10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2013

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)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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  x    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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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.

Large accelerated filer	¨	Accelerated filer	x
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  x

As of August 7, 2013, 54,315,966 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.

SCICLONE PHARMACEUTICALS, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2013

INDEX

		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012		3
	Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2013 and 2012		4
	Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2013 and 2012		5
	Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2013 and 2012		6
	Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.	Controls and Procedures		28
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 3.	Defaults Upon Senior Securities		51
Item 4.	Mine Safety Disclosures		51
Item 5.	Other Information		51
Item 6.	Exhibits		52
Signature			53

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

SCICLONE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 31, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	93,305		$	84,228
Accounts receivable, net of allowance of $1,160 and $1,169 as of March 31, 2013 and December 31, 2012, respectively		27,826			38,109
Inventories		7,680			10,424
Restricted cash and investments		2,747			2,759
Prepaid expenses and other current assets		1,996			1,809
Total current assets		133,554			137,329
Property and equipment, net		1,218			1,377
Deferred tax assets		369			369
Goodwill		34,478			34,313
Other assets		623			683
Total assets	$	170,242		$	174,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,284		$	7,787
Accrued and other current liabilities		19,623			21,427
Deferred tax liabilities		153			153
Short-term borrowings on loan facility		2,012			1,445
Total current liabilities		24,072			30,812
Other long-term liabilities		132			237
Commitments and contingencies
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; 54,030,646 and 54,484,053 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively		54			54
Additional paid-in capital		275,531			274,387
Accumulated other comprehensive income		3,156			2,988
Accumulated deficit		(132,703	)		(134,407	)
Total stockholders’ equity		146,038			143,022
Total liabilities and stockholders’ equity	$	170,242		$	174,071

See accompanying notes to unaudited condensed consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Three Months Ended March 31,
	2013			2012
Net revenues:
Product sales, net	$	20,533		$	33,163
Promotion services		9,273			7,905
Total net revenues		29,806			41,068
Operating expenses:
Cost of product sales		4,618			5,532
Sales and marketing		11,199			17,640
Amortization of acquired intangible assets, related to sales and marketing		—			884
Research and development		365			3,393
General and administrative		8,600			3,961
Contingent consideration (Note 3)		—			(916	)
Total operating expenses		24,782			30,494
Income from operations		5,024			10,574
Non-operating income (expense):
Interest and investment income		19			30
Interest and investment expense		(37	)		(55	)
Other expense, net		(16	)		(1	)
Income before provision for income tax		4,990			10,548
Provision for income tax		787			883
Net income	$	4,203		$	9,665
Basic net income per share	$	0.08		$	0.17
Diluted net income per share	$	0.08		$	0.16

See accompanying notes to unaudited condensed consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended March 31,
	2013			2012
Net income	$	4,203		$	9,665
Other comprehensive income:
Net change in unrealized gain (loss) and foreign currency translation on foreign currency denominated available-for-sale securities		(10	)		20
Foreign currency translation		178			254
Total other comprehensive income		168			274
Total comprehensive income	$	4,371		$	9,939

See accompanying notes to unaudited condensed consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended March 31,
	2013			2012
Operating activities:
Net income	$	4,203		$	9,665
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash expense related to stock-based compensation		1,019			922
Depreciation and amortization		202			1,046
Change in fair value of contingent consideration		—			(916	)
Deferred income taxes		—			280
Other long-term liabilities		(105	)		(70	)
Changes in operating assets and liabilities:
Accounts receivable, net		10,283			(1,735	)
Inventories		2,766			910
Prepaid expenses and other assets		(126	)		328
Accounts payable		(5,503	)		(2,362	)
Accrued and other current liabilities		(1,808	)		1,185
Net cash provided by operating activities		10,931			9,253
Investing activities:
Purchases of property and equipment		(41	)		(754	)
Net cash used in investing activities		(41	)		(754	)
Financing activities:
Repurchase of common stock		(2,500	)		(1,118	)
Borrowing on short-term loan		567			—
Proceeds from issuances of common stock		104			408
Net cash used in financing activities		(1,829	)		(710	)
Effect of exchange rate changes on cash and cash equivalents		16			28
Net increase in cash and cash equivalents		9,077			7,817
Cash and cash equivalents, beginning of period		84,228			66,654
Cash and cash equivalents, end of period	$	93,305		$	74,471

See accompanying notes to unaudited condensed consolidated financial statements.

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SCICLONE PHARMACEUTICALS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”) have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistent with those applied in, and should be read in conjunction with, the audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”). The Company prepared the unaudited condensed consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other information that are normally required by GAAP can be condensed or omitted.

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

The interim financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited condensed consolidated balance sheet data as of December 31, 2012 is derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

Customer Concentration

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 Lingyun Biopharmaceutical (Shanghai) 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. 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 partners. These importing agents, distributors and partners are the Company’s customers.

For the three months ended March 31, 2013 and 2012, revenues from two customers in China accounted for 90% and 89%, respectively, of the Company’s revenues. No other customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2013 or 2012. The Company’s two largest customers were the same for both periods. As of March 31, 2013, approximately $26.4 million, or 91%, of the Company’s accounts receivable were attributable to three customers in China. The Company generally does not require collateral from its customers.

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Accounts Receivable

Receivable Reserve. The Company records a receivable reserve based upon 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. As of March 31, 2013, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable of $4.1 million related to two customers who are related parties to each other. As of December 31, 2012, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable from one customer of $3.5 million. The receivable reserve reflects the Company’s best estimate of the ultimate collection, though actual collections may vary and the Company continues to pursue the full amount of the accounts receivables.

Reserve for Product Returns. The Company maintains a reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired product 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 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 March 31, 2013 and December 31, 2012, the Company had estimated a product returns reserve of $0.1 million on its consolidated balance sheets related to oncology products and Aggrastat product sales.

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 products, from the date of the acquisition of the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed”) in April of 2011 into 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 upon receipt of cash from the distributor. The Company amended the agreement on October 21, 2012, 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 upon 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.

8

Promotion Services Revenue. The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in the 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 is required to return or refund a portion of promotion services fees received during interim periods from pharmaceutical customers if defined annual sales targets are not achieved. Under the Company’s agreements with these customers, if the agreement is terminated, and provided such targets have been met on a “pro rata” basis at the date of contract termination, the Company is entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets have been met on a “pro rata” basis at any interim date, the Company has 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 amount of revenue recognized during the three-month period ended March 31, 2013 under this method that is potentially subject to refund is $2.2 million. If the Company achieves the defined annual sales targets, these amounts will not be refunded.

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. For the three month period ended March 31, 2013, the Company has not recorded any write-downs related to inventory.

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, restricted stock units (“RSUs”) 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 (in thousands, except per share amounts):

	Three Months Ended March 31,
	2013		2012
Numerator:
Net income	$	4,203	$	9,665
Denominator:
Weighted-average shares outstanding used to compute basic net income per share		54,084		57,701
Effect of dilutive securities		1,388		1,990
Weighted-average shares outstanding used to compute diluted net income per share		55,472		59,691
Basic net income per share	$	0.08	$	0.17
Diluted net income per share	$	0.08	$	0.16

For the three months ended March 31, 2013 and 2012, outstanding stock options and RSUs for 2,856,805 and 2,882,181 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise of these options and RSUs calculated under the treasury stock method would have been anti-dilutive. In addition, for the three months ended March 31, 2013 and 2012, shares subject to market or performance conditions of 12,500 and 71,703, respectively, were excluded from the calculation of diluted net income per share because the performance or market criteria had not been met.

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2. Available-for-Sale Investments

The following is a summary of available-for-sale investments as of (in thousands):

	March 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses for More Than 12 Months			Estimated Fair Value
Certificate of deposit	$	75	$	—	$	—		$	75
Money market funds		50,506		—		—			50,506
Restricted Italian state bonds maturing in 2013		451		—		(78	)		373
Total available-for-sale investments	$	51,032	$	—	$	(78	)	$	50,954
	December 31, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses for More Than 12 Months			Estimated Fair Value
Certificate of deposit	$	75	$	—	$	—		$	75
Money market funds		43,505		—		—			43,505
Restricted Italian state bonds maturing in 2013		451		—		(67	)		384
Total available-for-sale investments	$	44,031	$	—	$	(67	)	$	43,964

The cost of securities sold is based on the specific identification method.

The Company’s restricted Italian state bonds secure its Italian value added tax filing arrangements. The unrealized losses on the bonds mainly relate to loss on foreign currency translation. The Company has concluded that it has the ability and is more likely than not that it will hold its restricted Italian state bond investments until maturity or recovery of its cost basis.

The Company’s money market funds include $2.3 million of cash in a restricted account to secure a letter of credit associated with its loan agreement with Shanghai Pudong Development Bank Co. Ltd. Refer also to Note 5 for further information regarding the Company’s loan agreement.

3. Fair Value Measurements

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.

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The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements as of March 31, 2013 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		50,506		—		—		50,506
Restricted Italian state bonds		373		—		—		373
Total	$	50,879	$	75	$	—	$	50,954
	Fair Value Measurements as of December 31, 2012 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2012
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		43,505		—		—		43,505
Restricted Italian state bonds		384		—		—		384
Total	$	43,889	$	75	$	—	$	43,964

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 payments upon the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn-out” or “contingent consideration”). Under the Agreement, the earn-out was based upon certain financial performance metrics, including a revenue-based formula and an adjusted EBITDA (earnings before interest, depreciation and taxes) based formula. The earn-out provisions provided that: (i) if cumulative revenue in China for legacy NovaMed products for the two fiscal years ended December 31, 2012 exceeded $94.2 million, a cash payment ranging from $0 to $11.5 million would be paid, with the full amount payable if such revenue was $117.8 million or more; and (ii) if adjusted EBITDA for the two year period ending December 31, 2012 exceeded $91.8 million, a cash payment from $17.2 million to $21.5 million would have been paid with the full amount payable if such adjusted EBITDA was $137.8 million or more. Adjusted EBITDA was defined in the Agreement to exclude certain expenses which were not generally related to operating results in China, including SciClone’s US research and development expense, certain share-based compensation, license fees paid by SciClone for new products, certain legal and advisory fees related to the Agreement or to change-in-control transactions, and certain fees and expenses, including legal fees and governmental fines or settlements paid with respect to the pending formal, non-public investigation being conducted by the SEC.

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 (a total maximum contingent cash consideration of $43.0 million) or reduced by $10.0 million, depending upon whether the Company was able to achieve targets relating to the renewal of the Depakine services agreement with Sanofi. The earn-out payments would have been due 20 business days after completion of the Company’s audit for the fiscal year ended December 31, 2012. The earn-out provisions were subject to various limitations and conditions specified in the Agreement.

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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. The estimated fair value of the contingent consideration was subject to fluctuations as a result of adjustments to certain performance metric projections used to estimate the fair value. As of March 31, 2012, the Company estimated the fair value of the contingent consideration to be $14.5 million, resulting in a non-cash gain of $0.9 million for the three-month period ended March 31, 2012. The significant unobservable inputs used in the fair value measurement of the contingent consideration were revenue volatility of 40%; revenue discount rate of 20%, risk free rate of 0.19%; earn-out discount rate, including counterparty risk of 5%; estimates of projected revenues and earnings before taxes; and other assumptions regarding customer conditions, and probability of change of control and employment termination considerations. Significant changes in the estimated revenues, earnings before taxes; customer conditions, and revenue volatility would have resulted in changes in the fair value measurement. Generally, a change in the assumptions used for the revenue discount rate was accompanied by a change in the fair value of the contingent consideration.

The following represented the change in the estimated fair value of the contingent consideration (in thousands):

	Three Months Ended March 31,
	2013		2012
Contingent Consideration:
Balance at beginning of period	$	—	$	15,400
Change in the estimated fair value of the contingent consideration liability		—		(916	)
Balance at end of period	$	—	$	14,484

4. Inventories

Inventories consisted of the following (in thousands):

	March 31,		December 31,
	2013		2012
Raw materials	$	3,039	$	3,184
Work in progress		1,698		904
Finished goods		2,943		6,336
	$	7,680	$	10,424

Included in the Company’s inventory as of March 31, 2013 and December 31, 2012, was $1.1 million and $2.3 million, respectively, in inventory held at distributors related to products sold by its NovaMed subsidiary.

5. Loan Agreement

In August 2012, the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd., entered into a loan agreement with Shanghai Pudong Development Bank Co. Ltd. for 12.5 million renminbi (approximately $2.0 million). As of March 31, 2013, 12.5 million renminbi ($2.0 million) in borrowings were outstanding on the loan. The loan is secured by a $2.3 million letter of credit. The Company is required to maintain $2.3 million of cash in a restricted bank account to secure the letter of credit. The loan bears interest on borrowed funds at 7.5% and expires on August 29, 2013. Any amounts borrowed must be repaid by the expiration date.

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6. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	March 31,		December 31,
	2013		2012
Accrued sales and marketing expenses	$	5,426	$	9,051
Accrued taxes, tax reserves and interest		5,810		4,410
Accrued compensation and benefits		1,745		3,232
Accrued professional fees		3,945		1,570
Other		2,697		3,164
	$	19,623	$	21,427

7. Stockholders’ Equity

Stock-based Compensation

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

	Three Months Ended March 31,
	2013		2012
Sales and marketing	$	246	$	276
Research and development		9		90
General and administrative		764		556
	$	1,019	$	922

Stock Options

During the three months ended March 31, 2013, the Company granted options to purchase a total of 50,000 shares of common stock and options to purchase 44,731 shares of common stock were exercised. As of March 31, 2013, there was approximately $4.2 million of unrecognized compensation expense cost, net of forfeitures, related to non-vested stock options, which is expected to be recognized over a weighted average remaining period of approximately 2.33 years.

The Company has granted a performance-based option for 12,500 shares 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 option will fully vest upon 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 grant date fair value per share of the performance-based awards has been calculated using the Black-Scholes option pricing model using the following assumptions: expected term of 5.22 years, volatility factor of 63.66%, and risk free interest rate of 0.96%. 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 the three-month period ended March 31, 2013 and 2012, the Company recognized $0 and $26,000, respectively, of expense related to performance-based options.

RSUs

During the three months ended March 31, 2013, no RSUs were granted and no RSUs vested. As of March 31, 2013, there was approximately $0.8 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 1.17 years.

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Repurchase of Common Stock

In May and November 2012, the Company’s Board of Directors approved an increase of approximately $10.5 million and $10.0 million, respectively, to the $20 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $40.5 million. The Company repurchased and retired 502,400 shares at a cost of $2.5 million during the three-month period ended March 31, 2013. As of March 31, 2013, $9.9 million of the $40.5 million share repurchase program authorized by the Board of Directors was available for future share repurchases. Repurchased shares have been retired and constitute authorized but unissued shares.

8. Other Corporate Matters

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. The subpoena requests documents relating to a range of matters 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 will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations.

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. 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.

The Company received a further subpoena from the SEC in the fourth quarter of fiscal 2012 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 certain sales and marketing expenses.

The Company cannot predict what the outcome of those investigations will be, or the timing of any resolution. However, due to the significant uncertainty as to the outcome of the investigation, the Company is unable to reasonably estimate the loss or range of loss that may be incurred. As of March 31, 2013, the Company has therefore not accrued a liability for the contingent loss related to the FCPA investigation. Any fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could materially impact the Company’s financial statements. The Company will continue to reassess the potential liability related to the investigations and adjust its estimates accordingly in future periods.

NovaMed is a party to a Distribution and Supply Agreement with MEDA Pharma GmbH & Co. KG (“MEDA”). Following the Company’s acquisition of NovaMed, NovaMed continued to perform this agreement; however, 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 and MEDA were in negotiations since the acquisition regarding potential amendments to the agreement that would resolve the disagreement. However no resolution was reached. MEDA notified NovaMed that the termination was effective as of May 2011, however as provided in the agreement, disputes, including disputes regarding termination must be resolved in binding arbitration. The Company does not expect any significant revenues from this agreement until 2014. NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On October 10, 2012, MEDA filed an initial response and counterclaim with CIETAC claiming MEDA’s termination was valid and demanding the transfer of certain information and rights, as well as demanding the award of damages, including attorneys’ fees in an unspecified amount. On April 16, 2013, MEDA filed a further response stating their claims and facts in support of their initial response and counterclaim. A hearing on the merits of the matter is scheduled to be held before the CIETAC arbitration panel from August 20 through August 22, 2013 in Shanghai.

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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, 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’s management believes that the claims lack merit and will vigorously defend against them.

9. 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 and reporting segments, 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 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. Operating loss for the Rest of the World segment includes the change in the fair value of the contingent consideration and all research and development expense for the Company’s SCV-07 trial, which was discontinued in the first quarter of 2012.

Summary information by operating segment for the three-month periods ended March 31, 2013 and 2012 is as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Revenue:
China	$	28,810		$	40,373
Rest of the World (including the US and Hong Kong)		996			695
Total net revenues	$	29,806		$	41,068
Income (loss) from operations:
China	$	10,951		$	14,242
Rest of the World (including the US and Hong Kong)		(5,927	)		(3,668	)
Total income from operations	$	5,024		$	10,574
Non-operating income (expense):
China	$	(26	)	$	(31	)
Rest of the World (including the US and Hong Kong)		(8	)		5
Total non-operating expense	$	(34	)	$	(26	)
Income (loss) before provision for income tax:
China	$	10,925		$	14,211
Rest of the World (including the US and Hong Kong)		(5,935	)		(3,663	)
Total income before provision for income tax	$	4,990		$	10,548

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Long-lived assets as of March 31, 2013 by operating segment are as follows (in thousands):

China	$	35,590
Rest of the World (including the US and Hong Kong)		729
	$	36,319

10. Subsequent Events

Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”). On May 13, 2013, the Company, through a designated affiliate, entered into a binding term sheet with Zensun for the exclusive promotion, marketing, distribution and sale of Neucardin^TM in China, Hong Kong and Macau. 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 the China Food and Drug Administration (“CFDA”) in 2012. The Zensun agreement provides for the principal terms of the arrangement. The Company is now negotiating 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 upon 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 of $25 million if approval is received for the use of Neucardin™ in additional indications. In addition, the Company has agreed, subject to the entry into mutually acceptable definitive agreements and the satisfaction of certain conditions, to provide a collateralized loan to Zensun of up to approximately $12 million. Zensun is required to refund and return the upfront payment it receives from the Company if Zensun terminates the agreement for failure of the Company to fund all or some of the loan to Zensun. 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.

Taiwan Liposome Company (“TLC”). On June 2013, the Company entered into an agreement with TLC granting the Company a license and the exclusive rights in China, Hong Kong and Macau 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 manufacturing and supply of ProFlow, and the Company will be responsible for all aspects of commercialization including pre-and post-launch activities. ProFlow has been submitted to the CFDA for approval, and it is expected that some additional clinical testing may be required prior to approval. Financial terms of the agreement include clinical regulatory milestone payments up and sales milestone payments up to an aggregate of $39.5 million. The agreement provides for the principal terms of the arrangement between SciClone and TLC, and the companies have agreed to negotiate a supplemental license and supply agreement.

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 our acquisition of NovaMed. As a result of the Company’s claim, approximately $1.4 million in cash held in escrow and 622,363 shares of the Company’s common stock 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 will retain 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. The Company intends to cancel and retire the shares.

Chief Financial Officer. On July 15, 2013, the Company announced the appointment of Wilson W. Cheung as Chief Financial Officer and Senior Vice President, Finance.

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Share Repurchase Program. In August 2013, the Company’s Board of Directors approved an increase of $10.0 million to the existing $40.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to $50.5 million. In addition, the Board of Directors approved extending the repurchase program through December 31, 2014. As of August 7, 2013, $19.9 million of the total $50.5 million was available for share repurchase.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on our current expectations, estimates and projections about our business, industry, management’s beliefs and certain assumptions made by us. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe” or similar expressions are intended to identify forward-looking statements including those statements we make regarding our future financial results; anticipated product sales 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 Quarterly Report on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is a revenue-generating, United States (“US”)-based, China-focused, specialty pharmaceutical company with a substantial commercial business and a product portfolio of therapies for oncology, infectious diseases, cardiovascular, urological, respiratory and central nervous system 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 profitability 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, and products from Pfizer Inc. (“Pfizer”) and Correvio LLC. ZADAXIN has the highest margins in our portfolio as it is a premium proprietary product sold exclusively by SciClone. Aggrastat^®, an intervention cardiology product launched in China in 2009, is an in-licensed product with higher margins than the products we promote under services agreements and we anticipate revenues from this product will grow significantly as it further penetrates the China market. 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 Sanofi Aventis S.A. (“Sanofi”) and 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, such as the anti-epileptic drug Depakine^®, the hypnotic Stilnox^® (marketed as Ambien^® in the US) and the ACE inhibitor Tritace^®. 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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In January 2013, our promotion agreement with Sanofi was renewed until December 31, 2013 under the same terms as previously negotiated. Revenues for 2011 and 2012 related to our agreement with Sanofi were approximately $19.7 million and $30.8 million, respectively. We are actively negotiating the further renewal or extension of this agreement. In June 2013, we renewed our promotion agreement with Baxter for a 5 year term, through December 2017. Our other significant promotion agreement with Pfizer International Trading (Shanghai) Ltd. (“Pfizer”) will be expiring August 31, 2013 unless renewed, extended or renegotiated. Revenues for 2011 and 2012 related to our agreement with Pfizer were approximately $5.5 million and $8.8 million, respectively. We are actively negotiating the renewal or extension of this agreement. 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. As part of this process, we have recently discontinued promotion of our oncology products, Adriamycin and Daunoblastina for Pfizer, and Perenan, a primary care product for Sanofi. Revenues related to these products were approximately $2.7 million and $1.5 million in 2011 and 2012, respectively. 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.

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 3 with over 500 beds) as well as mid-size hospitals (class 2). 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 that are in more rural areas. We are also seeking to expand the indications for which ZADAXIN could be used, including sepsis.

We are also pursuing the registration of several other therapeutic products in China. These include: DC Bead^®, an embolic acting bead with drug loading capabilities that can be used for targeted delivery of cancer chemotherapy drugs directly to the tumor; Loramyc^®, a mucoadhesive tablet formulation of miconazole lauriad to treat oropharyngeal candidiasis; Rapinyl^®, a sublingual tablet formulation of fentanyl to treat breakthrough cancer pain; and RapidFilm^®, an oral film formulation of ondansetron to treat nausea induced by chemotherapy.

We continue to seek in-licensing arrangements for approved or late-stage branded, well-differentiated products which if not yet approved, have a clear regulatory approval pathway in China based on existing regulatory approval outside of 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 May 2013, we entered into a binding term sheet with Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”) for the exclusive promotion, marketing, distribution and sale of Neucardin^TM in China, Hong Kong and Macau. 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.

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 Macau 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. ProFlow has been submitted to CFDA for approval, and it is expected that some additional clinical testing may be required prior to approval. The agreement provides for the principal terms of the arrangement between SciClone and TLC, and the companies have agreed to negotiate a supplemental license and supply agreement.

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We believe that these licensing agreements for Neucardin and ProFlow provide us the opportunity to use our considerable sales and marketing expertise to expand our product portfolio with differentiated, high quality products that have significant therapeutic advantages and near-term commercial potential, and that can contribute to our long-term growth.

ZADAXIN Inventories and Sales

ZADAXIN revenues for the first quarter of 2013 were within our operating plan, but were lower compared to the same period in 2012.

During the third quarter of 2012 and particularly in September 2012, we estimate that there was a substantial increase in ZADAXIN channel inventory levels and we believe that sales to our customers, importers and distributors, exceeded the pace at which they were able to sell ZADAXIN through to hospital pharmacies and other parties, resulting in lower commercial sales to our importer in the fourth quarter of 2012 and first quarter of 2013. As anticipated, as a result of reduced sales to our importer, and of continued demand for ZADAXIN in the market, we believe ZADAXIN channel inventory levels decreased in the fourth quarter of 2012 and the first quarter of 2013. We have made significant organizational and management enhancements designed to improve our sales and marketing performance going forward, including the hiring of an experienced Chief Executive Officer for China Operations. We continue to believe that we will grow hospital demand for ZADAXIN in the future through increased penetration in the market. We believe ZADAXIN revenues for the second half of 2013 will increase by approximately 50% compared to the first half of 2013, although we anticipate ZADAXIN revenues for the full year 2013 will be lower than ZADAXIN revenues for 2012.

Other Matters

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”). 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. The Special Committee substantially concluded its original investigation, and on May 4 and 5, 2011 reported its findings and recommendations to the Board of Directors. The Special Committee has also reported findings to the SEC and DOJ. The SEC’s and DOJ’s formal investigations are continuing and the Company is continuing to cooperate with those investigations, including undertaking a review or investigation of additional matters, primarily related to our NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed”) operations and certain sales and marketing expenses.

In our Form 10-Q for the period ended September 30, 2012, filed with the SEC on November 9, 2012, we 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 was concluded to represent a material weakness in internal control over financial reporting. Following our disclosure of these items, we received a subpoena from the SEC requesting documents related to these and various other matters regarding the NovaMed acquisition and our 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, our 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, including certain sales and marketing expenses.

We are unable to predict what consequences any investigation by any regulatory agency or the Special Committee or the 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 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 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. If we are subject to adverse findings resulting from the SEC and DOJ investigations, or from our own independent investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. In addition, we will incur additional 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 management and financial resources which could otherwise be devoted to the operation of our business. We cannot predict what the outcome of those investigations will be, or the timing of any resolution.

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On February 22, 2013, we announced that our reported financial results for each of the second and third quarters of 2011, the year ended December 31, 2011, and the first three quarters of fiscal 2012 could not be relied upon and that we would restate them. Subsequently, we received a purported derivative litigation naming certain of our officers and directors as defendants. Our management believes the claims lack merit and will vigorously defend against them.

Refer to Part I, Item 1 “Notes to Unaudited Condensed Consolidated Financial Statements” Note 8 “Other Corporate Matters” and Part II, Item 1 “Legal Proceedings” in this Form 10-Q for further information regarding the investigation and remedial measures, and related litigation.

We believe our cash, cash equivalents, and investments as of March 31, 2013 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 period over period changes in our product sales and promotion services (in thousands):

	Three Months Ended March 31,
	2013		2012		Change
Product Sales	$	20,533	$	33,163		-38	%
Promotion Services		9,273		7,905		17	%
Total Net Revenues	$	29,806	$	41,068		-27	%

Product sales were $20.5 million for the three-month period ended March 31, 2013, compared to $33.2 million for the corresponding period in 2012, a decrease of $12.6 million, or 38%, for the three-months ended March 31, 2013, compared to the same period in the prior year. ZADAXIN sales were $19.0 million for the three-month period ended March 31, 2013, compared to $29.7 million for the corresponding period of 2012, a decrease of $10.7 million. The decrease in ZADAXIN revenue for the three-month period ended March 31, 2013, compared to same period in the prior year was substantially all attributable to a decrease in unit sales. The additional decrease of $1.9 million related to oncology and Aggrastat product sales.

During the third quarter of 2012 and particularly in September 2012, we estimate 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 ZADAXIN to other parties, primarily hospital pharmacies. As anticipated, as a result of reduced sales to our importer, and of continued demand for ZADAXIN in the market, we believe ZADAXIN channel inventory levels decreased in the fourth quarter of 2012 and the first quarter of 2013. We have made significant organizational and management enhancements designed to improve our sales and marketing performance going forward, including the hiring of an experienced Chief Executive Officer for China Operations. We continue to believe that we will grow hospital demand for ZADAXIN in the future through increased penetration in the market. We believe ZADAXIN sales for the second half of 2013 will increase approximately 50% compared to the first half of 2013, although we anticipate ZADAXIN revenues for the full year 2013 will be lower than ZADAXIN revenues for 2012.

Promotion services revenue was $9.3 million, for the three-month period ended March 31, 2013, compared to $7.9 million for the corresponding period in 2012, and related to the distribution of products under promotional contracts. The $1.4 million increase in promotion services revenue was primarily as a result of sales of Depakine product.

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Total China revenues were $28.8 million, or 97% of total revenues for the three-month period ended March 31, 2013, compared to $40.4 million, or 98% of total revenues for the corresponding period in 2012.

For the three-month period ended March 31, 2013, revenues from two customers in China accounted for approximately 29% and 61% of our revenues. For the three-month period ended March 31, 2012, revenues from two customers in China accounted for approximately 71% and 18% of our revenues. Our experience with our largest customers has been good and we anticipate that we will continue to sell a majority of our product to them.

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 Lingyun Biopharmaceutical (Shanghai) 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. 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. Our other product sales revenues result from the sale of the Company’s in-licensed products to importing agents. Our promotion services revenues result from fees received for exclusively promoting products for certain partners. These importing agents, distributors and partners are the Company’s customers. It takes approximately seven weeks for our China importation customer to clear a shipment of ZADAXIN through the importation process for sale in China. Our customers tend to purchase infrequent large orders of ZADAXIN inventory to facilitate the distribution and sale to Chinese hospital pharmacies. The timing of infrequent large orders may significantly affect the ZADAXIN channel inventory levels and may cause fluctuations to our reported sales and profitability for each quarterly period.

In January 2013, our promotion agreement with Sanofi was renewed until December 31, 2013 under the same terms as previously negotiated. Revenues for 2011 and 2012 related to our agreement with Sanofi were approximately $19.7 million and $30.8 million, respectively. We are actively negotiating the renewal or extension of this agreement. In June 2013, we renewed our promotion agreement with Baxter for a 5 year term, through December 2017. Our other significant promotion agreement with Pfizer will be expiring August 31, 2013 unless renewed, extended or renegotiated. Revenues for 2011 and 2012 related to our agreement with Pfizer were approximately $5.5 million and $8.8 million, respectively. We are actively negotiating the renewal or extension of this agreement. 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. As part of this process, we have recently discontinued promotion of our oncology products, Adriamycin and Daunoblastina for Pfizer, and the primary care product, Perenan, for Sanofi. Revenues related to these products were approximately $2.7 million and $1.5 million in 2011 and 2012, respectively. 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.

Cost of Product Sales:

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

	Three Months Ended March  31,
	2013		2012		Change
Cost of Product Sales	$	4,618	$	5,532		-17	%

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Cost of product sales was $4.6 million and $5.5 million for the three-month periods ended March 31, 2013 and 2012, respectively. A decrease of $0.4 million, or 10%, for the three-month periods ended March 31, 2013 compared to the same period in 2012 was attributable to a decrease in ZADAXIN cost of sales to $3.7 million for the three-month period ended March 31, 2013, compared to $4.1 million for the corresponding period in 2012, and related to a decrease in ZADAXIN unit sales. A decrease of $0.5 million in oncology and Aggrastat cost of sales related to a decrease in part to unit volumes and in part to unit price decreases for those products. Gross margin for ZADAXIN was 80.3% and 86.1% for the three months ended March 31, 2013 and 2012, respectively. The decrease in gross margin for ZADAXIN for the three-month period ended March 31, 2013, compared to the three-month period ended March 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, 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 upon 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 costs such as manufacturing process improvements for the goal of future cost reductions

Overall, we expect our gross margin percentages in 2013 to remain comparable to 2012, although they may fluctuate from quarter to quarter.

Sales and Marketing:

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

	Three Months Ended
	March 31,
	2013		2012		Change
Sales and Marketing	$	11,199	$	17,640		-37	%

Sales and marketing expenses for the three months ended March 31, 2013 decreased by $6.4 million, or 37%, compared to the same period in 2012. In 2013, we began expense-saving measures in our sales and marketing activities although the continued impact in the future is uncertain. We have also strategically reduced our sales force by over 100 salespersons compared to March 31, 2012. In addition, the Company held its annual sales conference during the three months ended March 31, 2012, with the expenses of the conference included in sales and marketing expenses for the three months ended March 31, 2012, whereas in 2013, the Company’s annual sales conference occurred in the second quarter of 2013.

We expect sales and marketing expenses for the year ending December 31, 2013 to be lower compared to those incurred for the year ended December 31, 2012.

Amortization and Impairment of Acquired Intangible Assets:

For the three-months ended March 31, 2012, we recognized $0.9 million in amortization of acquired intangible assets expense. 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 third quarter ended September 30, 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 in the third quarter of 2012. No further amortization expense will be recorded related to our NovaMed acquired intangible assets.

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Research and Development (“R&D”):

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

	Three Months Ended
	March 31,
	2013		2012		Change
Research and Development	$	365	$	3,393		-89	%

R&D expenses for the three months ended March 31, 2013 decreased by $3.0 million, or 89%, compared to the same period in 2012. On March 2, 2012, we announced the discontinuation of our SCV-07 phase 2b clinical trial for the delay to onset of severe OM based on the results of the pre-planned interim analysis that indicated that the trial would not meet the pre-specified efficacy endpoints. The decreases in R&D expenses for the three-month periods ended March 31, 2013, as compared to the same period in 2012, related primarily to the discontinuation of this trial.

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 expect our research and development expenses to increase in 2013, compared to 2012, related to our arrangements with Zensun and TLC which include $5.0 million in upfront fees recorded in the second quarter of 2013, and may include an additional milestone payment to TLC of $0.8 million upon clinical trial application approval which the Company anticipates may occur in the fourth quarter of 2013 or the first quarter of 2014, offset by decreases in research and development expenses as a result of the discontinuation of the SCV-07 phase 2b clinical trial. We continue to evaluate opportunities to in-license the marketing rights to proprietary products primarily in China, which may result in increased research and development expenses due to license fee payments, local registration clinical trials, or other expenses related to in-licensing and development of new products in the future.

General and Administrative:

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

	Three Months Ended
	March 31,
	2013		2012		Change
General and Administrative	$	8,600	$	3,961		117	%

General and administrative expenses for the three-month period ended March 31, 2013 increased by $4.6 million, or 117%, compared to the same period in 2012. The increases included higher professional expenses of approximately $2.1 million related to legal matters associated with the ongoing government investigation and our ongoing improvements to our FCPA compliance efforts, approximately $0.3 million related to legal matters associated with our MEDA Pharma GmbH & Co. KG (“MEDA”) arbitration and escrow claim on the NovaMed sellers; and approximately $0.9 million related to accounting matters associated with the restatement of our consolidated financial statements for the year ended December 31, 2011 and certain quarters of 2011 and 2012, as well as higher general and administrative personnel-related costs.

We expect our general and administrative expenses in 2013 to increase compared to 2012 as we anticipate higher legal and accounting costs in 2013. Our ongoing government investigations are unpredictable and we expect they will result in continuing 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 2013, however we anticipate an increase in legal and accounting expenses in 2013 compared to 2012 due primarily to our restatement and transition to new auditors. We continue to evaluate opportunities in China, which may result in increased general and administrative expenses in the future. See Part II, Item 1 “Legal Proceedings”.

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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 upon the successful achievement of revenue and earnings targets for the 2011 and 2012 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. 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 estimated fair value of the contingent consideration was subject to fluctuations as a result of adjustments to certain performance metric projections used to estimate the fair value that resulted in a gain of $0.9 million for the three-month period ended March 31, 2012. Our fair value estimates were based on a variety of factors that significantly fluctuated from period to period, including the likelihood that earn-out targets would be achieved and present value factors associated with the timing of the earn-out targets. The significant reduction in the valuation of the contingent consideration expense as of December 31, 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.

Provision for Income Tax:

The provision for income tax relates to our foreign operations in China. The provision for income tax was $0.8 million for the three-month period ended March 31, 2013, compared to $0.9 million of expense for the three-month period ended March 31, 2012. The tax expense decreased $0.1 million for the three-month period, compared to the same period in 2012, as a result of lower tax expense recorded related to an uncertain tax position in China. Our statutory tax rate in China was 25% in 2012 and 2013. We expect the provision for income tax to increase for the year ending December 31, 2013, compared to the year ended December 31, 2012, as we do not expect the tax benefits we recorded during 2012 related to the reversal of deferred tax liabilities, due to the impairment loss recorded on our intangible assets in 2012, to recur in 2013.

Subsequent Event:

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 will retain 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 anticipate our results will be positively impacted by approximately $2.6 million in the third quarter of 2013 related to this settlement.

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, short-term investments and our short-term loan arrangement 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, to pay down our short-term borrowing arrangements, 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		As of
	March 31, 2013		December 31, 2012
Cash, cash equivalents and investments	$	96,052	$	86,987

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As of March 31, 2013, we had $96.1 million in cash, cash equivalents and investments of which $76.1 million was located in subsidiaries of the Company outside the US. Cash and cash equivalents held by subsidiaries outside the US is 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. We historically have considered undistributed earnings of our foreign subsidiaries to be indefinitely reinvested outside of the US, and accordingly, no US taxes have been provided thereon. We currently intend to continue to indefinitely reinvest the undistributed earnings of our foreign subsidiaries outside of the US. Based on our current operating plan for the next 12 months, we do not anticipate the repatriation of cash and cash equivalents held by foreign subsidiaries, if any, would result in payment of US Federal taxes.

	Three Months Ended
	March 31,
	2013			2012
Cash provided by (used in):
Operating activities	$	10,931		$	9,253
Investing activities	$	(41	)	$	(754	)
Financing activities	$	(1,829	)	$	(710	)

Net cash provided by operating activities was $10.9 million for the three months ended March 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, and changes in operating assets and liabilities. Such changes included a $10.3 million increase in cash received from customers for accounts receivable. In addition, accounts receivable decreased as of March 31, 2013 compared to December 31, 2012 related to lower first quarter 2013 sales. As of April 30, 2013, we have accounts receivable totaling approximately $4.1 million which are substantially delinquent and which we are actively trying to collect, and for which we have recorded a reserve of $1.0 million. The customers have a binding obligation to pay us, but we may have to pursue legal remedies, and 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. Inventory also decreased $2.8 million in the 2013 period, related to a planned reduction in inventory levels associated with the renewal of our ZADAXIN China import license. The changes also included a $5.5 million and $1.8 million decrease in accounts payable and accrued expenses, respectively, mainly related to payments for goods sold, manufacturing costs, legal and professional expenses, and clinical trial services.

Net cash provided by operating activities was $9.3 million for the three months ended March 31, 2012 and primarily reflected the net income for the period adjusted for non-cash items such as stock-based compensation expense, depreciation and amortization expense and changes in operating assets and liabilities.

Net cash used in investing activities was $41,000 and $0.8 million for the three months ended March 31, 2013 and 2012, respectively, and was related to the purchases of property and equipment.

Net cash used in financing activities was $1.8 million and $0.7 million for the three months ended March 31, 2013 and 2012, respectively. During the three months ended March 31, 2013 and 2012, we used $2.5 million and $1.1 million to repurchase and retire 502,400 and 253,480 shares of our common stock under our stock repurchase program, respectively. For the three months ended March 31, 2013 and 2012, we also received $0.1 million and $0.4 million of proceeds, respectively, from the issuances of common stock made under our stock award plans. For the three months ended March 31, 2013, our subsidiary borrowed $0.6 million under its loan agreement with Shanghai Pudong Development Bank Co. Ltd.

There have been no material changes in our future contractual obligations during the three months ended March 31, 2013 compared to the disclosure in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012.

On March 15, 2012, we filed a shelf registration with the SEC under which we may offer and sell up to $100.0 million of our securities, assuming we continue to meet the SEC’s eligibility requirements for primary offerings on Form S-3. Subsequently, affiliates of Sigma-Tau sold approximately 6.3 million shares for an aggregate price of approximately $33.1 million under this registration statement, and we have approximately $66.9 million available for future use.

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In May and November 2012, we announced that our Board of Directors approved increases of $10.5 million and $10.0 million, respectively, to the Company’s stock repurchase program bringing the total authorized since the program’s inception in October 2011 to $40.5 million. Under this program, we repurchased and retired 502,400 shares at a cost of $2.5 million during the three months ended March 31, 2013 bringing the total repurchases since the program’s inception to approximately 6.0 million shares at a cost of $30.8 million through March 31, 2013. Subsequent to March 31, 2013, our Board of Directors approved an increase of $10.0 million to the Company’s stock repurchase program, bringing the total authorized since the program’s inception in October 2011 to $50.5 million and the Board of Directors extended the program through December 31, 2014. 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.

In August 2012, our subsidiary, NovaMed, entered into a loan agreement with Shanghai Pudong Development Bank Co. Ltd to borrow up to 12.5 million renminbi (approximately $2.0 million as of March 31, 2013). As of March 31, 2013, there were 12.5 million renminbi ($2.0 million) in borrowings under the loan agreement. The loan agreement is secured by a $2.3 million letter of credit. We are required to maintain $2.3 million of cash in a restricted bank account to secure the letter of credit. The loan agreement bears interest on borrowed funds at 7.5% and expires on August 29, 2013. Any amounts borrowed must be repaid by the expiration date. We anticipate the full repayment of this loan by August 29, 2013, and we intend to enter into a new facility later this year.

In May 2013, as part of our binding term sheet with Zensun, we agreed to enter into a $12.0 million loan facility to Zensun. We anticipate finalization of the licensing agreement with Zensun in the next quarter and we anticipate the $12.0 million loan will be either partially or fully funded later this year.

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. We have no current commitments to offer and sell any securities that may be offered or sold pursuant to our registration statement. 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-balance sheet arrangements.

Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions in the preparation of our unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Our revenue recognition policy is as follows.

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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 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 upon receipt of cash from the distributor. We amended the agreement on October 21, 2012, 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 upon 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 contract, which marks the period when marketing and promotion services have been rendered, and the revenue recognition criteria are met. In certain arrangements, we are required to return or refund a portion of promotion services fees received during interim periods from pharmaceutical customers if defined annual sales targets are not achieved. Under our agreements with these customers, if the agreement is terminated, and provided such targets have been met on a “pro rata” basis at the date of contract termination, we are entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets have been met on a “pro rata” basis at any interim date, we 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 amount of revenue recognized during the three-month period ended March 31, 2013 under this method that is potentially subject to refund is $2.2 million. If we achieve the defined annual sales targets, these amounts will not be refunded.

For a discussion of the Company’s other significant accounting policies, please see our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. There have been no material changes in our critical accounting policies, estimates and judgments during the three months ended March 31, 2013 compared to the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk during the three months ended March 31, 2013 compared to the disclosure in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2012.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report due to a material weakness in our internal control over financial reporting, which is disclosed below.

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Changes in Internal Controls

During the year ended December 31, 2012, we identified deficiencies in the design and operating effectiveness of controls primarily associated with the timing of revenue recognition for our Pfizer products and product returns reserves related to our Aggrastat product line, the override of certain controls in the financial statement close process related to our NovaMed subsidiary, and the corporate monitoring thereof. We concluded that the aggregation of these deficiencies is a material weakness.

We discussed these matters with our independent registered public accounting firm and our Audit Committee. Further, with the oversight of management and our audit committee, we have implemented, and are continuing to monitor the effectiveness of, additional controls to address these deficiencies. In the fourth quarter of 2012, we implemented additional controls related to our revenue recognition and product return reserve processes to strengthen our controls. We also re-evaluated the operation of our controls at our NovaMed subsidiary and made adjustments to strengthen these controls, including the recent hiring of our Chief Financial Officer, China Operations who joined the Company in the third quarter of 2012. We terminated personnel who were involved in the override of certain controls in the financial statement close process at our NovaMed subsidiary that resulted in the material weakness. We also hired a Chief Executive Officer, China operations who began April 1, 2013. Our remediation activities are not complete and we continue to seek ways to strengthen the operation of our controls at our NovaMed subsidiary, and our corporate monitoring thereof, and we may need to continue effective operation of these controls for one or more quarters before we can conclude that the material weakness has been corrected.

There were no other changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations of the Effectiveness of Internal Controls

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. Because of inherent limitations in any control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. We are continuously seeking to improve the efficiency and effectiveness of our operations and of our internal controls. This results in refinements to processes throughout our organization.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The SEC and the DOJ are each conducting formal investigations of us regarding a range of matters including the possibility of violations of the 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, and (iv) hire a Vice President of Compliance and Internal Audit to monitor and enforce compliance with our policies.

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.

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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 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 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, and certain sales and marketing expenses.

We are unable to predict what consequences that 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. If we are subject to adverse findings resulting from the SEC and DOJ investigations, or from our own independent investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. In addition, we will incur additional 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 management, Board of Directors and financial resources which could otherwise be devoted to the operation of our business.

NovaMed is a party to a Distribution and Supply Agreement with MEDA. Following our acquisition of NovaMed, NovaMed continued to perform this agreement; however, 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 and MEDA were in negotiations since the acquisition regarding potential amendments to the agreement that would resolve the disagreement. However no resolution was reached. MEDA notified NovaMed that the termination was effective as of May 2011, however as provided in the agreement, disputes, including disputes regarding termination must be resolved in binding arbitration. We do not expect any significant revenues from this agreement until 2014. NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On October 10, 2012, MEDA filed an initial response and counterclaim with CIETAC claiming MEDA’s termination was valid and demanding the transfer of certain information and rights, as well as demanding the award of damages, including attorneys’ fees in an unspecified amount. On April 16, 2013, MEDA filed a further response stating their claims and facts in support of their initial response and counterclaim. A hearing on the merits of the matter is scheduled to be held before the CIETAC arbitration panel from August 20 through August 22, 2013 in Shanghai. NovaMed continues to perform its obligations under the agreement pending resolution of the dispute, and has notified MEDA that the dispute has been submitted to arbitration. We cannot predict the outcome of this matter at this time.

On October 16, 2012, we made a claim against the former stockholders of NovaMed pursuant to the acquisition agreement relating to our acquisition of NovaMed. As a result of our claim, approximately $1.4 million in cash held in escrow and 622,363 shares of our common stock held in escrow were not released to the former NovaMed stockholders pending the outcome of our claim. The claim related to damages we incurred as a result of various matters, including in particular the understatement of product return reserves for Aggrastat product in the balance sheet of NovaMed at 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 will retain approximately $0.8 million in cash and 342,300 shares of its common stock, representing 55% of the remaining cash and shares held in escrow.

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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 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. Our management believes that the claims lack merit and will vigorously defend against them.

Item 1A. Risk Factors

Consider these risks and uncertainties before investing in our common stock. We have marked with an asterisk (*) those risk factors below that reflect substantive changes from the risk factors included in our Annual Report on Form 10-K filed with the SEC on April 1, 2013.

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

Although we reported net income of $4.2 million and $9.7 million, for the three-months ended March 31, 2013 and 2012, respectively, we have experienced significant operating losses in the past, and as of March 31, 2013, we had an accumulated deficit of approximately $133 million. If our operating expenses were to increase or if we were not able to increase or sustain revenue, we may not achieve 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 litigations;

• 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 actions intended to reduce pharmaceutical prices such as including 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 licensing or acquisition-related expenses including up-front fees, milestone payments and, and periodic impairment charges that have and may result from the goodwill and intangible assets recorded in the acquisition;

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

• our ability to manage the risks associated with our acquisition of NovaMed;

• 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;

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• unanticipated increases in our G&A expense due to legal and accounting expenses, including expenses relating to the governmental investigations, our disputes 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; and

• broad financial market fluctuations in the US, Europe or Asia.

Our acquisition of NovaMed involves a number of risks. Although we believe we have substantially completed the integration, there are some challenges that still could affect us and we have not realized all the anticipated benefits of the acquisition. We may acquire other companies or products that present similar risks.

We believe we have substantially completed the integration of our NovaMed acquisition and the two companies’ operations and personnel and have begun to utilize common business, information and communication systems, operating procedures, financial controls and human resources practices. We have experienced a number of challenges in the process of integration which have had, and could have further adverse affects on our business. These challenges include:

• diversion of management’s attention from normal daily operations of the business which have and could continue to adversely affect ongoing operations, including matters relating to the restatement of our financial results and material weakness in our internal control over financial reporting identified in the third and fourth quarters of 2012;

• retaining key employees of both organizations, including recently announced executive departures and potential additional turnover;

• managing the acquisition and continuing operations in both organizations to successfully achieve the anticipated benefits of the acquisition;

• preserving important relationships of both SciClone and NovaMed, including NovaMed’s contractual relationships with pharmaceutical partners;

• costs and delays in implementing common systems and procedures;

• consolidating and rationalizing information technology and administrative infrastructures;

• the potential for further disputes or litigation related to the acquisition by us or by the former NovaMed stockholders, and the uncertainty as to the results of such dispute or any further dispute;

• the effectiveness of our efforts to improve the performance of NovaMed, including our effort to negotiate renewals of agreements with third parties and to improve the financial terms for agreements relating to promotional service revenues;

• implementing procedures, policies and processes related to FCPA compliance; and

• integrating and documenting processes and controls in conformance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 which were not applicable to NovaMed prior to the acquisition.

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

• 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 have been and will 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.

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Any one or all of these factors, many of which are outside of our control, may increase operating costs or lower anticipated financial performance following the NovaMed acquisition, or following any future acquisition. In addition, the combined company may lose customers, distributors, suppliers, manufacturers, partners and employees. Any diversion of management’s attention to address these factors and any difficulties associated with the acquisition of NovaMed, or of companies or products we may acquire in the future could have a material adverse effect on the operating results of the company and on the value of our common stock, and could result in our not achieving the anticipated synergies and benefits of the acquisition underlying the two companies’ reasons for the merger. Failure to achieve our objectives could have a material adverse effect on the business and operating results of the company.

During the year ended December 31, 2012, we determined that the carrying value of our intangible assets related to the promotion and distribution contract rights we acquired as part of the acquisition of NovaMed were no longer recoverable. As a result, we recognized a non-cash impairment loss of approximately $42.7 million, which adversely affected our financial results and could adversely affect the market value of our common stock. If the value of our goodwill asset becomes impaired, we may be required to incur further material impairment charges.

Our revenue will continue to be substantially dependent on our sale of ZADAXIN in China. The China government recently 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 sale of ZADAXIN in China. As a result of additional product sales resulting from the NovaMed acquisition in 2011, we expect that the percentage of our revenues that come from the sale of ZADAXIN in China will decline significantly. However, we anticipate that sales of ZADAXIN will continue to be a majority of our revenue for at least the next two years. For the three months ended March 31, 2013, approximately 97% of our ZADAXIN sales 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 estimate 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 ZADAXIN through to other parties, primarily hospital pharmacies. As a result, ZADAXIN revenues were lower in the first half of 2013, compared to the comparable period in 2012. We have revised and we are implementing changes in our strategy for ZADAXIN market penetration 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.

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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 flow 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 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.

In November 2009, thymalfasin, the generic chemical name for our pharmaceutical product ZADAXIN, was included as a Category B product in the NRDL and pricing for ZADAXIN on the NRDL was recently reviewed by the authorities. As a result of the China 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. As a result, we anticipated that the actual impact on SciClone of this price reduction would be a decrease of less than 5% in our sales price of ZADAXIN to Sinopharm. Since the date the terms of our new agreement with Sinopharm went into effect, the average impact on our sales price per unit has been a decrease of approximately 3%. 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 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.

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. Although we were successful in obtaining a renewal in 2003, 2008 and 2012, there is no assurance that we 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 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 State Food and Drug Administration of China (“SFDA”). Some manufacturing changes may require: 1) approval by AIFA in Italy and/or 2) be accepted by the SFDA, the Chinese equivalent of the FDA. In addition, we must obtain an Imported Drug License (“IDL”) from the SFDA permitting the importation of ZADAXIN into China 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 SFDA permitting the importation of ZADAXIN into China. Our ability to continue to renew our IDL from the SFDA permitting the importation of ZADAXIN into China could be adversely affected, if we were to fail to maintain ZADAXIN registration in Italy. The SFDA, 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.

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Our ZADAXIN sales and operations in other parts of China and 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 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.

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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 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. If we are subject to adverse findings resulting from the SEC and DOJ investigations, or from our own independent investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. In addition, we will incur additional 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 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. As of December 31, 2010, we also had two material weaknesses in internal control over financial reporting related to our controls over (i) our implementation of our policy on compliance with laws and (ii) our accounting for income taxes. We continue to 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, our recently announced 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 our material weakness related to the design and operation of our controls 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.

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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 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 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, or the FCPA. In particular, if our employees, distributors or third-party marketing firms make any payments that are forbidden under the FCPA, we could be subject to civil and criminal penalties imposed by the 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 marking of our products or other activities involving our products. If our employees, affiliates, distributors or third-party marketing firms violate these laws, we could be required to pay damages or fines, which could materially and adversely affect our financial condition and results of operations. 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.

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.

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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 the attention of senior management and members of the Board of Directors and may result in fines 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 Director’s 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. In particular we could experience a charge for inventory returns related to Aggrastat if our customers are unable to sell units of Aggrastat that are nearing their expiry dates, or for bad debt if a former distributor does not pay an outstanding receivable 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 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. We may experience stock price volatility in the future, either related to announcements regarding the SEC and DOJ investigation, 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 will 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 Director’s 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 were in-licensed by us. We have recently in-licensed two additional product candidates, Neucardin from Zensun and ProFlow from TLC, 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, SFDA 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 upon our activities. We have experienced delays in the regulatory process and continue to experience delays, and there exists risk that we may not receive approval, including with the approval process for DC Bead or other in-licensed products. 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 numerous 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 NovaMed. 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 recently imposed price restrictions on ZADAXIN, Aggrastat and various oncology products we promote. As a result of the China 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. As a result, we anticipated that the actual impact on SciClone of this price reduction would be a decrease of less than 5% in our sales price of ZADAXIN to Sinopharm. Since the date the terms of our new agreement with Sinopharm went into effect, the average impact on our sales price per unit has been a decrease of approximately 3%. As Sinopharm is now our exclusive importer of ZADAXIN into China, we have not made any subsequent sales of ZADAXIN to other importers.

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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.

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. As of March 31, 2013, we have accounts receivable totaling approximately $4.1 million which are substantially delinquent and which we are actively trying to collect. The customers have a binding obligation to pay us, but we may have to pursue legal remedies, and 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.

Our business strategy is dependent in part upon our agreements with third parties for the rights to develop and commercialize products, or promote products, particularly in China. If we fail to maintain such agreements, or if we fail to enter into additional agreements, our business will suffer. *

Our sales and marketing strategy in China depends significantly upon agreements with third parties, and potentially upon 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 the products recently licensed from Zensun and TLC and products currently promoted or sold by our subsidiary, NovaMed, are held by us under license, promotion, distribution or marketing agreements with third parties. These agreements for products on the market including Depakine, Stilnox, Tritace and Aggrastat, and products in the regulatory review process, including DC Bead and several of NovaMed’s products in clinical trials, are held under license, distribution or marketing agreements. In addition, our success in the future may be dependent upon 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.

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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 assure you that we will be able to negotiate in-license, promotion or distribution agreements for additional products in the future on acceptable terms, if at all.

In January 2013, our promotion agreement with Sanofi was renewed until December 31, 2013 under the same terms as previously negotiated. Revenues for 2011 and 2012 related to our agreement with Sanofi were approximately $19.7 million and $30.8 million, respectively. We are actively negotiating the renewal or extension of this agreement. In June 2013, we renewed our promotion agreement with Baxter for a 5 year term, through December 2017. Our other significant promotion agreement with Pfizer will be expiring August 31, 2013 unless renewed, extended or renegotiated. Revenues for 2011 and 2012 related to our agreement with Pfizer were approximately $5.5 million and $8.8 million, respectively. We are actively negotiating the renewal or extension of this agreement. 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. As part of this process, we have recently discontinued promotion of the oncology products, Adriamycin and Daunoblastina for Pfizer, and the primary care product, Perenan, for Sanofi. Revenues related to these products were approximately $2.7 million and $1.5 million in 2011 and 2012, respectively. Over time, we anticipate the product mix 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 to other costs including restructuring charges if a resulting revenue decline required us to reduce costs.

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 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.

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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 a limited number of importers, in any given quarter, to supply our products and most of our ZADAXIN sales have been through three importers. Our receivables from those importers are material, and if we were unable to collect receivables from those importers or any other importer, 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 recent 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 was 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.

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. 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 renminbi. 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 renminbi in a narrow currency trading band that may or may not fluctuate based upon government policy. 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 renminbi 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.

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

Many of our prior trials involved the use of ZADAXIN in combination with other drugs. We cannot predict how ZADAXIN, Depakine, 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, Depakine, 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, Depakine, 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 and Depakine 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 which 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.

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 active pharmaceutical ingredient (“API”) suppliers. If we experience a problem with the manufacturer or our suppliers our sales may suffer. We and NovaMed have each experienced difficulties with obtaining product from manufacturers in the past. During 2012, we have experienced limitations on supply of Depakine IV, Perenan, Methotrexate, and Rulide and the growth in the sales of those products has been 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.

Our two API suppliers for ZADAXIN are both working on the development of a more efficient manufacturing process to increase the per batch manufacturing process scale in anticipation of growth in future commercial demand. There are technical and regulatory risks associated with the development of the new process that may be beyond our control. If the new process fails to allow for scale-up of API production while also providing API that meets regulatory specifications and/or shelf-life stability, or if the new manufacturing process approval is delayed or denied by regulatory authorities, the commercial supply of ZADAXIN could be limited as we would have to continue with the current scale of manufacturing with the current manufacturing process.

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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 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 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. For example, Biocompatibles is providing SciClone with product samples, clinical and product data, and the necessary supporting documents to obtain regulatory approval in China for DC Bead. 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.

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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 resigned from the Company on August 2, 2013 to pursue other opportunities. We hired a new Chief Financial Officer and a new Vice President, Finance and Controller in July 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 and hired a new Chief Executive Officer of SciClone’s China operations, who began on April 1, 2013. 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. We have taken corrective measures based upon the findings of our Special Committee relating to its investigation of matters relating to the FCPA and have, 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. In November and May 2012, we announced that our Board of Directors has approved increases in our share repurchase program that authorizes the Company to repurchase up to a total of $40.5 million of its outstanding common stock. As of March 31, 2013, $9.9 million of the $40.5 million remained available under the repurchase program for future share repurchases. Subsequent to March 31, 2013, our Board of Directors approved an increase of $10.0 million to our stock repurchase program bringing the total authorized to $50.5 million and extended the program through December 31, 2014. Further, we may use cash to acquire additional product rights or for future acquisitions. Our ability to achieve and sustain operating profitability is dependent on numerous factors including our ability to achieve our goal of increasing sales of ZADAXIN, securing regulatory approval for DC Bead in China, and for our other products and products we acquired as a result of the NovaMed acquisition, the execution and successful completion of clinical trials in China, securing partnerships for those programs that lead to regulatory approvals in major pharmaceutical markets, and successfully continuing NovaMed’s sales and integrating NovaMed into our business. 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.

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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.

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, thymosin alpha 1 (“thymalfasin”), the chemical composition of 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.

46

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 alternative 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.

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 which 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.

In March 2012, we filed a Form S-3 Shelf registration with the SEC under which we may offer and sell up to $100.0 million of our securities, assuming we continue to meet the SEC’s eligibility requirements for primary offerings on Form S-3. Subsequently, affiliates of Sigma-Tau sold approximately 6.3 million shares for an aggregate price of approximately $33.1 million under this registration statement, and we have approximately $66.9 million available for future use. In addition, we issued 8,298,110 shares of the Company’s common stock to NovaMed under the terms of the acquisition in April 2011, and former NovaMed stockholders own approximately 15% of our outstanding common stock after the transaction. We have granted registration rights for those shares and the shares are freely tradable. Sales of the shares could lead to a decrease in the market price of our common stock.

47

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, cash equivalents and investments 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 an Interest Rate Rating Agency 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 a commercial loan, 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 loans.

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 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 issuance of Common Stock in the acquisition of NovaMed, our repurchases of our Common Stock 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.

48

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 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.

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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. Any such breach could compromise our computer networks and the information stored there could be accessed, publicly disclosed, lost or stolen. 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 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below summarizes our stock repurchase activity for the three months ended March 31, 2013 (in thousands, except per share amounts):

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of  Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value  of Shares that May Yet Be Purchased Under the Plans or  Programs(1)
January 1, 2013 through January 31, 2013		502	$	4.93		502	$	9,880
February 1, 2013 through February 28, 2013		—		—		—		9,880
March 1, 2013 through March 31, 2013		—		—		—		9,880
Total		502	$	4.93		502

⁽¹⁾ “Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs” reflects increases of $10.5 million and $10.0 million announced May 2012 and November 2012, respectively, bringing the total authorized since the program’s inception in October 2011 to $40.5 million, less the $30.6 million we repurchased through March 31, 2013. Subsequent to March 31, 2013, our Board of Directors approved an increase of $10.0 million to the Company’s stock repurchase program bringing the total authorized since the program’s inception to $50.5 million, and as of August 7, 2013, the total remaining available for repurchase was $19.9 million. Our Board of Directors also extended the stock repurchase program through December 31, 2014.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit Number	Description
10.1(1) *	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.
10.2(1)**	Stay Bonus Agreement by and between Gary Titus and SciClone Pharmaceuticals, Inc. effective January 16, 2013.
10.3(2)**	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.
10.4(2)**	Change in Control Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.5(2)**	Executive Severance Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.6(2)**	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.
10.7(2)**	Stay Bonus Agreement by and between Stephanie Wong and SciClone Pharmaceuticals, Inc. effective April 3, 2013.
31.1(2)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(2)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(2)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(2)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101***	The following materials from Registrant’s Quarterly Report on Form 10-Q for the three-months ended March 31, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Unaudited Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012, (ii) Unaudited Condensed Consolidated Statements of Income for the Three-Months Ended March 31, 2013 and 2012, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three-Months Ended March 31, 2013 and 2012, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2013 and 2012, and (v) Notes to Condensed Consolidated Financial Statements.

(1) Incorporated by reference from the Company’s Annual Report on Form 10-K filed on April 1, 2013.

(2) Filed Herewith.

* Certain information in this exhibit has been omitted and filed separately with the SEC 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.

*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURE

Pursuant to the requirements 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: August 9, 2013	/s/ Friedhelm Blobel, Ph.D.
	Friedhelm Blobel, Ph.D.
	President and Chief Executive Officer

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INDEX TO EXHIBITS

Exhibit Number	Description
10.1(1)*	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.
10.2(1)**	Stay Bonus Agreement by and between Gary Titus and SciClone Pharmaceuticals, Inc. effective January 16, 2013.
10.3(2)**	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.
10.4(2)**	Change in Control Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.5(2)**	Executive Severance Agreement effective April 1, 2013 by and between Hong Zhao and SciClone Pharmaceuticals, Inc.
10.6(2)**	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.
10.7(2)	Stay Bonus Agreement by and between Stephanie Wong and SciClone Pharmaceuticals, Inc. effective April 3, 2013.
31.1(2)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(2)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002..
32.1(2)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(2)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101***	The following materials from Registrant’s Quarterly Report on Form 10-Q for the three-months ended March 31, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Unaudited Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012, (ii) Unaudited Condensed Consolidated Statements of Income for the Three-Months Ended March 31, 2013 and 2012, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three-Months Ended March 31, 2013 and 2012, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2013 and 2012, and (v) Notes to Condensed Consolidated Financial Statements.

(1) Incorporated by reference from the Company’s Annual Report on Form 10-K filed on April 1, 2013.

(2) Filed Herewith.

* Certain information in this exhibit has been omitted and filed separately with the SEC 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.

*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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EX-10.3

EXHIBIT 10.3

Friedhelm Blobel, Ph.D. Executive Director

CONFIDENTIAL

March 29, 2013

Hong Zhao

Dear Mr. Zhao,

I am pleased to offer you a position with NovaMed Pharmaceuticals (Shanghai) Co., Ltd. (“NovaMed”) (the “Company”), an affiliate of SciClone Pharmaceuticals Inc. as its Chief Executive Officer of China Operations reporting to me, President and Chief Executive Officer of Sciclone Pharmaceuticals Inc. The position includes responsibility as CEO of SciClone Pharmaceuticals (China) Ltd. (see also exhibit a attached to this letter). The position will be based out of our offices located at 30F Shanghai Times Square No. 93 Huaihai Zhong Road, Shanghai 200021, China. Your start date will be March 15, 2013.

If you decide to join us, you will receive an annual base salary of RMB 1,850,000 (one million and eight hundred fifty thousand RMB) less applicable withholding taxes which will be paid monthly in accordance with the Company’s normal payroll procedures. As an employee, you will be eligible to participate in the Company’s annual bonus program, under which you will have an annual bonus opportunity targeted at 53% (fifty threepercent) of your then current annual base salary and which will be earned based on your achievement of business objectives as established annually by the Company’s President and Chief Executive Officer in accordance with the terms of the executive bonus program and will be paid in China in the way base salary is administered. You will be entitled to the pro-rata bonus in January 2014 if you can join the company on or before September 30, 2013. Such bonus, if earned, shall be paid not later than the date that is two and one-half months following the close of the year in which such bonus is earned.

As an employee, you are entitled to participate in the China social benefits programs such as Pension, Medical, Unemployment Insurance, subjected to the China state’s relevant regulation. You including your family members will be reimbursed for health insurance costs capped at RMB 13,080 (or the corresponding US $ amount) per month. You will also be entitled to participate in SciClone’s US’s life insurance plan subject to the terms, conditions and overall administration of SciClone US’s life insurance plan, which is capped at an amount of US$ 203.00 per month. You are also entitled to 15 annual leave days per year, prorated in 2013 according to the first date of employment. A car (BMW 325) and driver will also be provided. Lastly, since your family is still in Nanjing, the Company will provide you with a place in Shanghai to live. In addition, if you decide to join us, it will be recommended at the first meeting of the Company’s Board of Directors (the “Board”) following your employment start date that the Company will

Hong Zhao

March 29, 2013

Page 2

a. either grant you an option to purchase 100,000 shares of the Company’s common stock at a price per share equal to the fair market value per share of the Company’s common stock on the date of the first day of employment. Subject to your continued employment, twenty-five percent (25%) of the option shares shall initially vest (become exercisable) on the first anniversary of your employment start date (and no shares shall vest before such date) and the remaining shares shall vest monthly over the next thirty-six (36) months in substantially equal monthly amounts. Plus you will be granted 50,000 performance based options. These options will vest in accordance with you achieving the criteria specified. Or, alternatively

b. you will be granted 50,000 time based Restricted Stock Units (RSU’s) vesting 25% at each of the one, two, three and four year anniversary or the first open trading window after such anniversary plus 50,000 option shares that are performance based. The performance based options will vest in accordance with you achieving the criteria specified.

The RSU’s and option shares shall be subject to the terms and conditions of the Company’s stock option plan and an appropriate form of stock option agreement, which you will be required to sign as a condition of receiving any RSU’s and options. You must decide your preference for a. or b. above by March 10, 2013. Over time, additional stock option grants may be made available in the sole discretion of the Board of Directors.

In separate documents the company will provide you with a severance agreement as well as a Change in Control (CiC) agreement.

We look forward to a mutually beneficial relationship. However, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice. Except in the case of termination for cause, we will give you 30 days notice of termination of your employment. Similarly we request, however that, in the event of resignation, you give the Company at least thirty (30) days notice.

Your job offer and employment, is contingent upon the clearance of reference and background checks satisfactory to the Company. The company expects that you are in possession of appropriate documents to work in the People’s Republic of China.

Please prepare the following documents for the HR Department. Such documentation must be provided prior to March 14, 2013.

Passport sized photo

Hong Zhao

March 29, 2013

Page 3

Signed offer letter

Photocopy of ID card (both sides) or the first page of your passport

Work Permit or similar documents for PRC

Photocopy of Certificate of Academic Degree

Bank account information (Bank name, Bank address, SWIFT code, A/C name, A/C No.)

Verification of separation from your last employer

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company, you will not in any way utilize any such information.

As with all of our employees, your employment is also subject to our general employment policies, many of which are described in our Employee Handbook. As a Company employee, you will be expected to abide by Company rules and standards. You will be specifically required to sign an acknowledgment that you have read and that you understand the Company’s rules of conduct, which are included in the Company Handbook.

Hong, we are excited about the prospect of having you join our team and look forward to a mutually productive and successful relationship.

To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below. If you accept our offer, your first day of employment shall be subject to mutual agreement, but in no event will it be later than March 15, 2013. This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to any representations made during your interviews, whether written or oral. This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Company President and you. This offer of employment will terminate if it is not accepted, signed and returned by Wednesday, February 27, 2013.

We look forward to your favorable reply and to working with you.

Hong Zhao

March 29, 2013

Page 4

Sincerely,

/s/ Friedhelm Blobel

Friedhelm Blobel, Ph.D.

Executive Director

For and on behalf of

NovaMed Pharmaceuticals (Shanghai) Co., Ltd.

and its affiliates

AGREED TO AND ACCEPTED:

Signature:	/s/ Hong Zhao
Printed Name:	Hong Zhao
Date:	March 29, 2013

EX-10.4

EXHIBIT 10.4

SCICLONE PHARMACEUTICALS, INC.

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (the “Agreement”) is effective as of March 15, 2013, or the first date of employment by and between Hong Zhao (the “Employee”) and SciClone Pharmaceuticals, Inc., a Delaware corporation (the “Company”).

RECITALS

A. The Employee presently serves as Chief Executive Officer of China operations of the Company and performs significant strategic and management responsibilities necessary to the continued conduct of the Company’s business and operations.

B. The Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility or occurrence of a Change in Control (as defined below) of the Company.

C. The Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change in Control that will provide the Employee with enhanced financial security and provide sufficient incentive and encouragement to the Employee to remain with the Company following a Change in Control.

AGREEMENT

The Employee and the Company agree as set forth below:

1. Terms of Employment. The Company and the Employee agree that the Employee’s employment is based on the original offer letter and labor contract terms and that their employment relationship may be terminated by either party at any time, with or without Cause, and, if applicable, in accordance with Section 2 below. If the Employee’s employment with the Company terminates for any reason following a Change in Control, but on or before the first anniversary of the Change in Control, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement. During his employment with the Company, the Employee agrees to devote his full business time, energy and skill to his duties with the Company. These duties shall include, but not be limited to, any duties consistent with the Employee’s position that may be assigned to the Employee from time to time by the Company or the Board.

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2. Severance Benefits Upon Termination following a Change in Control. Subject to the limitations set forth in Sections 3 and 4 below, if the Employee’s employment with the Company terminates following a Change in Control but on or before the first anniversary of such Change in Control, then the Employee shall be entitled to receive, in addition to the compensation and benefits earned by the Employee through the date of his termination, severance benefits as follows:

(a) Involuntary Termination. If the Employee’s employment with the Company is terminated as a result of Involuntary Termination, then the Employee shall be entitled to receive the following severance benefits:

(i) The Employee shall be entitled to receive severance pay in an amount based on a termination date that occurs within the severance pay schedule below. The severance amount will be based on his annual base salary as in effect at the time of such termination. Any severance to which the Employee is entitled pursuant to this section shall be paid in a lump sum, less applicable withholding, within thirty (30) days following the Employee’s termination.

a. Three years severance pay if the termination date is between his start of employment and June 30, 2013,

b. Two years and nine months severance pay if the termination date is between July 1, 2013 and September 30, 2013,

c. Two years and six months severance pay if the termination date is between October 1, 2013 and December 31, 2013,

d. Two years and three months severance pay if the termination date is between January 1, 2014 through March 31, 2014,

e. Two years severance pay if the termination date is on April 1, 2014 or anytime thereafter.

(ii) The Executive shall be entitled to receive a separation bonus equal to the gross amount of fifty percent (50%) of the average annual performance bonus paid to the Executive for the two (2) most recent fiscal years for which bonuses have been paid prior to the termination date. If no or only one annual bonus has been paid at the time of termination the target bonus will be used as reference.

(iii) With respect to any unvested options to purchase shares of the stock of the Company held by the Employee; Section 12.1 (b) of the 2005 Equity Incentive Plan, as amended (the “Plan”), notwithstanding, if a Change in Control occurs and the “Acquiror”, as defined in the Plan, does not assume the “Awards”, as defined in the Plan, held by Employee, then all such Awards held by Employee shall become fully vested and exercisable as of a date ten (10) business days prior to the occurrence of the closing of the transaction resulting in the Change in Control, with any acceleration and exercise subject to, and conditional upon, the actual closing of such transaction.”

(iv) The Employee shall be entitled to exercise all vested options to purchase shares of the stock of the Company held be the Employee (including any options to purchase shares that become vested for a period of twelve (12) months after the date of such termination (notwithstanding anything to the contrary otherwise provided under the terms and conditions of such options).

(v) The Company shall, if permitted under the Company’s existing health insurance plans, continue the Executive’s existing group health insurance coverage. If not so permitted, the Company shall reimburse the Executive for any health insurance premiums paid by the Executive for continued group health insurance coverage. Such health insurance coverage or reimbursement of premiums shall continue until the earlier of (i) twelve (12) months after the date of the Executive’s Involuntary Termination or (ii) the date on which the Executive commences New Employment.

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(b) Voluntary Resignation; Termination For Cause. If the Employee’s employment terminates by reason of the Employee’s voluntary resignation (but not as a result of an Involuntary Termination) or as a result of the Employee’s termination for Cause, then the Employee shall not be entitled to receive any severance pay or benefits under this Agreement.

(c) Disability; Death. If the Company terminates the Employee’s employment as a result of the Employee’s Disability, or death, then the Employee shall not be entitled to receive any severance pay or benefits under this Agreement.

3. Release of Claims; Resignation. The Employee’s entitlement to any severance pay or benefits under Section 2(a) is conditioned upon the Employee’s execution and delivery to the Company of (a) a general release of known and unknown claims in the form attached hereto as Exhibit A and (b) a resignation from all of the Employee’s positions with the Company, including from the Board of Directors and any committees thereof on which the Employee serves, in a form satisfactory to the Company.

4. Parachute Payments. In the event that any payment or benefit received or to be received by the Employee pursuant to this Agreement or otherwise (collectively, the “Payments”) would result in a “parachute payment” as described in section 280G of the Internal Revenue Code of 1986, as amended, notwithstanding the other provisions of this Agreement, the amount of such Payments will not exceed the amount which produces the greatest after-tax benefit to the Employee. For purposes of the foregoing, the greatest after-tax benefit will be determined within thirty (30) days of the occurrence of such payment to the Employee, in the Employee’s sole and absolute discretion. If no such determination is made by the Employee within thirty (30) days of the occurrence of such payment, the Company will promptly make such determination in a fair and equitable manner.

5. Consulting Services. During the six (6) months following any Involuntary Termination for which the Employee receives the severance pay and benefits described in Section 2(a), the Employee shall be retained by the Company as an independent contractor to provide consulting services to the Company at its request for up to eight (8) hours per week. These services shall include any reasonable requests for information or assistance by the Company, including, but not limited to, the transition of the Employee’s duties. Such services shall be provided at mutually convenient times. For the actual provision of such services, the Company shall pay to the Employee a consulting fee of $1,000 per eight hour day, plus reasonable out-of-pocket expenses (for example, travel and lodging).

6. Company’s Successors. Any successor to the Company or to all or substantially all of the Company’s business and/or assets will be bound by this Agreement in the same manner and to the same extent as the Company. For all purposes under this Agreement, the term “Company” will include any successor to the Company’s business and/or assets.

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7. Employee’s Successors. All rights of Employee hereunder will inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Employee will have no right to assign any of his or her obligations or duties under this Agreement to any other person or entity.

8. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) “Cause” shall mean any of the following:

(i) the Employee’s theft, dishonesty, misconduct or falsification of any records of the Company, its successor, or any subsidiary of the Company or its successor (collectively, the “Company Group”);

(ii) the Employee’s misappropriation or improper disclosure of confidential or proprietary information of the Company Group;

(iii) any intentional action by the Employee which has a material detrimental effect on the reputation or business of the Company Group;

(iv) the Employee’s failure or inability to perform any reasonable assigned duties after written notice from the Company Group of, and a reasonable opportunity to cure, such failure or inability;

(v) any material breach by the Employee of any employment agreement between the Employee and the Company Group, which breach is not cured pursuant to the terms of such agreement; or

(vi) the Employee’s conviction of any criminal act which impairs the Employee’s ability to perform his or her duties for the Company Group.

(b) “Change in Control” shall mean: (i) a merger or other transaction in which the Company or substantially all of its assets is sold or merged and as a result of such transaction, the holders of the Company’s common stock prior to such transaction do not own or control a majority of the outstanding shares of the successor corporation, (ii) the election of nominees constituting a majority of the Board which nominees were not approved by a majority of the Board prior to such election, or (iii) the acquisition by a third party of twenty percent (20%) or more of the Company’s outstanding shares which acquisition was without the approval of a majority of the Board in office prior to such acquisition.

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(c) “Constructive Termination” shall mean any one or more of the following:

(i) without the Employee’s express written consent, the assignment to the Employee, following the Change in Control, of any title or duties, or any limitation of the Employee’s responsibilities, that are substantially inconsistent with the Employee’s title(s), duties, or responsibilities with the Company Group immediately prior to the date of the Change in Control;

(ii) without the Employee’s express written consent, the relocation of the principal place of the Employee’s employment, following the Change in Control, to a location that is more than fifty (50) miles from the Employee’s principal place of employment immediately prior to the date of the Change in Control, or the imposition of travel requirements substantially more demanding of the Employee than such travel requirements existing immediately prior to the date of the Change in Control;

(iii) any failure by the Company Group, following the Change in Control, to pay, or any material reduction by the Company Group of, (1) the Employee’s base salary in effect immediately prior to the date of the Change in Control, or (2) the Employee’s bonus compensation, if any, in effect immediately prior to the date of the Change in Control (subject to applicable performance requirements with respect to the actual amount of bonus compensation earned by the Employee), unless base salary and/or bonus reductions comparable in amount and duration are concurrently made for a majority of the other employees of the Company Group who have substantially similar titles and responsibilities as the Employee; and

(iv) any failure by the Company Group, following the Change in Control, to (1) continue to provide the Employee with the opportunity to participate, on terms no less favorable than those in effect for the benefit of any employee group which customarily includes a person holding the employment position or a comparable position with the Company Group then held by the Employee, in any benefit or compensation plans and programs, including, but not limited to, the Company Group’s life, disability, health, dental, medical, savings, profit sharing, stock purchase and retirement plans, if any, in which the Employee was participating immediately prior to the date of the Change in Control, or in substantially similar plans or programs, or (2) provide the Employee with all other fringe benefits (or substantially similar benefits), including, but not limited to, relocation benefits, provided to any employee group which customarily includes a person holding the employment position or a comparable position with the Company Group then held by the Employee, which the Employee was receiving immediately prior to the date of the Change in Control.

However, the foregoing conditions shall not constitute a Constructive Termination unless the Employee has given written notice of any such condition(s) to the Chairman of the Board and allowed the Company Group at least twenty (20) days thereafter to correct such condition(s). If such condition(s) are not corrected within that twenty (20) day period, the Employee may give written notice of her Constructive Termination to the Board, which shall be an Involuntary Termination.

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(d) “Disability” means the inability of the Employee, in the opinion of a qualified physician, to perform the essential functions of the Employee’s position with the Company Group, with reasonable accommodation, because of the sickness or injury of the Employee.

(e) “Involuntary Termination” shall mean the occurrence of either of the following events after a Change in Control, but on or before the first anniversary of such Change in Control:

(i) termination by Company Group of the Employee’s employment without Cause; or

(ii) the Employee’s Constructive Termination.

“Involuntary Termination” shall not include any termination of the Employee’s employment that is (1) for Cause, (2) a result of the Employee’s death or Disability, or (3) a result of the Employee’s voluntary resignation.

(f) “New Employment” shall mean any employment obtained by the Employee after the termination of the Employee’s employment with the Company.

9. Nonsolicitation. During his or her employment with the Company, and for a period of one (1) year following the termination of his or her employment for any reason, the Employee shall not directly or indirectly recruit, solicit, or induce any person who on the date hereof is, or who subsequently becomes, an employee, sales representative or consultant of the Company, to terminate his or her relationship with the Company.

10. Successors.

(a) Company’s Successors. Any successor to the Company or to all or substantially all of the Company’s business and/or assets shall be bound by this Agreement in the same manner and to the same extent as the Company. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets.

(b) Employee’s Successors. All rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Employee shall have no right to assign any of her obligations or duties under this Agreement to any other person or entity.

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11. Notice.

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to the Employee at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b) Notice of Termination. Any termination by the Company Group or the Employee of their employment relationship shall be communicated by a written notice of termination to the other party.

12. Miscellaneous Provisions.

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement (whether by seeking New Employment or in any other manner), nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

(b) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California.

(d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(e) Arbitration. Any dispute, controversy or claim arising out of or relating to this contract, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force with the Notice of Arbitration is submitted in accordance with these rules. Judgment upon any decision or award rendered by the arbitrator may be entered in any court having jurisdiction over the matter. The Employee and the Company knowingly and willingly waive their respective rights to have any such disputes or claims tried to a judge or jury.

(f) Prior Agreements. This Agreement supersedes all prior understandings and agreements, whether written or oral, regarding the subject matter of this Agreement.

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

SCICLONE PHARMACEUTICALS, INC.
By:	/s/ Friedhelm Blobel

EMPLOYEE
/s/ Hong Zhao
	HONG ZHAO

8

Exhibit A

RELEASE

In exchange for the severance pay and benefits described in the Executive Severance Agreement between SciClone Pharmaceuticals, Inc. (the “Company”) and me of March 15,, 2013, I hereby release the Company, its parents and subsidiaries, and their officers, directors, employees, attorneys, stockholders, successors, assigns and affiliates, of and from any and all claims, liabilities, and causes of action of every kind and nature, whether known or unknown, based upon or arising out of any agreements, events, acts, omissions or conduct at any time prior to and including the execution date of this Release, including, but not limited to: all claims concerning my employment with the Company or the termination of that employment; all claims pursuant to any PRC Labor Contract Law and the regulations promulgated by the local government having jurisdiction over the employment.

I am knowingly, willingly and voluntarily releasing any claims I may have under relevant local laws. I acknowledge that the consideration given for the release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.

I hereby waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown claims I may have, and I affirm that it is my intention to release all known and unknown claims that I have or may have against the parties released above.

This Release contains the entire agreement between the Company and me regarding the subjects above, and it cannot be modified except by a document signed by me and an authorized representative of the Company.

	EMPLOYEE
Date:
	HONG ZHAO

	SCICLONE PHARMACEUTICALS, INC.
Date:	By:
	Its:

EX-10.5

EXHIBIT 10.5

SCICLONE PHARMACEUTICALS, INC.

EXECUTIVE SEVERANCE AGREEMENT

This Executive Severance Agreement (the “Agreement”) is effective as of the first date of employment by and between Hong Zhao (the “Executive”) and SciClone Pharmaceuticals, Inc., a Delaware corporation (the “Company”).

RECITALS

A. The Executive presently serves as Chief Executive Officer of China operations of the Company, and performs significant strategic and management responsibilities necessary to the continued conduct of the Company’s business and operations.

B. The Board of Directors of the Company (the “Board”) through its Compensation Committee has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Executive of the Company.

C. The Board believes that it is imperative to provide the Executive with certain severance benefits upon the Executive’s termination of employment without Cause that will provide the Executive with enhanced financial security and provide sufficient incentive and encouragement to the Executive to remain with the Company.

AGREEMENT

The Executive and the Company agree as set forth below:

1. Terms of Employment. The Company and the Executive agree that the Executive’s employment is based on the original offer letter and labor contract terms and that their employment relationship may be terminated by either party at any time, with or without Cause, and, if applicable, in accordance with Section 2 below. If the Company terminates Executive’s employment without Cause, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement. During his employment with the Company, the Executive agrees to devote his full business time, energy and skill to his duties with the Company. These duties shall include, but not be limited to, any duties consistent with the Executive’s position that may be assigned to the Executive from time to time by the Company or the Board.

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2. Severance Benefits Upon Termination without Cause. Subject to the limitations set forth in Sections 3 and 4 below, if the Executive’s employment with the Company is terminated without Cause, then the Executive shall be entitled to receive, in addition to the compensation and benefits earned by the Executive through the date of his or her termination, severance benefits as follows:

(a) The Executive shall be entitled to receive severance pay in the form of continuation of Employee’s base salary in effect on Employee’s termination date for twelve (12) months following such termination date. These payments will be made on the Company’s ordinary payroll dates starting with the first pay date after the termination date, and will be subject to standard payroll deductions and withholdings.

(b) The Executive shall be entitled to receive a separation bonus equal to the gross amount of fifty percent (50%) of the average annual performance bonus paid to the Executive for the two (2) most recent fiscal years for which bonuses have been paid prior to the termination date. If no or only one annual bonus has been paid at the time of termination the target bonus will be used as reference.

(c) The Company shall, if permitted under the Company’s existing health insurance plans, continue the Executive’s existing group health insurance coverage. If not so permitted, the Company shall reimburse the Executive for any health insurance premiums paid by the Executive for continued group health insurance coverage. Such health insurance coverage or reimbursement of premiums shall continue until the earlier of (i) twelve (12) months after the date of the Executive’s Involuntary Termination or (ii) the date on which the Executive commences New Employment.

3. Voluntary Resignation; Termination For Cause.

(a) If the Employee’s employment terminates by reason of the Employee’s voluntary resignation (but not as a result of an Involuntary Termination) or as a result of the Employee’s termination for Cause, then the Employee shall not be entitled to receive any severance pay or benefits under this Agreement.

(b) Disability; Death. If the Company terminates the Executive’s employment as a result of the Executive’s Disability, or death, then the Executive shall not be entitled to receive any severance pay or benefits under this Agreement.

4. Release of Claims; Resignation. The Executive’s entitlement to any severance pay or benefits under Section 2 is conditioned upon the Executive’s execution and delivery to the Company of (a) a general release of known and unknown claims in the form attached hereto as Exhibit A and (b) a resignation from all of the Executive’s positions with the Company, including from the Board and any committees thereof on which the Executive serves, in a form satisfactory to the Company.

5. Consulting Services. During the six (6) months following any termination without Cause for which the Executive receives the severance pay and benefits described in Section 2, the Executive shall be retained by the Company as an independent contractor to provide consulting services to the Company at its request for up to eight (8) hours per week. These services shall include any reasonable requests for information or assistance by the Company, including, but not limited to, the transition of the Executive’s duties. Such services shall be provided at mutually convenient times. For the actual provision of such services, the Company shall pay to the Executive a consulting fee of $1,000 on a full eight hour day basis, pro-rated for the number of hours of service, plus reasonable out-of-pocket expenses (for example, travel and lodging).

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6. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) “Cause” shall mean any of the following:

(i) the Executive’s theft, dishonesty, misconduct or falsification of any records of the Company, its successor, or any subsidiary of the Company or its successor (collectively, the “Company Group”);

(ii) the Executive’s misappropriation or improper disclosure of confidential or proprietary information of the Company Group;

(iii) any intentional action by the Executive which has a material detrimental effect on the reputation or business of the Company Group;

(iv) the Executive’s failure or inability to perform any reasonable assigned duties after written notice from the Company Group of, and a reasonable opportunity to cure, such failure or inability;

(v) any material breach by the Executive of any employment agreement between the Executive and the Company Group, which breach is not cured pursuant to the terms of such agreement; or

(vi) the Executive’s conviction of any criminal act which impairs the Executive’s ability to perform his or her duties for the Company Group.

(b) “Disability” means the inability of the Executive, in the opinion of a qualified physician, to perform the essential functions of the Executive’s position with the Company Group, with or without reasonable accommodation, because of the sickness or injury of the Executive.

(c) “New Employment” shall mean any employment obtained by the Executive after the termination of the Executive’s employment with the Company.

7. Nonsolicitation. During his or her employment with the Company, and for a period of one (1) year following the termination of his or her employment for any reason, the Executive shall not directly or indirectly recruit, solicit, or induce any person who on the date hereof is, or who subsequently becomes, an executive, sales representative or consultant of the Company, to terminate his or her relationship with the Company.

8. Successors.

(a) Company’s Successors. Any successor to the Company or to all or substantially all of the Company’s business and/or assets shall be bound by this Agreement in the same manner and to the same extent as the Company. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets.

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(b) Executive’s Successors. All rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive shall have no right to assign any of his or her obligations or duties under this Agreement to any other person or entity.

9. Notice.

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Executive, mailed notices shall be addressed to the Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b) Notice of Termination. Any termination by the Company Group or the Executive of their employment relationship shall be communicated by a written notice of termination to the other party.

10. Miscellaneous Provisions.

(a) No Duty to Mitigate. The Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement (whether by seeking New Employment or in any other manner), nor shall any such payment be reduced by any earnings that the Executive may receive from any other source.

(b) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California.

(d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(e) Arbitration. Any dispute, controversy or claim arising out of or relating to this contract, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force with the Notice of Arbitration is submitted in accordance with these rules . Judgment upon any decision or award rendered by the arbitrator may be entered in any court having jurisdiction over the matter. The Executive and the Company knowingly and willingly waive their respective rights to have any such disputes or claims tried to a judge or jury.

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(f) Prior Agreements; Controlling Agreement in the Case of a Change in Control. This Agreement supersedes all prior understandings and agreements, whether written or oral, regarding the subject matter of this Agreement, provided, however, that the Change in Control Agreement dated March 15, 2013 (the “CIC Agreement”) between Executive and Company shall remain in place and is not amended or waived in any way hereby. If Executive is entitled to receive severance benefits under the CIC Agreement, then the CIC Agreement shall be controlling.

[Remainder of Page Left Intentionally Blank]

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

SCICLONE PHARMACEUTICALS, INC.
By:	/s/ Friedhelm Blobel
	FRIEDHELM BLOBEL, Ph.D.

EXECUTIVE

/s/ Hong Zhao

HONG ZHAO

6

Exhibit A

RELEASE

In exchange for the severance pay and benefits described in the Executive Severance Agreement between SciClone Pharmaceuticals, Inc. (the “Company”) and me of my first date of employment (March 15, 2013) I hereby release the Company, its parents and subsidiaries, and their officers, directors, employees, attorneys, stockholders, successors, assigns and affiliates, of and from any and all claims, liabilities, and causes of action of every kind and nature, whether known or unknown, based upon or arising out of any agreements, events, acts, omissions or conduct at any time prior to and including the execution date of this Release, including, but not limited to: all claims concerning my employment with the Company or the termination of that employment; all claims pursuant to any PRC Labor Contract Law and the regulations promulgated by the local government having jurisdiction over the employment.

I am knowingly, willingly and voluntarily releasing any claims I may have under relevant local laws. I acknowledge that the consideration given for the release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.

I hereby waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown claims I may have, and I affirm that it is my intention to release all known and unknown claims that I have or may have against the parties released above.

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This Release contains the entire agreement between the Company and me regarding the subjects above, and it cannot be modified except by a document signed by me and an authorized representative of the Company.

Date:	EXECUTIVE
	HONG ZHAO
	SCICLONE PHARMACEUTICALS, INC.
Date:	By:
	Its:

2

EX-10.6

EXHIBIT 10.6

Friedhelm Blobel, Ph.D.

Executive Director

CONFIDENTIAL

February 22, 2013

Hong Zhao

30 F Shanghai Times Square

No. 93 Huai Hai Zhong Road

Shanghai 200021

China

Dear Mr. Zhao,

Referring to the offer letter dated February 22, 2013 to join SciClone Pharmaceuticals as CEO China Operations, I am pleased to offer you also a Sign-On Bonus in the amount of RMB 300,000 (three hundred thousand RMB). This Sign-On Bonus will be paid with the first regular payroll less applicable withholding taxes.

Although this bonus will be paid at the time noted, it will not be fully earned until the first anniversary of your employment start date. Should you voluntarily terminate your employment prior to the first anniversary of your employment start date, you shall be required to repay as of your termination date the full amount of the Sign-On Bonus.

Sincerely,

/s/ Friedhelm Blobel

Friedhelm Blobel, Ph.D.

Executive Director

For and on behalf of

NovaMed Pharmaceuticals (Shanghai)

Co., Ltd. and its affiliates

EX-10.7

EXHIBIT 10.7

March 4, 2013

Stephanie Wong

950 Tower Lane

Suite 900

Foster City, CA 94404

Re: Stay Bonus

Dear Stephanie,

Your services and contribution to SciClone Pharmaceuticals, Inc. (the “Company”) are highly valued. We wish to reward you for your continuing efforts and performance and to provide you an incentive to remain with the Company, particularly to assist with the closing of the Company’s 2012 consolidated financial statements, the completion of the 2012 audit and the preparation and filing of the Company’s Form 10-K for the fiscal year ended December 31, 2012 as well as the quarterly filings of the Company’s Form 10-Q in the first several quarters of 2013. As a result, we have decided to offer you a retention bonus because we believe you are an important part of the Company’s future success. This letter sets forth the terms upon which the Company may make a retention bonus payment to you.

You will be entitled to receive, in addition to your other compensation and benefits the following benefits provided in each case that you are still an employee on the dates such benefits become due and earned and set forth below:

1. As of the date of filing of the Company’s Form 10-K for the fiscal year ended on December 31, 2012, you will be entitled to receive a lump sum cash payment of $30,000, subject to standard payroll deductions and withholdings, which shall be payable on the next payroll date after the filing of the Company’s Form 10-K (the “10-K Stay Bonus”).

2. As of August 1, 2013, you will be entitled to receive a lump sum cash payment of $60,000, subject to standard payroll deductions and withholdings, which shall be payable on the next payroll date after such date (the “June 30 Stay Bonus”).;

3. As of the date of filing of the Company’s Form 10-Q for the quarter ending September 30, 2013, you will be entitled to receive the full year 2013 target bonus, subject to standard payroll deductions and withholdings, which shall be payable on the next payroll date after the filing of the Company’s Form 10-Q ( the “September 30 Stay Bonus”).

4. Further, if you remain with the Company through August 1, 2013, and (i) prior to December 31, 2013 either you terminate your employment or you are terminated other than for “cause” as defined in your Change of Control agreement, and (ii) in the event of any such termination you execute a general release of known and unknown claims in the form attached hereto as Exhibit A and a resignation from all of your positions with the Company, then you will be entitled to

(a) a continuation of payments equal to your base salary and health care benefits in effect on the date of your resignation, until the earlier of (i) six (6) months after your date of resignation or (ii) the date on which you commence new full-time employment after the termination of your employment with the Company. These payments will be made on the Company’s ordinary payroll dates starting with the first pay date after the termination date, and will be subject to standard payroll deductions and withholdings and less any salary you may receive for part-time employment;

(b) the post-termination exercise period for any of your Company stock options that are vested as of the date of your resignation will be extended to twelve (12) months.

The validity, interpretation, construction and performance of this letter agreement shall be governed by the laws of the State of California. No provision of this letter agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by you and by an authorized officer of the Company (other than you). No waiver by either party of any breach of, or of compliance with, any condition or provision of this letter agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

In the event of any dispute or claim relating to or arising out of this letter agreement, you and the Company agree that all such disputes shall be fully, finally and exclusively resolved by binding arbitration conducted by the American Arbitration Association in San Mateo County, California. Judgment upon any decision or award rendered by the arbitrator may be entered in any court having jurisdiction over the matter. You and the Company knowingly and willingly waive their respective rights to have any such disputes or claims tried to a judge or jury.

Sincerely,
SciClone Pharmaceuticals, Inc.
By:	/s/ Friedhelm Blobel
Name: Friedhelm Blobel
Title: President and CEO

Acknowledged and Agreed to

on April 3, 2013:

/s/ Stephanie Wong

Stephanie Wong

EXHIBIT A

FORM OF RELEASE

In exchange for the Stay Bonus amounts and benefits described in the letter agreement between SciClone Pharmaceuticals, Inc. (the “Company”) and me of January __, 2013, I hereby release the Company, its parents and subsidiaries, and their officers, directors, employees, attorneys, stockholders, successors, assigns and affiliates, of and from any and all claims, liabilities, and causes of action of every kind and nature, whether known or unknown, based upon or arising out of any agreements, events, acts, omissions or conduct at any time prior to and including the execution date of this Release, including, but not limited to: all claims concerning my employment with the Company or the termination of that employment; all claims pursuant to any federal, state or local law, statute, or cause of action, including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; race, sex, age or other discrimination or harassment; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.

I am knowingly, willingly and voluntarily releasing any claims I may have under the ADEA. I acknowledge that the consideration given for the release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) this Release does not apply to any rights or claims that may arise after I sign it; (b) I have the right to consult with an attorney prior to signing this Release; (c) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily sign this Release earlier); (d) I have seven (7) days after I sign this Release to revoke it; and (e) this Release shall not be effective until the eighth day after it is signed by me.

In giving this release, which includes claims that may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown claims I may have, and I affirm that it is my intention to release all known and unknown claims that I have or may have against the parties released above.

This Release contains the entire agreement between the Company and me regarding the subjects above, and it cannot be modified except by a document signed by me and an authorized representative of the Company.

Date:	STEPHANIE WONG
	SCICLONE PHARMACEUTICALS, INC.
Date:	By:
	Its:

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 quarterly report on Form 10-Q 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.

Date: August 9, 2013	/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 quarterly report on Form 10-Q 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: August 9, 2013	/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 Quarterly Report on Form 10-Q 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.

Date: August 9, 2013	/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 Quarterly Report on Form 10-Q 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.

Date: August 9, 2013	/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 be retained by SciClone Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Basis Of Presentation (Policy)

3 Months Ended

Mar. 31, 2013

Basis Of Presentation [Abstract]

Basis Of Presentation

1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”) have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistent with those applied in, and should be read in conjunction with, the audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”). The Company prepared the unaudited condensed consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other information that are normally required by GAAP can be condensed or omitted.

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

The interim financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited condensed consolidated balance sheet data as of December 31, 2012 is derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

Customer Concentration

Customer Concentration

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 Lingyun Biopharmaceutical (Shanghai) 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. 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 partners. These importing agents, distributors and partners are the Company’s customers.

For the three months ended March 31, 2013 and 2012, revenues from two customers in China accounted for 90% and 89%, respectively, of the Company’s revenues. No other customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2013 or 2012. The Company’s two largest customers were the same for both periods. As of March 31, 2013, approximately $26.4 million, or 91%, of the Company's accounts receivable were attributable to three customers in China. The Company generally does not require collateral from its customers.

Accounts Receivable

Accounts Receivable

Receivable Reserve.The Company records a receivable reserve based upon 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. As of March 31, 2013, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable of $4.1 million related to two customers who are related parties to each other. As of December 31, 2012, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable from one customer of $3.5 million. The receivable reserve reflects the Company’s best estimate of the ultimate collection, though actual collections may vary and the Company continues to pursue the full amount of the accounts receivables.

Reserve for Product Returns. The Company maintains a reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired product 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 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 March 31, 2013 and December 31, 2012, the Company had estimated a product returns reserve of $0.1 million on its consolidated balance sheets related to oncology products and Aggrastat product sales.

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 products, from the date of the acquisition of the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed”) in April of 2011 into 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 upon receipt of cash from the distributor. The Company amended the agreement on October 21, 2012, 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 upon 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 the 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 is required to return or refund a portion of promotion services fees received during interim periods from pharmaceutical customers if defined annual sales targets are not achieved. Under the Company’s agreements with these customers, if the agreement is terminated, and provided such targets have been met on a “pro rata” basis at the date of contract termination, the Company is entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets have been met on a “pro rata” basis at any interim date, the Company has 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 amount of revenue recognized during the three-month period ended March 31, 2013 under this method that is potentially subject to refund is $2.2 million. If the Company achieves the defined annual sales targets, these amounts will not be refunded.

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. For the three month period ended March 31, 2013, the Company has not recorded any write-downs related to inventory.

Net Income (Loss) 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, restricted stock units (“RSUs”) 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 (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2013		2012
Numerator:
Net income	$	4,203	$	9,665
Denominator:
Weighted-average shares outstanding used to
compute basic net income per share		54,084		57,701
Effect of dilutive securities		1,388		1,990
Weighted-average shares outstanding used to
compute diluted net income per share		55,472		59,691
Basic net income per share	$	0.08	$	0.17
Diluted net income per share	$	0.08	$	0.16

For the three months ended March 31, 2013 and 2012, outstanding stock options and RSUs for 2,856,805 and 2,882,181 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise of these options and RSUs calculated under the treasury stock method would have been anti-dilutive. In addition, for the three months ended March 31, 2013 and 2012, shares subject to market or performance conditions of 12,500 and 71,703, respectively, were excluded from the calculation of diluted net income per share because the performance or market criteria had not been met.

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Condensed Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net revenues:
Product sales, net	$ 20,533	$ 33,163
Promotion services	9,273	7,905
Total net revenues	29,806	41,068
Operating expenses:
Cost of product sales	4,618	5,532
Sales and marketing	11,199	17,640
Amortization of acquired intangible assets, related to sales and marketing		884
Research and development	365	3,393
General and administrative	8,600	3,961
Contingent consideration (Note 3)		(916)
Total operating expenses	24,782	30,494
Income from operations	5,024	10,574
Non-operating income (expense):
Interest and investment income	19	30
Interest and investment expense	(37)	(55)
Other expense, net	(16)	(1)
Income (loss) before provision for income	4,990	10,548
Provision for income tax	787	883
Net income (loss)	$ 4,203	$ 9,665
Basic net income (loss) per share	$ 0.08	$ 0.17
Diluted net income (loss) per share	$ 0.08	$ 0.16

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Inventories

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Inventories

4.Inventories

Inventories consisted of the following (in thousands):

	March 31,		December 31,
	2013		2012
Raw materials	$	3,039	$	3,184
Work in progress		1,698		904
Finished goods		2,943		6,336
	$	7,680	$	10,424

Included in the Company’s inventory as of March 31, 2013 and December 31, 2012, was $1.1 million and $2.3 million, respectively, in inventory held at distributors related to products sold by its NovaMed subsidiary.

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Segment Information And Geographic Data (Tables)

3 Months Ended

Mar. 31, 2013

Segment Information And Geographic Data [Abstract]

Summary Information By Operating Segment

	Three Months Ended
	March 31,
	2013		2012
Revenue:
China	$	28,810	$	40,373
Rest of the World (including the US and Hong Kong)		996		695
Total net revenues	$	29,806	$	41,068
Income (loss) from operations:
China	$	10,951	$	14,242
Rest of the World (including the US and Hong Kong)		(5,927)		(3,668)
Total income from operations	$	5,024	$	10,574
Non-operating income (expense):
China	$	(26)	$	(31)
Rest of the World (including the US and Hong Kong)		(8)		5
Total non-operating expense	$	(34)	$	(26)
Income (loss) before provision for income tax:
China	$	10,925	$	14,211
Rest of the World (including the US and Hong Kong)		(5,935)		(3,663)
Total income before provision for income tax	$	4,990	$	10,548

Long-Lived Assets By Operating Segment

China	$	35,590
Rest of the World (including the US and Hong Kong)		729
	$	36,319

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Basis Of Presentation (Tables)

3 Months Ended

Mar. 31, 2013

Basis Of Presentation [Abstract]

Reconciliation Of The Numerator And Denominators Of The Basic And Diluted Net Income Per Share Computations

	Three Months Ended
	March 31,
	2013		2012
Numerator:
Net income	$	4,203	$	9,665
Denominator:
Weighted-average shares outstanding used to
compute basic net income per share		54,084		57,701
Effect of dilutive securities		1,388		1,990
Weighted-average shares outstanding used to
compute diluted net income per share		55,472		59,691
Basic net income per share	$	0.08	$	0.17
Diluted net income per share	$	0.08	$	0.16

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Subsequent Event (Narrative) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	May 13, 2013 Zensun [Member]	Jun. 25, 2013 TLC [Member]
Subsequent Event [Line Items]
Commitment agreement payment amount	$ 18.5	$ 39.5
Commitment agreement additional payment amount	10.0
Commitment agreement further payments upon approval for new indications of product	25.0
Collateralized loan amount, maximum	$ 12.0

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Available-For-Sale Investments (Available-For-Sale Investments) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 51,032,000	$ 44,031,000
Unrealized Gains
Unrealized Losses for More Than 12 Months	(78,000)	(67,000)
Estimated Fair Value	50,954,000	43,964,000
Restricted cash	2,300,000
Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	75,000	75,000
Unrealized Gains
Estimated Fair Value	75,000	75,000
Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	50,506,000	43,505,000
Unrealized Gains
Estimated Fair Value	50,506,000	43,505,000
Restricted Italian State Bonds Maturing In 2013 [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	451,000	451,000
Unrealized Gains
Unrealized Losses for More Than 12 Months	(78,000)	(67,000)
Estimated Fair Value	$ 373,000	$ 384,000

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Basis Of Presentation (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
	Mar. 31, 2013	Mar. 31, 2012
Basis Of Presentation [Abstract]
Net income (loss)	$ 4,203	$ 9,665
Weighted-average shares outstanding used to compute basic net income per share	54,084	57,701
Effect of dilutive securities	1,388	1,990
Weighted-average shares outstanding used to compute diluted net income per share	55,472	59,691
Basic net income (loss) per share	$ 0.08	$ 0.17
Diluted net income (loss) per share	$ 0.08	$ 0.16

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Stockholders' Equity (Narrative) (Details) (USD $)	1 Months Ended			3 Months Ended		9 Months Ended	17 Months Ended
	Nov. 30, 2012	May 31, 2012	Oct. 31, 2011	Mar. 31, 2013	Mar. 31, 2012	Sep. 30, 2013	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expenses recognized				$ 1,019,000	$ 922,000
Share repurchase program, approved increase	10,000,000	10,500,000
Share repurchase program, amount authorized			20,000,000	40,500,000		50,500,000	50,500,000
Stock repurchased and retired, shares				502,400
Stock repurchased and retired, value				2,500,000
Share repurchase program, remaining amount authorized				9,900,000			19,900,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, options granted, shares				50,000
Common stock, option exercises, shares				44,731
Unrecognized compensation expense, net of forfeitures				4,200,000
Unrecognized compensation expense, weighted-average remaining period for recognition, in years				2 years 3 months 29 days
Fair value assumption, method used to calculate grant date fair value per share				Black-Scholes option pricing model
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, options outstanding, shares				12,500
Stock-based compensation, option term				10 years
Fair value assumption, expected term, in years				5 years 2 months 19 days
Fair value assumption, volatility factor				63.66%
Fair value assumption, risk free interest rate				0.96%
Stock-based compensation expenses recognized				0	26,000
RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, net of forfeitures				$ 800,000
Unrecognized compensation expense, weighted-average remaining period for recognition, in years				1 year 2 months 1 day
RSUs granted, shares				0
RSUs vested, shares				0

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Inventories (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Inventories [Abstract]
Raw materials	$ 3,039,000	$ 3,184,000
Work in progress	1,698,000	904,000
Finished goods	2,943,000	6,336,000
Inventory, net	7,680,000	10,424,000
Inventory held	$ 1,100,000	$ 2,300,000

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Basis of Presentation (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Basis of Presentation [Line Items]
Shares excluded from the calculation of diluted net income per share	2,856,805	2,882,181
Service revenue subject to refund	$ 2,200,000
Allowance for accounts	1,160,000		1,169,000
Performance Shares [Member]
Basis of Presentation [Line Items]
Shares excluded from the calculation of diluted net income per share	12,500	71,703
Revenues From Two Importing Or Distributor Agents In China [Member]
Basis of Presentation [Line Items]
Percentage of sales to importing or distributor agents	90.00%	89.00%
Maximum sales revenue percentage contributed by other importers or distributors	10.00%	10.00%
Accounts Receivable To Three Importing Or Distributor Agents in China [Member]
Basis of Presentation [Line Items]
Accounts receivable	26,400,000
Percentage of accounts receivable, net	91.00%
One Customer [Member]
Basis of Presentation [Line Items]
Allowance for accounts			1,000,000
Total accounts receivable			3,500,000
Two Customers [Member]
Basis of Presentation [Line Items]
Allowance for accounts	1,000,000
Total accounts receivable	4,100,000
Oncology Products and Aggrastat Product Sales [Member]
Basis of Presentation [Line Items]
Product returns reserve amount	$ 100,000		$ 100,000

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating activities:
Net income (loss)	$ 4,203	$ 9,665
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Non-cash expense related to stock-based compensation	1,019	922
Depreciation and amortization	202	1,046
Change in fair value of contingent consideration		(916)
Deferred income taxes		280
Other long-term liabilities	(105)	(70)
Changes in operating assets and liabilities:
Accounts receivable, net	10,283	(1,735)
Inventories	2,766	910
Prepaid expenses and other assets	(126)	328
Accounts payable	(5,503)	(2,362)
Accrued and other current liabilities	(1,808)	1,185
Net cash provided by (used in) operating activities	10,931	9,253
Investing activities:
Purchases of property and equipment	(41)	(754)
Net cash used in investing activities	(41)	(754)
Financing activities:
Repurchase of common stock	(2,500)	(1,118)
Borrowing on short-term loan	567
Proceeds from issuances of common stock to employees	104	408
Net cash used in financing activities	(1,829)	(710)
Effect of exchange rate changes on cash and cash equivalents	16	28
Net increase (decrease) in cash and cash equivalents	9,077	7,817
Cash and cash equivalents, beginning of period	84,228	66,654
Cash and cash equivalents, end of period	$ 93,305	$ 74,471

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Available-For-Sale Investments

3 Months Ended

Mar. 31, 2013

Available-For-Sale Investments [Abstract]

Available-For-Sale Investments

2.Available-for-Sale Investments

The following is a summary of available-for-sale investments as of (in thousands):

		March 31, 2013
						Unrealized
						Losses for
		Amortized		Unrealized		More Than		Estimated
		Cost		Gains		12 Months		Fair Value
Certificate of deposit	$	75	$	—	$	—	$	75
Money market funds		50,506		—		—		50,506
Restricted Italian state bonds maturing
in 2013		451		—		(78)		373
Total available-for-sale investments	$	51,032	$	—	$	(78)	$	50,954

		December 31, 2012
						Unrealized
						Losses for
		Amortized		Unrealized		More Than		Estimated
		Cost		Gains		12 Months		Fair Value
Certificate of deposit	$	75	$	—	$	—	$	75
Money market funds		43,505		—		—		43,505
Restricted Italian state bonds maturing
in 2013		451		—		(67)		384
Total available-for-sale investments	$	44,031	$	—	$	(67)	$	43,964

The cost of securities sold is based on the specific identification method.

The Company’s restricted Italian state bonds secure its Italian value added tax filing arrangements. The unrealized losses on the bonds mainly relate to loss on foreign currency translation. The Company has concluded that it has the ability and is more likely than not that it will hold its restricted Italian state bond investments until maturity or recovery of its cost basis.

The Company’s money market funds include $2.3 million of cash in a restricted account to secure a letter of credit associated with its loan agreement with Shanghai Pudong Development Bank Co. Ltd. Refer also to Note 5 for further information regarding the Company’s loan agreement.

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Loan Agreement

3 Months Ended

Mar. 31, 2013

Loan Agreement [Abstract]

Loan Agreement

5.Loan Agreement

In August 2012, the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd., entered into a loan agreement with Shanghai Pudong Development Bank Co. Ltd. for 12.5 million renminbi (approximately $2.0 million). As of March 31, 2013, 12.5 million renminbi ($2.0 million) in borrowings were outstanding on the loan. The loan is secured by a $2.3 million letter of credit. The Company is required to maintain $2.3 million of cash in a restricted bank account to secure the letter of credit. The loan bears interest on borrowed funds at 7.5% and expires on August 29, 2013. Any amounts borrowed must be repaid by the expiration date.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

3.Fair Value Measurements

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. 

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements as of March 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)		March 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		50,506		—		—		50,506
Restricted Italian state
bonds		373		—		—		373
Total	$	50,879	$	75	$	—	$	50,954

	Fair Value Measurements as of December 31, 2012 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, 2012
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		43,505		—		—		43,505
Restricted Italian state
bonds		384		—		—		384
Total	$	43,889	$	75	$	—	$	43,964

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 payments upon the successful achievement of revenue and earnings targets for the 2011 and 2012 fiscal years (the “earn-out” or “contingent consideration”). Under the Agreement, the earn-out was based upon certain financial performance metrics, including a revenue-based formula and an adjusted EBITDA (earnings before interest, depreciation and taxes) based formula. The earn-out provisions provided that: (i) if cumulative revenue in China for legacy NovaMed products for the two fiscal years ended December 31, 2012 exceeded $94.2 million, a cash payment ranging from $0 to $11.5 million would be paid, with the full amount payable if such revenue was $117.8 million or more; and (ii) if adjusted EBITDA for the two year period ending December 31, 2012 exceeded $91.8 million, a cash payment from $17.2 million to $21.5 million would have been paid with the full amount payable if such adjusted EBITDA was $137.8 million or more. Adjusted EBITDA was defined in the Agreement to exclude certain expenses which were not generally related to operating results in China, including SciClone’s US research and development expense, certain share-based compensation, license fees paid by SciClone for new products, certain legal and advisory fees related to the Agreement or to change-in-control transactions, and certain fees and expenses, including legal fees and governmental fines or settlements paid with respect to the pending formal, non-public investigation being conducted by the SEC.

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 (a total maximum contingent cash consideration of $43.0 million) or reduced by $10.0 million, depending upon whether the Company was able to achieve targets relating to the renewal of the Depakine services agreement with Sanofi. The earn-out payments would have been due 20 business days after completion of the Company’s audit for the fiscal year ended December 31, 2012. The earn-out provisions were subject to various limitations and conditions specified in the Agreement.

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. The estimated fair value of the contingent consideration was subject to fluctuations as a result of adjustments to certain performance metric projections used to estimate the fair value. As of March 31, 2012, the Company estimated the fair value of the contingent consideration to be $14.5 million, resulting in a non-cash gain of $0.9 million for the three-month period ended March 31, 2012. The significant unobservable inputs used in the fair value measurement of the contingent consideration were revenue volatility of 40%; revenue discount rate of 20%, risk free rate of 0.19%; earn-out discount rate, including counterparty risk of 5%; estimates of projected revenues and earnings before taxes; and other assumptions regarding customer conditions, and probability of change of control and employment termination considerations. Significant changes in the estimated revenues, earnings before taxes; customer conditions, and revenue volatility would have resulted in changes in the fair value measurement. Generally, a change in the assumptions used for the revenue discount rate was accompanied by a change in the fair value of the contingent consideration.

The following represented the change in the estimated fair value of the contingent consideration (in thousands):

	Three Months Ended
	March 31,
	2013		2012
Contingent Consideration:
Balance at beginning of period	$	—	$	15,400
Change in the estimated fair value of the
contingent consideration liability		—		(916)
Balance at end of period	$	—	$	14,484

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Fair Value Measurements (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011
Fair Value Measurements [Line Items]
Contingent consideration		$ 14,484,000	$ 15,400,000
Estimation of fair value of contingent consideration volatility rate	40.00%
Risk-adjusted discount rate to estimate fair value of contingent consideration	20.00%
Risk-free rate in the fair value measurement of the contingent consideration	0.19%
Counterparty risk percentage used in the fair value measurement of the contingent consideration	5.00%
Change in fair value of contingent consideration		(916,000)
NovaMed [Member]
Fair Value Measurements [Line Items]
Contingent consideration	43,000,000
Contingent consideration, maximum increase	10,000,000
Contingent consideration, maximum decrease	10,000,000
Earn out provision, days due after completion of audit		20 days
Contingent Consideration By Revenue [Member] | Minimum [Member] | NovaMed [Member]
Fair Value Measurements [Line Items]
Contingent consideration, potential future revenue	94,200,000
Contingent consideration, potential cash payment	0
Contingent Consideration By Revenue [Member] | Maximum [Member] | NovaMed [Member]
Fair Value Measurements [Line Items]
Contingent consideration, potential future revenue	117,800,000
Contingent consideration, potential cash payment	11,500,000
Contingent Consideration By EBITDA [Member] | Minimum [Member] | NovaMed [Member]
Fair Value Measurements [Line Items]
Contingent consideration, potential cash payment	17,200,000
Contingent consideration, potential earnings before income taxes, depreciation, and amortization	91,800,000
Contingent Consideration By EBITDA [Member] | Maximum [Member] | NovaMed [Member]
Fair Value Measurements [Line Items]
Contingent consideration, potential cash payment	21,500,000
Contingent consideration, potential earnings before income taxes, depreciation, and amortization	$ 137,800,000

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Loan Agreement (Details)	9 Months Ended					3 Months Ended
	Sep. 30, 2012	Mar. 31, 2013 USD ($)	Mar. 31, 2013 CNY	Aug. 31, 2012 USD ($)	Aug. 31, 2012 CNY	Mar. 31, 2013 Standby Letters of Credit [Member] USD ($)
Line of Credit Facility [Line Items]
Line of Credit Facility, Expiration Date	Aug. 29, 2013
Line of credit interest rate during year						7.50%
Debt Financing Facility, maximum borrowing capacity				$ 2,000,000	12,500,000	$ 2,300,000
Debt Financing Facility, amount borrowed		2,000,000	12,500,000
Debt financing facility, cash required to secure letter of credit						$ 2,300,000

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Segment Information And Geographic Data (Long-Lived Assets By Operating Segment) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Segment Reporting Information [Line Items]
Long-lived assets	$ 36,319
China [Member]
Segment Reporting Information [Line Items]
Long-lived assets	35,590
Rest Of The World (Including the US and Hong Kong) [Member]
Segment Reporting Information [Line Items]
Long-lived assets	$ 729

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Condensed Consolidated Balance Sheets [Abstract]
Allowance for accounts	$ 1,160	$ 1,169
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	54,030,646	54,484,053
Common stock, shares outstanding	54,030,646	54,484,053

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Other Corporate Matters

3 Months Ended

Mar. 31, 2013

Other Corporate Matters [Abstract]

Other Corporate Matters

8.Other Corporate Matters

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. The subpoena requests documents relating to a range of matters 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 will continue to cooperate fully with the SEC and DOJ in the conduct of their investigations.

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. 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.

The Company received a further subpoena from the SEC in the fourth quarter of fiscal 2012 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 certain sales and marketing expenses.  

The Company cannot predict what the outcome of those investigations will be, or the timing of any resolution. However, due to the significant uncertainty as to the outcome of the investigation, the Company is unable to reasonably estimate the loss or range of loss that may be incurred. As of March 31, 2013, the Company has therefore not accrued a liability for the contingent loss related to the FCPA investigation. Any fines or penalties that may be imposed, or other losses that may be realized related to the investigations, could materially impact the Company’s financial statements. The Company will continue to reassess the potential liability related to the investigations and adjust its estimates accordingly in future periods.

NovaMed is a party to a Distribution and Supply Agreement with MEDA Pharma GmbH & Co. KG(“MEDA”). Following the Company’s acquisition of NovaMed,  NovaMed continued to perform this agreement; however, 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 and MEDA were in negotiations since the acquisition regarding potential amendments to the agreement that would resolve the disagreement. However no resolution was reached. MEDA notified NovaMed that the termination was effective as of May 2011, however as provided in the agreement, disputes, including disputes regarding termination must be resolved in binding arbitration. The Company does not expect any significant revenues from this agreement until 2014. NovaMed filed an application for binding arbitration with the China International Economic and Trade Arbitration Commission (“CIETAC”) on July 26, 2012. On October 10, 2012, MEDA filed an initial response and counterclaim with CIETAC claiming MEDA’s termination was valid and demanding the transfer of certain information and rights, as well as demanding the award of damages, including attorneys’ fees in an unspecified amount. On April 16, 2013, MEDA filed a further response stating their claims and facts in support of their initial response and counterclaim. A hearing on the merits of the matter is scheduled to be held before the CIETAC arbitration panel from August 20 through August 22, 2013 in Shanghai.

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, 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’s management believes that the claims lack merit and will vigorously defend against them.

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Condensed Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Condendsed Consolidated Statements Of Comprehensive Income [Abstract]
Net income (loss)	$ 4,203	$ 9,665
Other comprehensive income (loss):
Net change in unrealized gain (loss) and foreign currency translation on foreign currency denominated available-for-sale securities	(10)	20
Foreign currency translation	178	254
Total other comprehensive income (loss)	168	274
Total other comprehensive income (loss)	$ 4,371	$ 9,939

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 93,305	$ 84,228
Accounts receivable, net of allowance	27,826	38,109
Inventories	7,680	10,424
Restricted cash and investments	2,747	2,759
Prepaid expenses and other current assets	1,996	1,809
Total current assets	133,554	137,329
Property and equipment, net	1,218	1,377
Deferred tax assets	369	369
Goodwill	34,478	34,313
Other assets	623	683
Total assets	170,242	174,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	2,284	7,787
Accrued and other current liabilities	19,623	21,427
Deferred tax liabilities	153	153
Short-term borrowing on loan facility	2,012	1,445
Total current liabilities	24,072	30,812
Other long-term liabilities	132	237
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding
Common stock	54	54
Additional paid-in capital	275,531	274,387
Accumulated other comprehensive income	3,156	2,988
Accumulated deficit	(132,703)	(134,407)
Total stockholders' equity	146,038	143,022
Total liabilities and stockholders' equity	$ 170,242	$ 174,071

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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	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	$ 50,954	$ 43,964
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	50,879	43,889
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	50,506	43,505
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	50,506	43,505
Restricted Italian State Bonds Maturing In 2013 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value	373	384
Restricted Italian State Bonds Maturing In 2013 [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	$ 373	$ 384

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation Expenses Included In The Condensed Consolidated Statements Of Operations

	Three Months Ended
	March 31,
		2013		2012
Sales and marketing	$	246	$	276
Research and development		9		90
General and administrative		764		556
	$	1,019	$	922

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Subsequent Event Part 2 (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended		3 Months Ended	9 Months Ended	17 Months Ended	0 Months Ended
	Aug. 31, 2013	Oct. 31, 2011	Mar. 31, 2013	Sep. 30, 2013	Dec. 31, 2014	Jul. 08, 2013 NovaMed [Member]	Oct. 16, 2012 NovaMed [Member]
Subsequent Event [Line Items]
Cash held in escrow not released							$ 1.4
Common stock held in escrow not released							622,363
Escrow settlement, cash expected to be retained						0.8
Escrow settlement, common stock expected to be retained						342,300
Escrow settlement, cash and shares combined value						2.6
Share repurchase program, amount authorized		20.0	40.5	50.5	50.5
Share repurchase program, additional amount authorized	10.0
Share repurchase program, remaining amount authorized			$ 9.9		$ 19.9

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Stockholders' Equity (Stock-Based Compensation Expenses Included In The Condensed Consolidated Statements Of Operations) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	$ 1,019,000	$ 922,000
Sales And Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	246,000	276,000
Research And Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	9,000	90,000
General And Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses recognized	$ 764,000	$ 556,000

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Segment Information And Geographic Data (Summary Information By Operating Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Segment Reporting Information [Line Items]
Revenues	$ 29,806	$ 41,068
Income (loss) from operations	5,024	10,574
Non-operating income (expense)	(34)	(26)
Income (loss) before provision for income tax	4,990	10,548
China [Member]
Segment Reporting Information [Line Items]
Revenues	28,810	40,373
Income (loss) from operations	10,951	14,242
Non-operating income (expense)	(26)	(31)
Income (loss) before provision for income tax	10,925	14,211
Rest Of The World (Including the US and Hong Kong) [Member]
Segment Reporting Information [Line Items]
Revenues	996	695
Income (loss) from operations	(5,927)	(3,668)
Non-operating income (expense)	(8)	5
Income (loss) before provision for income tax	$ (5,935)	$ (3,663)

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Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity [Abstract]

Stockholders' Equity

7.Stockholders’ Equity

Stock-based Compensation

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

	Three Months Ended
	March 31,
		2013		2012
Sales and marketing	$	246	$	276
Research and development		9		90
General and administrative		764		556
	$	1,019	$	922

Stock Options

During the three months ended March 31, 2013, the Company granted options to purchase a total of 50,000 shares of common stock and options to purchase 44,731 shares of common stock were exercised. As of March 31, 2013, there was approximately $4.2 million of unrecognized compensation expense cost, net of forfeitures, related to non-vested stock options, which is expected to be recognized over a weighted average remaining period of approximately 2.33 years.

The Company has granted a performance-based option for 12,500shares 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 option will fully vest upon 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 grant date fair value per share of the performance-based awards has been calculated using the Black-Scholes option pricing model using the following assumptions: expected term of 5.22 years, volatility factor of 63.66%, and risk free interest rate of 0.96%. 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 the three-month period ended March 31, 2013 and 2012, the Company recognized $0 and $26,000, respectively, of expense related to performance-based options.

RSUs

During the three months ended March 31, 2013, no RSUs were granted and no RSUs vested. As of March 31, 2013, there was approximately $0.8 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 1.17 years.

Repurchase of Common Stock

In May and November 2012, the Company’s Board of Directors approved an increase of approximately $10.5 million and $10.0 million, respectively, to the $20 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to approximately $40.5 million. The Company repurchased and retired 502,400 shares at a cost of $2.5 million during the three-month period ended March 31, 2013. As of March 31, 2013, $9.9 million of the $40.5 million share repurchase program authorized by the Board of Directors was available for future share repurchases. Repurchased shares have been retired and constitute authorized but unissued shares.

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Fair Value Measurements (Schedule Of Change In Estimated Fair Value Of Contingent Consideration) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Fair Value Measurements [Abstract]
Balance at beginning of period		$ 15,400
Change in the estimated fair value of the contingent consideration liability		(916)
Balance at end of period		$ 14,484

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Subsequent Event

3 Months Ended

Mar. 31, 2013

Subsequent Event [Abstract]

Subsequent Event

10.Subsequent Events

Zensun (Shanghai) Science & Technology Co., Ltd. (“Zensun”).  On May 13, 2013, the Company, through a designated affiliate, entered into a binding term sheet with Zensun for the exclusive promotion, marketing, distribution and sale of Neucardin^TM in China, Hong Kong and Macau. 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 the China Food and Drug Administration (“CFDA”) in 2012. The Zensun agreement provides for the principal terms of the arrangement. The Company is now negotiating 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 upon 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 of  $25 million if approval is received for the use of Neucardin™ in additional indications. In addition, the Company has agreed, subject to the entry into mutually acceptable definitive agreements and the satisfaction of certain conditions, to provide a collateralized loan to Zensun of up to approximately $12 million. Zensun is required to refund and return the upfront payment it receives from the Company if Zensun terminates the agreement for failure of the Company to fund all or some of the loan to Zensun. 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.

Taiwan Liposome Company (“TLC”).  On June 2013, the Company entered into an agreement with TLC granting the Company a license and the exclusive rights in China, Hong Kong and Macau 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 manufacturing and supply of ProFlow, and the Company will be responsible for all aspects of commercialization including pre-and post-launch activities. ProFlow has been submitted to the CFDA for approval, and it is expected that some additional clinical testing may be required prior to approval. Financial terms of the agreement include clinical regulatory milestone payments up and sales milestone payments up to an aggregate of $39.5million. The agreement provides for the principal terms of the arrangement between SciClone and TLC, and the companies have agreed to negotiate a supplemental license and supply agreement.

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 our acquisition of NovaMed. As a result of the Company’s claim, approximately $1.4 million in cash held in escrow and 622,363 shares of the Company’s common stock 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 will retain approximately $0.8 million in cash and 342,300 shares of its common stock, having a combined value of approximately $2.6million on the settlement date. The Company intends to cancel and retire the shares.

Chief Financial Officer.  On July 15, 2013, the Company announced the appointment of Wilson W. Cheung as Chief Financial Officer and Senior Vice President, Finance.

Share Repurchase Program.In August 2013, the Company’s Board of Directors approved an increase of $10.0 million to the existing $40.5 million share repurchase program initiated in October 2011, bringing the total authorized under the program since inception to $50.5million. In addition, the Board of Directors approved extending the repurchase program through December 31, 2014. As of August 7, 2013,$19.9 million of the total $50.5 million was available for share repurchase.

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Accrued And Other Current Liabilities

3 Months Ended

Mar. 31, 2013

Accrued And Other Current Liabilities [Abstract]

Accrued And Other Current Liabilities

6.Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	March 31,		December 31,
	2013		2012
Accrued sales and marketing expenses	$	5,426	$	9,051
Accrued taxes, tax reserves and interest		5,810		4,410
Accrued compensation and benefits		1,745		3,232
Accrued professional fees		3,945		1,570
Other		2,697		3,164
	$	19,623	$	21,427

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Basis Of Presentation

3 Months Ended

Mar. 31, 2013

Basis Of Presentation [Abstract]

Basis Of Presentation

1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”) have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistent with those applied in, and should be read in conjunction with, the audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”). The Company prepared the unaudited condensed consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other information that are normally required by GAAP can be condensed or omitted.

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

The interim financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited condensed consolidated balance sheet data as of December 31, 2012 is derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

Customer Concentration

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 Lingyun Biopharmaceutical (Shanghai) 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. 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 partners. These importing agents, distributors and partners are the Company’s customers.

For the three months ended March 31, 2013 and 2012, revenues from two customers in China accounted for 90% and 89%, respectively, of the Company’s revenues. No other customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2013 or 2012. The Company’s two largest customers were the same for both periods. As of March 31, 2013, approximately $26.4 million, or 91%, of the Company's accounts receivable were attributable to three customers in China. The Company generally does not require collateral from its customers.

Accounts Receivable

Receivable Reserve.The Company records a receivable reserve based upon 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. As of March 31, 2013, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable of $4.1 million related to two customers who are related parties to each other. As of December 31, 2012, the Company recorded a receivable reserve of approximately $1.0 million related to gross accounts receivable from one customer of $3.5 million. The receivable reserve reflects the Company’s best estimate of the ultimate collection, though actual collections may vary and the Company continues to pursue the full amount of the accounts receivables.

Reserve for Product Returns. The Company maintains a reserve for product returns based on estimates of the amount of product to be returned by its customers which may result from expired product 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 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 March 31, 2013 and December 31, 2012, the Company had estimated a product returns reserve of $0.1 million on its consolidated balance sheets related to oncology products and Aggrastat product sales.

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 products, from the date of the acquisition of the Company’s subsidiary, NovaMed Pharmaceuticals (Shanghai) Co. Ltd. (“NovaMed”) in April of 2011 into 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 upon receipt of cash from the distributor. The Company amended the agreement on October 21, 2012, 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 upon 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 the 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 is required to return or refund a portion of promotion services fees received during interim periods from pharmaceutical customers if defined annual sales targets are not achieved. Under the Company’s agreements with these customers, if the agreement is terminated, and provided such targets have been met on a “pro rata” basis at the date of contract termination, the Company is entitled to retain the amounts paid. Due to the ability to retain amounts paid upon contract termination, provided applicable targets have been met on a “pro rata” basis at any interim date, the Company has 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 amount of revenue recognized during the three-month period ended March 31, 2013 under this method that is potentially subject to refund is $2.2 million. If the Company achieves the defined annual sales targets, these amounts will not be refunded.

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. For the three month period ended March 31, 2013, the Company has not recorded any write-downs related to inventory.

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, restricted stock units (“RSUs”) 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 (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2013		2012
Numerator:
Net income	$	4,203	$	9,665
Denominator:
Weighted-average shares outstanding used to
compute basic net income per share		54,084		57,701
Effect of dilutive securities		1,388		1,990
Weighted-average shares outstanding used to
compute diluted net income per share		55,472		59,691
Basic net income per share	$	0.08	$	0.17
Diluted net income per share	$	0.08	$	0.16

For the three months ended March 31, 2013 and 2012, outstanding stock options and RSUs for 2,856,805 and 2,882,181 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise of these options and RSUs calculated under the treasury stock method would have been anti-dilutive. In addition, for the three months ended March 31, 2013 and 2012, shares subject to market or performance conditions of 12,500 and 71,703, respectively, were excluded from the calculation of diluted net income per share because the performance or market criteria had not been met.

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Accrued And Other Current Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Accrued And Other Current Liabilities [Abstract]
Accrued sales and marketing expenses	$ 5,426	$ 9,051
Accrued taxes, tax reserves and interest	5,810	4,410
Accrued compensation and benefits	1,745	3,232
Accrued professional fees	3,945	1,570
Other	2,697	3,164
Accrued and other current liabilities, total	$ 19,623	$ 21,427

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Available-For-Sale Investments (Tables)

3 Months Ended

Mar. 31, 2013

Available-For-Sale Investments [Abstract]

Summary Of Available-For-Sale Investments

		March 31, 2013
						Unrealized
						Losses for
		Amortized		Unrealized		More Than		Estimated
		Cost		Gains		12 Months		Fair Value
Certificate of deposit	$	75	$	—	$	—	$	75
Money market funds		50,506		—		—		50,506
Restricted Italian state bonds maturing
in 2013		451		—		(78)		373
Total available-for-sale investments	$	51,032	$	—	$	(78)	$	50,954

		December 31, 2012
						Unrealized
						Losses for
		Amortized		Unrealized		More Than		Estimated
		Cost		Gains		12 Months		Fair Value
Certificate of deposit	$	75	$	—	$	—	$	75
Money market funds		43,505		—		—		43,505
Restricted Italian state bonds maturing
in 2013		451		—		(67)		384
Total available-for-sale investments	$	44,031	$	—	$	(67)	$	43,964

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Segment Information And Geographic Data

3 Months Ended

Mar. 31, 2013

Segment Information And Geographic Data [Abstract]

Segment Information And Geographic Data

9.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 and reporting segments, 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 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. Operating loss for the Rest of the World segment includes the change in the fair value of the contingent consideration and all research and development expense for the Company’s SCV-07 trial, which was discontinued in the first quarter of 2012.

Summary information by operating segment for the three-month periods ended March 31, 2013 and 2012 is as follows (in thousands):

	Three Months Ended
	March 31,
	2013		2012
Revenue:
China	$	28,810	$	40,373
Rest of the World (including the US and Hong Kong)		996		695
Total net revenues	$	29,806	$	41,068
Income (loss) from operations:
China	$	10,951	$	14,242
Rest of the World (including the US and Hong Kong)		(5,927)		(3,668)
Total income from operations	$	5,024	$	10,574
Non-operating income (expense):
China	$	(26)	$	(31)
Rest of the World (including the US and Hong Kong)		(8)		5
Total non-operating expense	$	(34)	$	(26)
Income (loss) before provision for income tax:
China	$	10,925	$	14,211
Rest of the World (including the US and Hong Kong)		(5,935)		(3,663)
Total income before provision for income tax	$	4,990	$	10,548

Long-lived assets as of March 31, 2013 by operating segment are as follows (in thousands):

China	$	35,590
Rest of the World (including the US and Hong Kong)		729
	$	36,319

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Accrued And Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2013

Accrued And Other Current Liabilities [Abstract]

Schedule Of Accrued And Other Current Liabilities

	March 31,		December 31,
	2013		2012
Accrued sales and marketing expenses	$	5,426	$	9,051
Accrued taxes, tax reserves and interest		5,810		4,410
Accrued compensation and benefits		1,745		3,232
Accrued professional fees		3,945		1,570
Other		2,697		3,164
	$	19,623	$	21,427

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

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

	Fair Value Measurements as of March 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)		March 31, 2013
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		50,506		—		—		50,506
Restricted Italian state
bonds		373		—		—		373
Total	$	50,879	$	75	$	—	$	50,954

	Fair Value Measurements as of December 31, 2012 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, 2012
Certificate of deposit	$	—	$	75	$	—	$	75
Money market funds		43,505		—		—		43,505
Restricted Italian state
bonds		384		—		—		384
Total	$	43,889	$	75	$	—	$	43,964

Schedule Of Change In Estimated Fair Value Of Contingent Consideration

	Three Months Ended
	March 31,
	2013		2012
Contingent Consideration:
Balance at beginning of period	$	—	$	15,400
Change in the estimated fair value of the
contingent consideration liability		—		(916)
Balance at end of period	$	—	$	14,484

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Document And Entity Information	3 Months Ended
	Mar. 31, 2013	Aug. 07, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
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		54,315,966

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Schedule Of Inventories

	March 31,		December 31,
	2013		2012
Raw materials	$	3,039	$	3,184
Work in progress		1,698		904
Finished goods		2,943		6,336
	$	7,680	$	10,424