880771--3/16/2007--SCICLONE_PHARMACEUTICALS

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{property, intellectual, protect}

{regulation, change, law}

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{cost, regulation, environmental}

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Our revenue is dependent on the sale of ZADAXIN in foreign countries, particularly China, and if we experience difficulties in our foreign sales efforts, our operating results and financial condition will be harmed. Final results from our ongoing clinical trials for ZADAXIN and SCV-07 may differ materially from interim or pre-clinical trial results. These clinical trials could be affected by the future actions of our partners, unexpected delays, unanticipated patient drop out rates or adverse side effects, future actions by the U.S. Food and Drug Administration or equivalent regulatory authorities in Europe or additional expenses. We rely on third parties to supply our clinical trial and commercial products. Deficiencies in their work could delay or harm one or more important areas of our business including our sales, clinical trials or the regulatory approval process. We rely on third parties and corporate collaborators to conduct clinical trials and these third parties may not perform satisfactorily. If third-party reimbursement is not available or patients cannot otherwise pay for ZADAXIN or the DC Bead, we may not be able to successfully market them. Additional clinical trials will be required for the successful U.S. and European commercialization of ZADAXIN and for the continued success of our commercialization efforts in China and other markets. If the results of clinical trials are not favorable, we will be unable to obtain regulatory approval for the intended indications we are evaluating and our sales efforts in China and other markets where ZADAXIN is approved will be harmed. Higher than anticipated patient drop out rates in our clinical trials could adversely affect trial results and make it more difficult to obtain regulatory approval. We cannot predict the safety profile of the use of ZADAXIN when used in combination with other drugs. If we do not obtain regulatory approval for ZADAXIN for the intended indications that we are evaluating, our revenues will be limited and we may never become profitable. Regulatory approval is necessary to permit us to market the DC Bead in China. If we are unable to secure regulatory approval in China, we will be unable to market the DC Bead in China and our future sales potential in this market could be harmed. Our business strategy is dependent on our ability to in-license or otherwise acquire the rights to develop and commercialize products. If we fail to acquire such rights or are unsuccessful in our efforts to develop such products and obtain regulatory approval to market and successfully commercialize them, our business will suffer. If we lose key personnel or are unable to attract and retain additional, highly skilled and experienced personnel required for the expansion of our activities, our business will suffer. Because of China's tiered method of importing and distributing finished pharmaceutical products, our quarterly results may vary substantially from one period to the next. Our sales of ZADAXIN may fluctuate due to seasonality of product orders and sales in any quarter may not be indicative of future sales. If we fail to protect our products, technologies and trade secrets, we may not be able to successfully use, manufacture, market or sell our products, or we may fail to advance or maintain our competitive position, and we have limited intellectual property protection in China. If we are involved in intellectual property claims and litigation, the proceedings may divert our resources and subject us to significant liability for damages, substantial litigation expense and the loss of our proprietary rights. If we are not able to establish and maintain adequate manufacturing relationships, the development and sale of our products could be impaired. We may not be able to successfully develop or commercialize our products. We may consider strategic alliances with other companies in efforts to broaden our product development pipeline. We may need to obtain additional capital to support our long-term product development and commercialization programs. We have a history of operating losses and an accumulated deficit. We expect to incur losses in the near term and may not be profitable in the future. We have limited sales, marketing and distribution capabilities outside of China, which may adversely affect our ability to successfully commercialize our products. Commercialization of some of our products depends on collaborations with others. If our collaborators are not successful, or if we are unable to find future collaborators, we may not be able to properly develop and commercialize our products. We may be subject to product liability lawsuits, and our insurance may be inadequate to cover damages. We depend on international sales, and global conditions could negatively affect our operating results. If we are unable to comply with environmental and other laws and regulations, our business may be harmed. We may lose market share or otherwise fail to compete effectively in the intensely competitive biopharmaceutical industry. Our stock price may be volatile, and an investment in our stock could suffer a decline in value. Substantial sales of our stock or the exercise or conversion of options or convertible securities may impact the market price of our common stock. Sales of our common stock by officers and directors could affect our stock price. Anti-takeover provisions in our charter documents and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. New accounting pronouncements may impact our financial position or results of operations. New legislation may impact our financial position or results of operations. We may be subject to currency exchange rate fluctuations, which could adversely affect our financial performance.

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880771--3/16/2007--SCICLONE_PHARMACEUTICALS_INC