The much-anticipated results from a Taiwan trial of SciClonePharmaceuticals Inc.'s thymosin alpha 1 for hepatitis B fell short ofdemonstrating significance. But company officials said the results,combined with earlier U.S. data, will support regulatory submissionsthroughout Asia.

SciClone, of San Mateo, Calif., has pointed to these data since April1994, when another company reported it failed to get statisticalsignificance in a Phase III U.S. study of thymosin alpha 1. Thatcompany, Alpha 1 Biomedicals Inc., of Bethesda, Md., later soldmost rights for the drug, called Zadaxin, to SciClone.

Overall in Taiwan 40 percent of those of those taking thymosin alpha1 for six months with a 12-month follow-up period respondedcompared to 27 in an untreated placebo arm.

Responses were defined as undetectable levels of hepatitis B virus(HBV) DNA and HBV e-antigen at 18 months. Those numbers don'treach statistical significance.

SciClone said it plans to file for approval soon in Taiwan using thelatest data together with earlier U.S. data, or a meta-analysis of thetrials. Together the studies show responses of 38 percent for Zadaxinpatients vs. 21 percent for controls.

"The meta-analysis validates the drug for us," said Donald Sellers,SciClone's president and CEO. "The issue is convincing the peoplein the different markets the value of meta-analysis."

SciClone stock (NASDAQ:SCLN) was down 35 percent Thursday,falling $4.25 to $7.87 in trading of 2.5 million shares. Sellers saidinvestors, accustomed to U.S. regulatory procedures, may notunderstand as clearly the approval process in Asian countries, wheresales of the drug will be concentrated.

Zadaxin for some time has been cleared for marketing in Singaporeand recently was approved in the Philippines. But SciClone waswaiting on the Taiwan data before launching in Singapore, mostlybecause of negative publicity generated by the failed U.S. trial. NowSciClone, which has applications pending in a number of SoutheastAsia countries, plans to wait for additional approvals so acoordinated launch can be made, Sellers said.

He said another reason to wait until more countries approve the drugis out of fairness to distributors in countries where the drug hasn'tcleared. Sellers stressed, however, that SciClone won't wait too long,and would launch in individual countries by the end of the year.

"We are set to move," Sellers said. "We have product. It's a questionof when is the right time to push the button. We'll be generatingrevenues in 1997."

About 80 percent of the world's 300 million to 350 million carriers ofhepatitis B are in Asia, Sellers said.

Franklin Berger, an analyst for New York-based Josephthal Lyon &Ross Inc., downgraded SciClone stock Thursday from speculativebuy to hold. But he said the news was open to interpretation.

"We're in the middle of a gray area," Berger said. "You can cut thisup a number of ways. The data gives mixed signals." For example, hesaid, it did not show statistical significance overall but did in thelargest treatment center, and Zadaxin did show benefit in certainsubgroups, such as in men. Therefore, he said, it could become anoption in the treatment of hepatitis B, for which alpha interferon isthe only approved therapy.

Berger said he expects filing in Taiwan within three to four months,and for SciClone to proceed with filings in a number of othercountries. He said the company "has powerful operating leverage"because SciClone could reach break-even if only 7,000 to 10,000patients are taking the drug. "The business model is verycompelling," Berger said.

Sellers said Zadaxin will cost about $4,000 per course of therapy. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.