new article on scln
SciClone Pharm. CEO eyes selective alliances
[3/21/00, 5:15 AM EST] Donald Sellers, CEO of SciClone
Pharmaceuticals, Inc. (Nasdaq: SCLN), has forged alliances with
some of the strongest global partners around, giving SCLN the clout
and the funds it needs to bring drugs to market, but that traditional
biotech paradigm is not a snug fit for SCLN, a company that has
always been self-sufficient.
In a recent interview, Sellers told RedChip Reporter™ that while he
will strike a deal when he sees benefits and profitability, his company
will “go it alone as much as possible” in order to place added value
into the hands of shareholders.
Analysts see substantial benefit to SCLN in seeking alliances in the
“My view is that putting energy and money into marketing takes away
from what a small company does best--drug development,” said
RedChip™ analyst Wayne Lottinville.
SCLN’s focus on acquiring and developing promising compounds, in
conjunction with the choice to selectively seek global alliances, have
paid off for Sellers’ company, placing it among the biotech elite.
SCLN is one of less than 10% of small-cap biotech companies
currently selling a lead compound on the market. With that first
milestone achieved, the company has laid the groundwork to achieve
profitability by the end of 2000.
“We think that having some meat on the bones is a very important
feature in today’s market, where the biotech world is a little bit upside
down,” said Sellers.
SCLN’s climb toward profitability has been fueled by ZADAXIN
thymosin alpha 1--its lead compound and a drug with implications for
hepatitis B, hepatitis C and possibly cancer and HIV/AIDS.
Starting in 1995, the company targeted markets in Asia, Latin America
and the Middle East, where there are the greatest number of cases of
chronic hepatitis B and hepatitis C, and where ZADAXIN was originally
given regulatory approval.
More recently, SCLN has focused on carving out a place for ZADAXIN
in the U.S. and European markets.
On March 13, SCLN announced a strategic alliance with Sigma-Tau,
one of the largest private companies in Italy.
“The interesting thing about Sigma-Tau, is that they realize that a
study [for ZADAXIN] in the United States would be very valuable to a
successful approval in the European community,” Sellers told
Because of this, Sigma-Tau will not only fund pan-European pivotal
Phase III hepatitis C trials, but will also dedicate more than one-third of
the funds necessary to complete the same Phase III trials in the
Sellers said that the deal with Sigma-Tau was not only beneficial
financially to the company, but was essential to working through the
maze-like regulatory environment in Europe.
For similar reasons, SCLN partnered with a subsidiary of
Schering-Plough in Japan and is currently in a pivotal Phase III
hepatitis B trial.
Sellers could not yet discuss results from the trials, but said that
studies usually do not advance to Phase III in Japan without some
certainty that the drug will be approved.
With the cost of studies in Europe on the shoulders of Sigma-Tau and
studies in Japan on a cost-sharing basis with Schering-Plough, SCLN
has been able to keep its research and development spending at low
“We really have a lot of people spending money on our behalf. If we
had to spend it all ourselves I think this budget [of a little more than $4
million] would be significantly larger,” said Sellers.
While its partnerships with large pharma have clearly helped SCLN,
Sellers insisted such deals are not the standard for his company.
SCLN licensed an entire class of drugs from the National Institutes of
Health, including CPX, a drug that addresses the underlying causes of
Cystic Fibrosis (CF).
Sellers called CPX, which targets a very lucrative market, “the icing
on the cake” for the company. “It’s the kind of drug Merck would love
to have,” he said.
While several large pharmaceutical companies have approached
SCLN, Sellers said his company would remain independent in the
development of CPX for the time being.
“You don’t really need a giant field force or a big distribution group to
sell [CPX],” said Sellers.
Almost 95% of CF patients in the United States are registered with the
CF Foundation (a similar situation exists in Europe), making the
market one that is easily identified and targeted.
SCLN has been working closely with the CF Foundation and with the
U.S. Food and Drug Administration, both of which are anxious to bring
CPX into the investigative clinic for children as quickly as possible.
The company’s relationship with the patient population provides a
strong foothold in a concentrated market, said Sellers.
Even with ZADAXIN studies still underway and CPX and other
compounds still in the pipelines, SCLN saw its sales grow by 151%
last year to $9.1 million, while total revenue increased 152% to $9.4
The company trimmed its net loss for the year to $5.5 million, or $0.26
per share--a 74% decrease from the net loss posted in FY98--and
expects to make the jump to profitability by the end of this year.
“Having some financial stability [and] a good balance sheet--the ability
to sustain ourselves--plus having a significant future with some
development plans in place, we hope makes us a very attractive
candidate in the marketplace,” said Sellers
(Voluntary Disclosure: Position- Long; ST Rating- Buy; LT Rating- Strong
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