Sciclone Pharmaceuticals (SCLN) 8-K Sciclone Reports Second Quarter Results

Exhibit 99.1

SCICLONE REPORTS SECOND QUARTER RESULTS

— Record ZADAXIN Sales of $16.2 Million and Net Income of $5.1 Million —

San Mateo, CA, July 28, 2003 — SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) today reported net income of $5,124,000, or $0.13 per fully diluted share, for the second quarter ended June 30, 2003. Revenues from sales of ZADAXIN®, the company’s lead immune system enhancer drug, reached a record $16,207,000, driven primarily by a significant unanticipated surge in orders related to the SARS epidemic in China last April.

Commenting on the results, Donald R. Sellers, SciClone’s President and Chief Executive Officer said, “While our primary focus continues to be on managing the progress of our two U.S. phase 3 hepatitis C clinical trials, I am very proud of how our employees, suppliers, and importers responded quickly and responsibly to the SARS related short term increase in demand for ZADAXIN in China and our ability to make similar adjustments as ZADAXIN market conditions normalize.”

Sales reached $16,207,000 for the second quarter of 2003, a 300% increase over the $4,048,000 reported for the second quarter 2002 and a 224% increase over the $5,000,000 reported for the first quarter of 2003. Net income of $5,124,000, or $0.13 per fully diluted share, for the second quarter 2003 compares to a net loss of $3,345,000, or $0.10 per share, for the second quarter of 2002, and a net loss of $2,862,000, or $.08 per share, for the first quarter of 2003. In addition, the company recognized $224,000 as contract revenue from its European marketing partner, Sigma-Tau in each of these periods.

Richard A. Waldron, SciClone’s Chief Financial Officer, explained, “Compared to the first quarter of 2003, product sales increased by $11,207,000, gross margin increased by $9,292,000, and net income reached 31% of net revenue. These results were achieved even with the budgeted increase in research and development expenses associated with our two 500 patient phase 3 hepatitis C trials and finalizing the data from our Japanese phase 3 hepatitis B trial. In addition, with accelerated collections of receivables in the second quarter, the $1,382,000 increase in accounts receivable was low relative to the increase in sales. These factors contributed to an $8,787,000 increase in our cash position during the second quarter and to our continued ability to fund our ongoing U.S. phase 3 clinical trials. As the SARS epidemic has become more contained, we expect sales and other operating results in the third and in future quarters to be more consistent with sales patterns in prior quarters.”

For the six months ended June 30, 2003, revenues from ZADAXIN sales totaled $21,207,000, a 165% increase over the $7,996,000 reported for the same period of the prior year. Net income for the six months ended June 30, 2003 was $2,262,000, or $0.06 per fully diluted share, versus a net loss of $5,748,000, or $0.17 per share, during the same period of the prior year.

Positive operating cash flow of $5,602,000 for the second quarter of 2003 compared favorably to cash used in operations of $5,490,000 in the first quarter of 2003. Cash, cash equivalents, and short-term investments totaled $26,372,000 at June 30, 2003, compared to $17,585,000 at March 31, 2003 and $24,400,000 at June 30, 2002. Most of the increase from March 31, 2003 was attributable to the cash flow from operations and the receipt of $2.5 million from institutional investors exercising warrants to purchase common stock.

Other recent developments at SciClone include:

• In July, SciClone was added to the Russell 3000 index. In May, SciClone was added to the NASDAQ Biotechnology Index.

• In July, SciClone sponsored a satellite symposium that was attended by over 150 participants at the European Association for the Study of the Liver (EASL) in Geneva, Switzerland where internationally renowned experts in immunology and liver disease discussed ZADAXIN as a treatment for hepatitis C and hepatitis B.

• In June, SciClone announced positive data from its phase 3 clinical trial in Japan using ZADAXIN as a treatment for hepatitis B and its intent to file a Japanese New Drug Application. Efficacy measurements showed that 27% of patients had negative hepatitis B viral DNA, 23% of patients had a successful interruption of viral replication, and 20% of patients demonstrated a sustained seroconversion and the development of antibody to the hepatitis B virus e-antigen. Patients with chronic hepatitis B who demonstrate a sustained seroconversion are widely considered to be cured of their chronic hepatitis B. By comparison, in separate regulatory studies lamivudine produced a sustained seroconversion in 16% of Asian patients and adefovir dipivoxil produced a sustained seroconversion in 12% of patients.

• In June, SciClone announced the results of a tuberculosis animal model study demonstrating the mechanism of action of SCV-07, the Company’s proprietary compound that enhances the immune system. The study showed that SCV-07 stimulated a Th1 immune response, which led to a significant decrease in the lung damage index in the treatment group.

SciClone management will host a live audio webcast and conference call at 1:00 pm EDT (10:00 am PDT) today, Monday, July 28, 2003. The conference call may include forward looking statements. Financial information to be discussed in the conference call will be posted on the newsroom section of SciClone’s web site at http://www.sciclone.com prior to the commencement of the conference call. To participate in the conference call, please log-on at http://www.sciclone.com or call 800-374-0564 (U.S./Canada) or 706-634-6376 (international) and refer to SciClone when your call is answered by the operator. A replay will be available for two weeks. To access the replay, log on to http://www.sciclone.com or dial 800-642-1687 (U.S./Canada) or 706-645-9291 (international) and enter access code 1832532.

About SciClone
SciClone Pharmaceuticals is a biopharmaceutical company engaged in the development of therapeutics to treat life-threatening diseases. Its lead product ZADAXIN is in several late-stage clinical trials, including two phase 3 hepatitis C clinical trials in the U.S., a recently completed phase 3 hepatitis B clinical trial in Japan, a phase 2 malignant melanoma clinical trial in Europe, and two phase 2 liver cancer trials in the U.S. In addition to ZADAXIN, SciClone’s drug development opportunities include SCV-07, a potentially orally available therapy to treat viral and infectious diseases, and products to address the protein-based disorder that causes cystic fibrosis. Additional information is available at www.sciclone.com.

The information in this press release contains forward-looking statements including expectations and beliefs regarding sales and demand for ZADAXIN, our future financial results and the fact that the experimental or clinical data described may imply certain actual results in larger patient populations. Words such as “expects,” “plans,” “believe,” “may,” “will,” “anticipated,” “intended” and variations of these words or similar expressions are intended to identify forward-looking statements. In addition,

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any statements that refer to expectations, goals, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to 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 changes in demand for ZADAXIN, results obtained from future studies of ZADAXIN, the progress or failure of clinical trials, the course of the SARS epidemic and the fact that experimental data and clinical results derived from studies with a limited group of patients may not be predictive of the results of larger studies, as well as other risks and uncertainties described in SciClone’s filings with the Securities and Exchange Commission.

Corporate information contact:
Richard A. Waldron, CFO
650-358-3437

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SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Product sales		$	16,207,000		$	4,048,000		$	21,207,000		$	7,996,000
Contract revenue			224,000			224,000			448,000			224,000
Total revenue			16,431,000			4,272,000			21,655,000			8,220,000
Cost of product sales			2,931,000			815,000			3,947,000			1,607,000
Gross margin			13,500,000			3,457,000			17,708,000			6,613,000
Operating expenses:
	Research and development		4,308,000			3,771,000			8,091,000			6,297,000
	Sales and marketing		3,025,000			2,066,000			5,254,000			4,074,000
	General and administrative		1,035,000			955,000			2,047,000			1,947,000
Total operating expenses			8,368,000			6,792,000			15,392,000			12,318,000
Gain (loss) from operations			5,132,000			(3,335,000	)		2,316,000			(5,705,000	)
Interest and investment income			43,000			76,000			96,000			152,000
Interest and investment expense			(90,000	)		(90,000	)		(181,000	)		(180,000	)
Other income (expense), net			39,000			4,000			31,000			(15,000	)
Net income (loss)		$	5,124,000		$	(3,345,000	)	$	2,262,000		$	(5,748,000	)
Earnings per share:
	Basic net income (loss) per share	$	0.14		$	(0.10	)	$	0.06		$	(0.17	)
	Diluted net income (loss) per share	$	0.13		$	(0.10	)	$	0.06		$	(0.17	)
Weighted average shares used in computing:
	Basic net income (loss) per share		37,672,876			33,595,568			35,497,477			33,092,358
	Diluted net income (loss) per share		40,490,411			33,595,568			39,338,964			33,092,358

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SCICLONE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,			December 31,
		2003			2002
		(unaudited)			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents	$	25,363,000		$	20,233,000
	Restricted short-term investments		685,000			685,000
	Other short-term investments		324,000			232,000
	Accounts receivable, net of allowances of $638,000 in 2003 and 2002		11,923,000			9,276,000
	Inventories		2,936,000			3,431,000
	Prepaid expenses and other current assets		2,358,000			2,297,000
Total current assets			43,589,000			36,154,000
Property and equipment, net			90,000			111,000
Intangible assets, net			647,000			682,000
Other assets			148,000			164,000
Total assets		$	44,474,000		$	37,111,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable	$	4,213,000		$	3,150,000
	Accrued compensation and employee benefits		839,000			1,089,000
	Accrued clinical trials expense		739,000			966,000
	Accrued professional fees		546,000			679,000
	Deferred revenue		895,000			895,000
	Other accrued expenses		224,000			259,000
Total current liabilities			7,456,000			7,038,000
Deferred revenue			671,000			1,119,000
Convertible notes payable			5,600,000			5,600,000
Commitments and contingencies Shareholders’ equity:
	Common stock no par value; 75,000,000 shares authorized; 38,257,025 and 36,904,916 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively		161,334,000			156,290,000
	Accumulated other comprehensive income		167,000			79,000
	Accumulated deficit		(130,754,000	)		(133,015,000	)
Total shareholders’ equity			30,747,000			23,354,000
Total liabilities and shareholders’ equity		$	44,474,000		$	37,111,000

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SCICLONE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

			Six months ended
			June 30, 2003			June 30, 2002
			(unaudited)			(unaudited)
Operating activities:
Net income (loss)			$	2,262,000		$	(5,748,000	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
	Depreciation and amortization			90,000			292,000
	Changes in operating assets and liabilities:
		Accounts receivable, net		(2,647,000	)		(867,000	)
		Inventories		495,000			164,000
		Prepared expenses and other current assets		(59,000	)		777,000
		Accounts payable and other accrued expenses		1,027,000			(151,000	)
		Accrued compensation and employee benefits		(250,000	)		(298,000	)
		Accrued clinical trials expense		(226,000	)		817,000
		Accrued professional fees		(132,000	)		(18,000	)
		Deferred revenue		(448,000	)		2,461,000
Net cash provided by (used in) operating activities				112,000			(2,571,000	)
Investing activities:
	Purchase of property and equipment			(20,000	)		(43,000	)
	Payment on purchase of marketable securities			(4,000	)		(7,000	)
Net cash used in operating activities				(24,000	)		(50,000	)
Financing activities:
	Proceeds from issuance of common stock net of financing costs			5,042,000			10,524,000
Net cash provided by financing activities				5,042,000			10,524,000
Net increase in cash and cash equivalents				5,130,000			7,903,000
Cash and cash equivalents, beginning of period				20,233,000			15,518,000
Cash and cash equivalents, end of period			$	25,363,000		$	23,421,000

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