China Focused, Revenue Driven, Specialty Pharmaceutical Company

Transcription

1 China Focused, Revenue Driven, Specialty Pharmaceutical Company ANNUAL REPORT 2010

2 About SciClone SciClone Pharmaceuticals (NASDAQ: SCLN) is a revenue-generating, Chinacentric, specialty pharmaceutical company with a substantial international business and a product portfolio of novel therapies for cancer and infectious diseases. The Company is focused on continuing sales growth and executing a clinical development strategy with prudently managed costs. ZADAXIN (thymalfasin) is approved in over 30 countries for the treatment of hepatitis B (HBV), as a vaccine adjuvant, for the treatment of hepatitis C (HCV), and certain cancers. SciClone is evaluating SCV-07 in a phase 2b trial to modify the course of oral mucositis in patients with head and neck cancer. The Company also has exclusive commercialization and distribution rights in China to a novel treatment for advanced liver cancer, DC Bead, which is already approved in approximately 40 countries worldwide, including the U.S. and several countries in Europe. DC Bead is currently under review by regulatory agencies in China. Additionally, SciClone owns exclusive commercialization and distribution rights to the anti-nausea drug ondansetron RapidFilm in China, including Hong Kong and Macau, and Vietnam. The Company intends to seek regulatory approval for the product, commonly used to treat and prevent nausea and vomiting caused by chemotherapy, radiotherapy, and surgery, in these markets.

3 Product Portfolio PRODUCT DEVELOPMENT PHASE 1 PHASE 2 PHASE 3 MARKETED ZADAXIN HBV/HCV & Other Indications China, Russia & > 30 other countries SCV-07 Oral Mucositis in Head/Neck Cancer Global (Ex-Russia) DC Bead TM Liver Cancer China Ondansetron RapidFilm TM Palliative Care China & Vietnam

4 SCICLONE ANNUAL SALES MEETING; XI AN, CHINA, JANUARY 2011 Dear Stockholders, 2010 was a successful year for SciClone and we are pleased with our performance and progress. Driven by the success of our specialty pharmaceuticals franchise, we achieved our second consecutive year of profitability, an important milestone for the company. We continue to deliver strong financial results due to the sales momentum of ZADAXIN in China, and we continue to build a well-respected brand throughout the country. As a result, we increased revenues to $85.1 million in 2010, an increase of 18% over China remains the focal point of our strategy, and it is an exceptionally attractive pharmaceutical market opportunity. Our ZADAXIN business in China grew significantly in 2010, and we expect that trend to continue throughout Our goal is to become a significant competitor in China, where we feel we are well positioned for growth. China is expected to rank second among global pharmaceuticals markets by 2015 with projected growth rates of approximately 20% and more annually over the next couple of years. As our ZADAXIN business in China continues to grow, there are several key factors that may further increase its sales to China, the most important of which is Chinese health care reform. Reform is already underway in China and has many facets that should ultimately expand patients access to pharmaceuticals. We believe that Chinese health care reform will allow more patients to access products like ZADAXIN and as a result will increase sales volume for SciClone. Despite many delays, government-set price levels for listed drugs in the country are being reviewed and ZADAXIN s list price could be included in future reviews. We anticipate that additional, possibly decreased, government-set price levels for listed drugs may be announced in the near term, but the timing and actual impact is difficult to predict.

5 ZADAXIN Sales ($ in millions) E Earnings Per Share ($) E While China is still an emerging market it carries risks, in particular for US companies. For example, the ongoing government investigations that began in 2010 relating to our business in China, as well as related litigation, have required substantial expense and we anticipate the investigations to conclude soon. Despite these operational challenges, we remain excited about the growth opportunity in that country. We are working to further increase our sales to China while also leveraging our balance sheet to in-license additional products or acquire companies with branded, well-differentiated products that are approved or have a clear regulatory pathway to approval in China. Our many years of focus in this market, our established sales organization, and our strong brand and reputation will help us achieve this goal. To date, we have in-licensed two products with large potential markets in China, DC Bead and ondansetron RapidFilm, and we are working towards regulatory approval for both candidates. We have the Chinese rights to DC Bead, a novel treatment for advanced liver cancer, which is currently approved in approximately 40 countries worldwide, including the U.S. and several countries in Europe. Early this year, we completed enrollment in a small local registration trial of approximately 40 advanced liver cancer patients at several liver cancer treatment centers and hospitals in China. The primary objective is safety and the secondary objective is efficacy, as measured by tumor response.

6 We have also in-licensed the rights to ondansetron RapidFilm, which is an oral thin film formulation of ondansetron, a serotonin 5-HT3 receptor antagonist commonly used to treat and prevent nausea and vomiting caused by chemotherapy, radiotherapy, and surgery. We have commercialization rights for this product candidate in China, including Hong Kong, Macau, and Vietnam, and we plan on filing a clinical trial application in In 2010, ondansetron RapidFilm was granted approval under the European Union decentralized procedure in 16 major EU countries, and we believe that this will help facilitate the product registration process for us in China. We are excited about both of these new product opportunities, their potential to bring important therapies to patients in China, and also for the opportunity they may provide to further expand our business in the region. Beyond China, we are developing SCV-07, a small molecule synthetic peptide with immunomodulating properties, in an ongoing phase 2b clinical trial, launched early in 2011, for the prevention of oral mucositis (OM), which is a common, painful, debilitating complication of cancer treatment. We believe that approximately $10 billion was spent worldwide on medical costs for treating this disease in Last year we announced top-line results from our phase 2a proof of concept clinical trial of SCV-07 to modify the course of OM in patients with head and neck cancer receiving chemoradiotherapy regimens. The phase 2a trial was particularly important because it examined information related to dosing that helped establish the trial design for the phase 2b study. We were pleased to be able to advance the SCV-07 OM program from completion of phase 2a into the important phase 2b effectively. We will continue to work towards creating additional value for shareholders in 2011, as we focus on growing our China business, further expanding our ZADAXIN sales efforts, working towards approval for DC Bead and ondansetron RapidFilm, and looking for new opportunities in China. During the year, we expect to file a Clinical Trial Application, the initiation of the clinical trial process in China, for RapidFilm, and we hope to receive regulatory approval for DC Bead in China, towards year-end. In the U.S., we will continue enrolling patients in our phase 2b study in OM. We would like to thank our investors, patients, and partners for their continued support. I would also like to thank the employees at SciClone, especially our sales organization in China, for their hard work, commitment, and dedication in I look forward to updating you as the year progresses. Friedhelm Blobel, Ph.D. President and CEO APRIL 11, 2011

7 Corporate Directory Corporate Officers Friedhelm Blobel, Ph.D. President and Chief Executive Officer Gary Titus Senior Vice President and Chief Financial Officer Hans Schmid President and Managing Director ScicClone Pharmaceuticals International, Ltd. Israel Rios, M.D. Senior Vice President and Chief Managing Officer BOARD OF DIRECTORS Jon Saxe 1,3,4 Chairman, SciClone Pharmaceuticals, Inc. Former President, PDL BioPharma, Inc. (formerly Protein Design Labs, Inc.) Former Vice President of F. Hoffmann-LaRoche, Inc. Friedhelm Blobel, PhD. President and Chief Executive Officer, SciClone Pharmaceuticals, Inc. Roberto Camerini, M.D. 5 Head of Clinical Research Worldwide Drug Development, for Sigma-Tau Industrie Farmaceutiche Riunite SpA Richard Hawkins 1,2,5 Chairman and Chief Executive Officer, id2, Inc. Trevor Jones, Ph.D. 2,3,5 Commander of the British Empire, Former Vice Chair of King s College London Gregg Lapointe 4 Chief Executive Officer of Sigma-Tau Pharmaceuticals, Inc. Ira Lawrence, M.D. 4,5 Senior Vice President, Research and Development, Medicis Pharmaceuticals Dean Woodman 1,2,3,4 Co-Founder, Robertson Coleman Stephens & Woodman,Former Managing Director, ING Barings 1 Audit Committee Member 2 Compensation Committee Member 3 Nominating and Corporate Governance Committee Member 4 Business Development Committee Member 5 Scientific Review Committee Member CORPORATE HEADQUARTERS SciClone Pharmaceuticals, Inc. 950 Tower Lane, Suite 900 Foster City, CA T: or 800.SCICLONE Fax: Website You can obtain recent press releases and other corporate information by visiting SciClone s website at Additional INFORMation If you need additional assistance or information regarding the Company, or would like to receive a free copy of the Company s 10K or 10-Q reports filed with the Securitites and Exchange Commission, please contact our Investor Relations department at or send an message to: investorrelations@sciclone.com COMMON STOCK LISTING SciClone s common stock trades on the NASDAQ Stock Market LLC under the symbol SCLN. TRANSFER AGENT Communications concerning transfer requirements, lost certifications, changes of address and other similar inquiries should be directed to SciClone s transfer agent: BNY Mellon Shareowner Services P.O. Box Pittsburgh, PA T: shrrelations@mellon.com equityaccess Independent Auditors Ernst & Young LLP Palo Alto, California Legal Counsel DLA Piper LLP (US) San Francisco, California ANNUAL MEETING The Annual Meeting of Stockholders will be held on June 9, 2011 at 10 am PT at the Marriott San Mateo/San Francisco Airport, 1770 S. Amphlett Blvd., San Mateo, CA Detailed information about the meeting is contained in the Notice of Annual Meeting of Stockholders and Proxy Statement sent with a copy of the Annual Report on Form 10-K to each stockholder of record as of April 21, TRADEMARKS SciClone, the SciClone logo, the Swirl logo and ZADAXIN are registered trademarks of SciClone Pharmaceuticals, Inc. in the United States and numerous other countries. Forward-looking Statements This Annual Report contains forward-looking statements regarding expected financial results and expectations. Readers are urged to consider statements that include the words may, will, would, could, should, might, believes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal, unaudited, approximately or the negative of those words or other comparable words to be uncertain and forward-looking. These statements are subject to risks and uncertainties that are difficult to predict and actual outcomes may differ materially. These risks and uncertainties include risk and uncertainties relating to: the course, cost and outcome of regulatory matters, including pricing decisions by authorities in China; the on-going regulatory investigations and its independent investigation; the Company s ability to execute on its goals for ZADAXIN sales to China and on its objectives for revenue in fiscal 2011; operating an international business; the clinical trial process, including the regulatory approval and the process of initiating trials at, and enrolling patients at, clinical sites; the Company s ability to remediate its identified material weaknesses over financial control; and changes in its practices and policies which could adversely affect its ability to generate revenue. SciClone cannot predict the timing or outcome of its own internal investigation, of the SEC and DOJ investigations, of the various litigations that have or may be filed relating to any of those matters, or of its efforts to cooperate with those investigations, however the Company expects to incur substantial expenses in connection with the investigations and the results of the investigations could include fines and further changes in its internal control or other remediation measures that could adversely affect its business. Please also refer to other risks and uncertainties described in SciClone s filings with the SEC. All forward-looking statements are based on information currently available to SciClone and SciClone assumes no obligation to update any such forward-looking statements.

8 SciClone Pharmaceuticals, Inc. 950 Tower Lane, Suite 900 Foster City, CA T: or 800.SCICLONE Fax: