Alpha 1 Biomedicals Inc. and SciClone Pharmaceuticals Inc. arenegotiating a transaction in which Alpha 1 would give SciCloneworldwide rights to the drug thymosin alpha 1 in exchange forSciClone stock.The transaction also would settle, without damages, all issues pendingin arbitration proceedings between the companies, Alpha 1 said. Thesecond phase of arbitration between the companies is scheduled forMay 18. The conclusion of negotiations is subject to the further duediligence by each company, and the approval of Alpha 1 stockholders.Officials from both companies told BioWorld Tuesday that details ofthe proposed transaction would not be disclosed while negotiations areongoing.On April 28, Alpha 1 released partial data from a U.S. Phase III trial ofthymosin showing about equal responses in patients treated with thedrug and with placebo, as it relates to the disappearance of hepatitis Bvirus DNA, one of three treatment indicators.SciClone, of San Mateo, Calif., owns nearly 16 percent, or about 1.42million shares, of Alpha 1 stock. SciClone licenses the drug fromAlpha 1, and already has exclusive marketing rights in the areascontaining the vast majority of those infected with the chronic hepatitisB virus _ everywhere but North America, Europe, Korea and Israel.SciClone intends to launch the product later this year in Singapore, andis expecting approvals soon in Hong Kong and the People's Republicof China.`We're obviously interested in the drug, and the development of thedrug on a worldwide basis in as rapid a fashion as possible, across avariety of indications, Mark Culhane, SciClone's chief financial officerand vice president of finance and administration, told BioWorld. "If wecan gain access to the worldwide rights, it's important to do so."Culhane reiterated that SciClone has no interest in buying outBethesda, Md.-based Alpha 1, which has a shareholder rights plan ineffect to discourage a takeover by SciClone.Vincent Simmon, president and CEO of Alpha 1, said that, "Althoughnothing can be assured . . . we are very hopeful that the negotiationscan be brought to a successful conclusion."He told BioWorld that further analysis of the Phase III trial iscontinuing, that no conclusions have been reached, and that it will be"several weeks to a few months" before he could comment on specificsof the trial.SciClone (NASDAQ:SCLN) stock was up 63 cents Tuesday to close at$7.25. Alpha 1 (NASDAQ:ALBM) was up 38 cents to close at $3.38.

-- Jim Shrine

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