SciClone Pharma says it is being investigated by SEC; DOJ wants to meet with company

SciClone plunges on SEC, Justice Dept. inquiries

FOSTER CITY, Calif. — Shares of SciClone Pharmaceuticals Inc. plunged to a year-low on Tuesday after the biotech company said it is facing inquiries by the Securities and Exchange Commission and the U.S. Department of Justice about possible violations of anti-bribery laws overseas.

SciClone stock tumbled $1.12, or 31.9 percent, to $2.39 in afternoon trading. Earlier in the session they fell more than 40 percent to an annual low of $2.08.

In its earnings report Monday, SciClone said it was contacted last week by the SEC regarding its formal investigation. The company on Friday received a letter from the Justice Department asking to meet regarding its compliance with the U.S. Foreign Corrupt Practices Act. The act makes it illegal for U.S. companies or companies listed on U.S. stock exchanges to offer money or goods to foreign officials in order to win or retain business.

SciClone said the DOJ is investigating the pharmaceutical industry at large, and the agency told SciClone it has received information about practices by SciClone that may violate the law. SciClone said it will fully cooperate with both agencies.

On Monday Merck & Co., the world’s second-biggest drugmaker by revenue, also said it received inquiry letters from both agencies for possibly violating anti-bribery laws in multiple foreign countries. Drugmakers have been aggressively pursuing sales in emerging markets including China, Russia, India and Brazil over the past few years. Government health officials in such countries often control the prices allowed for prescription drugs and decide which brands they will buy for millions of hospital and other patients.

The company also reported its second-quarter results. SciClone said its net income slid 25 percent in the second quarter as expenses increased and sales of its vaccine booster Zadaxin fell.

The company said it earned $5.5 million, or 11 cents per share, compared with $7.3 million, or 16 cents per share in the year-ago quarter. Revenue fell 6 percent, to $20.7 million from $22 million.

All of the company’s revenue comes from sales of Zadaxin. Sales last year soared due to the swine flu outbreak in China, where SciClone markets its product heavily.

The company said research and development costs fell to $2.4 million from $3.6 million because it did not spend as much on clinical trials. But sales and marketing costs rose to $5.6 million from $4.8 million due to Zadaxin promotions in China. General and administrative costs also rose to $3.4 million from $2.7 million.

SciClone backed its annual profit and revenue forecasts of 31 to 35 cents per share on $82 million to $85 million in revenue. Analysts expect 36 cents per share and revenue of $82.5 million, on average.

SciClone Pharmaceuticals Inc. is based in Foster City, Calif.