By Kim Coghill

Washington Editor

SciClone Pharmaceuticals Inc. initiated a pivotal U.S. Phase III hepatitis C clinical program for Zadaxin in combination with Pegasys, or pegylated interferon alfa-2a.

The study will target hepatitis C patients in the U.S. who are nonresponders to standard therapy (alpha-interferon or alpha-interferon plus ribavirin), most of whom are infected with genotype 1 of the hepatitis C virus.

Zadaxin, a subcutaneous injectable, is on the market in 20 other countries, principally for the treatment of hepatitis B and hepatitis C and as a vaccine adjuvant for patients with weakened immune systems, said Ruth Koh, investor relations associate with San Mateo, Calif.-based SciClone. "Zadaxin is unique because it works well with your natural immune system and it has a positive side-effect profile, and we haven't had any serious adverse toxicities," she said. "It's a good alternative to standard therapy, which does have side effects."

Zadaxin is an immune system enhancer designed to help boost, maintain and direct the body's antiviral or anticancer responses. Pegylated interferon alfa-2a is an alpha-interferon formulation that lasts longer in the bloodstream than standard alpha-interferon, providing a more convenient dosing schedule, a better safety profile and more consistent viral suppression.

For the pivotal trial, Pegasys is being supplied by Nutley, N.J.-based Hoffmann-La Roche Inc. in exchange for data, Koh said. "There is a dire need for treatment and I think by supplying the drug, Roche obviously is interested in the benefits. Roche will offset a lot of trial costs by supplying the drug."

It is estimated that up to 4 million people in the United States are infected with the hepatitis C virus.

In 1999, overseas sales of Zadaxin were $9.1 million.

The study, which is expected to last through 2003 and possibly into early 2004, consists of two 500-patient, multicenter, randomized, double-blind tests. All patients will have documented chronic hepatitis C and will previously have completed a course of standard therapy that did not produce a virological response to the extent that the patients remain infected at the end of treatment.

Each patient will be randomized to one of two arms: Zadaxin plus pegylated interferon alfa-2a or placebo plus pegylated interferon alfa-2a. Patients in both treatment arms will receive 12 months of therapy.

The primary efficacy endpoints will be a sustained virological response and an improvement in historical activity index. Both primary endpoints will be measured six months after the end of the 12 months of therapy.

Sigma-Tau S.p.A. of Italy, SciClone's European partner, will pay about one-third of the cost of one trial.

Zadaxin is in a Phase II program in the U.S. in combination with lamivudine for the treatment of hepatitis B. In Europe, a pivotal Phase III Zadaxin hepatitis C program will complement the company's U.S. program. In Japan, where SciClone partners with Schering-Plough K.K., Zadaxin is in a pivotal Phase III program for hepatitis B and a Phase II program for hepatitis C.

SciClone, which has always owned international rights to Zadaxin, acquired U.S. rights in 1998 from Alpha 1 Biomedicals Inc., of Bethesda, Md., which had failed to reach statistically significant results in a Phase III trial.

SciClone's stock (NASDAQ: SCLN) closed Wednesday at $5.343, down 15.62 cents.