidated statement of income for the year ended December 31, 2012. As of December 31, 2013, the Company had completed its SCV-07 restructuring activities.