<PAGE>   1

                                   FORM 10-Q


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

    (Mark One)

        [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

        For the quarterly period ended June 30, 2000

                                          OR

        [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

        For the transition period from ____________________to __________________

        Commission file number: 0-19825

                         SCICLONE PHARMACEUTICALS, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

           CALIFORNIA                                            94-3116852
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)



901 MARINER'S ISLAND BLVD., SUITE 205, SAN MATEO, CALIFORNIA            94404
------------------------------------------------------------            -----
          (Address of principal executive offices)                    (Zip code)

                                 (650) 358-3456
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
                                 --------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)

                  Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

                  Yes  [X]          No    [ ]

                  As of July 10, 2000, 31,639,074 shares of the registrant's
Common Stock, no par value, were issued and outstanding.



<PAGE>   2


                         SCICLONE PHARMACEUTICALS, INC.

                                      INDEX
<TABLE>
<CAPTION>


PART I.     FINANCIAL INFORMATION                                                              PAGE NO.

<S>         <C>                                                                                <C>
Item 1.     Condensed Consolidated Financial Statements (Unaudited)
                 Condensed Consolidated Balance Sheets as of June 30, 2000 and
                     December 31, 1999                                                             3

                 Condensed Consolidated Statements of Operations for the Three month and
                     Six-month periods ended June 30, 2000 and 1999                                4

                 Condensed Consolidated Statements of Cash Flows for the Six-month
                     periods ended June 30, 2000 and 1999                                          5

                 Notes to Condensed Consolidated Financial Statements                              6

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of
                 Operations                                                                        8

Item 3.     Quantitative and Qualitative Disclosures About Market Risk                            24

PART II.    OTHER INFORMATION

Item 2.     Changes in Securities and Use of Proceeds                                             25

Item 4.     Submission of Matters to a Vote of Security Holders                                   26

Item 6.     Exhibits and Reports on Form 8-K                                                      27

Signatures                                                                                        28
</TABLE>


                                       2

<PAGE>   3


PART I.     FINANCIAL INFORMATION

ITEM 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                         SCICLONE PHARMACEUTICALS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>


                                                                                   June 30,         December 31,
                                                                                     2000              1999
                                                                                 -------------     -------------
                                                                                  (unaudited)         (Note 1)
<S>                                                                              <C>               <C>
Current assets:
    Cash and cash equivalents                                                    $  18,001,000     $   1,828,000
    Short-term investments                                                                  --         1,793,000
    Accounts receivable, net                                                         8,220,000         4,343,000
    Inventory                                                                        1,154,000         1,081,000
    Prepaid expenses and other current assets                                          717,000           685,000
    Assets available-for sale                                                        1,184,000         1,184,000
                                                                                 -------------     -------------
Total current assets                                                                29,276,000        10,914,000

Property and equipment, net                                                            187,000           235,000
Other assets                                                                         1,786,000         1,975,000
                                                                                 -------------     -------------
Total assets                                                                     $  31,249,000     $  13,124,000
                                                                                 =============     =============

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                             $   1,440,000     $     825,000
    Accrued compensation and benefits                                                  530,000           730,000
    Accrued clinical trials expense                                                    655,000           258,000
    Accrued professional fees                                                          699,000           865,000
    Other accrued expenses                                                              11,000           203,000
    Other current liabilities                                                          936,000           942,000
                                                                                 -------------     -------------
Total current liabilities                                                            4,271,000         3,823,000

Shareholders' equity:
    Common stock, no par value; 75,000,000 shares authorized; 31,639,074 and
       25,258,395 shares issued and outstanding at June 30, 2000 and December
       31, 1999, respectively                                                      143,459,000       124,328,000
    Net unrealized gain on available-for-sale securities                                12,000             2,000
    Accumulated deficit                                                           (116,493,000)     (115,029,000)
                                                                                 -------------     -------------
Total shareholders' equity                                                          26,978,000         9,301,000
                                                                                 -------------     -------------
Total liabilities and shareholders' equity                                       $  31,249,000     $  13,124,000
                                                                                 =============     =============
</TABLE>


            See notes to condensed consolidated financial statements

                                       3

<PAGE>   4

                         SCICLONE PHARMACEUTICALS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>


                                           Three months ended                  Six months ended
                                                 June 30,                          June 30,
                                           2000             1999             2000             1999
                                       ------------     ------------     ------------     ------------
<S>                                    <C>              <C>              <C>              <C>
Product revenue                        $  4,206,000     $  2,001,000     $  7,705,000     $  3,578,000
Contract revenue                                 --          107,000               --          307,000
                                       ------------     ------------     ------------     ------------

Total revenue                             4,206,000        2,108,000        7,705,000        3,885,000

Cost of product sales                       849,000          397,000        1,584,000          756,000
                                       ------------     ------------     ------------     ------------

Gross profit                              3,357,000        1,711,000        6,121,000        3,129,000

Operating expenses:
     Research and development             1,297,000          891,000        2,556,000        2,803,000
     Marketing                            2,036,000        1,485,000        3,952,000        2,757,000
     General and administrative             897,000          863,000        1,540,000        1,772,000
                                       ------------     ------------     ------------     ------------
Total operating expenses                  4,230,000        3,239,000        8,048,000        7,332,000
                                       ------------     ------------     ------------     ------------

Loss from operations                       (873,000)      (1,528,000)      (1,927,000)      (4,203,000)

Interest and investment income, net         284,000           17,000          463,000           69,000
                                       ------------     ------------     ------------     ------------

Net loss                               $   (589,000)    $ (1,511,000)    $ (1,464,000)    $ (4,134,000)
                                       ============     ============     ============     ============

Net loss per common share (basic &
     diluted)                          $      (0.02)    $      (0.07)    $      (0.05)    $      (0.20)
                                       ============     ============     ============     ============

Weighted average shares used in
     computing per share amounts         31,442,890       20,622,801       29,599,825       20,327,706
                                       ============     ============     ============     ============
</TABLE>

            See notes to condensed consolidated financial statements

                                       4

<PAGE>   5


                         SCICLONE PHARMACEUTICALS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                     Six months ended
                                                                                         June 30,
                                                                                    2000            1999
                                                                               ------------     -----------
<S>                                                                            <C>              <C>
OPERATING ACTIVITIES:
Net loss                                                                       $ (1,464,000)    $(4,134,000)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                  295,000          84,000
     Changes in operating assets and liabilities:
         Prepaid expenses and other assets                                          (48,000)        441,000
         Accounts receivable                                                     (3,877,000)     (1,365,000)
         Inventory                                                                  (73,000)        228,000
         Accounts payable and other accrued expenses                                418,000         266,000
         Accrued compensation and benefits                                         (200,000)        232,000
         Accrued clinical trials expense                                            397,000      (1,504,000)
         Accrued professional fees                                                 (166,000)         73,000
                                                                               ------------     -----------
Net cash used in operating activities                                            (4,718,000)     (5,679,000)
                                                                               ------------     -----------

INVESTING ACTIVITIES:
     Purchase of property and equipment                                             (43,000)        (14,000)
     Sale of marketable securities, net                                           1,803,000       1,918,000
                                                                               ------------     -----------
Net cash provided by investing activities                                         1,760,000       1,904,000
                                                                               ------------     -----------

FINANCING ACTIVITIES:
Proceeds from issuance of common stock net of financing cost                     19,131,000         889,000
Payment on notes receivable from officer                                                 --         235,000
                                                                               ------------     -----------
Net cash provided by financing activities                                        19,131,000       1,124,000
                                                                               ------------     -----------

Net increase (decrease) in cash and cash equivalents                             16,173,000      (2,651,000)
Cash and cash equivalents, beginning of period                                    1,828,000       3,490,000
                                                                               ------------     -----------
Cash and cash equivalents, end of period                                       $ 18,001,000     $   839,000
                                                                               ============     ===========
</TABLE>


            See notes to condensed consolidated financial statements

                                       5
<PAGE>   6

                         SCICLONE PHARMACEUTICALS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.      The accompanying unaudited consolidated financial statements have been
        prepared in conformity with generally accepted accounting principles
        consistent with those applied in, and should be read in conjunction
        with, the audited financial statements for the year ended December 31,
        1999. The interim financial information reflects all normal recurring
        adjustments which are, in the opinion of management, necessary for a
        fair presentation of the results for the interim periods presented. The
        balance sheet data at December 31, 1999 is derived from the audited
        financial statements at that date but does not include all of the
        information and footnotes required by generally accepted accounting
        principles for complete financial statements. The interim results are
        not necessarily indicative of results for subsequent interim periods or
        for the full year.

2.      In June 1998, the Financial Accounting Standards Board issued Statement
        No. 133, "Accounting for Derivative Instruments and Hedging Activities"
        ("SFAS 133"), which is required to be adopted for the year ending
        December 31, 2001. Management does not anticipate that the adoption of
        SFAS 133 will have a significant impact on results of operations or the
        financial position of the Company.

3.      In December 1999, the Securities and Exchange Commission issued Staff
        Accounting Bulletin No. 101, "Revenue Recognition in Financial
        Statements" ("SAB 101"). This summarizes certain areas of the staff's
        views in applying generally accepted accounting principles to revenue
        recognition in financial statements. SAB 101 is required to be adopted
        in the quarter ended December 31, 2000. The Company is currently
        evaluating the impact of SAB 101 on its results of operations and
        financial position.

4.      For the six-month periods ended June 30, 2000 and 1999, the Company's
        total comprehensive loss amounted to $(1,454,000) and $(4,136,000),
        respectively.

5.      The following is a summary of inventories at June 30, 2000:
<TABLE>
<CAPTION>

<S>                                    <C>
         Raw materials                 $1,107,000
         Finished goods                    47,000
                                       ----------
                                       $1,154,000
                                       ==========
</TABLE>

6.       The following is a summary of other assets at June 30, 2000:
<TABLE>
<CAPTION>

<S>                                          <C>
         Intangible product rights - net     $1,705,000
         Other                                   81,000
                                             ----------
                                             $1,786,000
                                             ==========
</TABLE>

        Product rights acquired are being amortized over six years beginning in
        September 1998. The Company identifies and records impairment losses, as
        circumstances dictate, on intangible product rights when events and
        circumstances indicate that the assets might be

                                       6
<PAGE>   7

        impaired and the undiscounted cash flows estimated to be generated by
        those assets are less than the carrying amounts of those assets.

7.      For the three-month period ended June 30, 2000, the Company received
        approximately $1,313,000 in connection with exercises of outstanding
        options to purchase 58,961 shares of common stock and outstanding
        warrants to purchase 828,348 shares of common stock.

8.      The Company does not have any minimum purchase requirements under its
        contract manufacturing supply agreements for ZADAXIN(R) and CPX.

9.      The Company recognizes revenue from product sales at the time of
        shipment and recognizes contract/grant revenue when services have been
        performed. Sales to distributors are recognized at time of shipment when
        title to the products are transferred to them. The distributors do not
        have a contractual right of return.

10.     The Company accounts for equity instruments issued to non-employees in
        accordance with the provisions of SFAS 123 and Emerging Issues Task
        Force ("EITF") 96-18. Warrants issued in connection with equity and debt
        arrangements are valued using the Black-Scholes option valuation model.
        Warrants issued to placement agents and similar parties in connection
        with equity financing efforts are accounted as stock issuance cost with
        an equal amount recorded as additional paid-in capital. Warrants issued
        to purchasers of the Company's equities are not specifically accounted
        for as their value is a sub-component of additional paid-in capital. The
        fair value of warrants issued in connection with debt arrangements, if
        material, is accounted for as a debt discount and amortized as
        additional interest expense over the term of the related debt.

11.     Net loss per share is computed using the weighted average number of
        shares of common stock outstanding. Common equivalent shares from stock
        options & warrants are excluded, as their effect is antidilutive.

                                       7
<PAGE>   8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes appearing elsewhere in this report. This
discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. The actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, such as those set forth under "Risk Factors" and the risks discussed in
our other SEC filings, including our Annual Report on Form 10-K filed March 30,
2000 with the SEC.

OVERVIEW

         SciClone Pharmaceuticals, Inc. is a global specialty biopharmaceutical
company that acquires, develops and commercializes novel medicines for treating
a broad range of the world's most serious diseases. We believe the significance,
prevalence and diversity of our disease targets, and the known limitations of
current treatment alternatives, have created a compelling need for improved
therapies, with novel medicines often enjoying premium pricing and rapid market
acceptance. Our current product development and commercial activities are
focused on this large, unmet market need. Specifically, we have focused our
current product development and commercial activities on the following diseases:

        -       hepatitis C, an infectious disease affecting 170 million people
                worldwide;

        -       hepatitis B, an infectious disease affecting 350 million people
                worldwide;

        -       the most common and deadliest form of liver cancer worldwide,
                hepatocellular carcinoma;

        -       the deadliest form of skin cancer and one of the most rapidly
                increasing types of cancer worldwide, malignant melanoma;

        -       HIV, the virus that causes AIDS;

        -       drug-resistant tuberculosis, an infectious disease reaching
                pandemic proportions worldwide; and

        -       cystic fibrosis, the most common fatal genetic disease among
                Caucasians.

                                       8
<PAGE>   9

         Our flagship drug is ZADAXIN(R), an immunotherapy. ZADAXIN boosts the
body's immune system in its fight against multiple types of cancer and
infectious diseases. In the U.S., Europe and Japan, the world's largest
pharmaceutical markets, ZADAXIN is in, or is expected to enter, phase 2 and
phase 3 development targeting four diseases: hepatitis C, hepatitis B,
hepatocellular carcinoma and malignant melanoma. ZADAXIN has been administered
to over 3,000 subjects in over 70 clinical trials covering a broad range of life
threatening diseases and an estimated 7,000 patients commercially with virtually
no serious drug related side effects.

         Unlike most biotechnology companies, we are currently selling our lead
drug -- ZADAXIN. ZADAXIN is currently approved for sale in Italy and 19 emerging
markets in Asia, Latin America and the Middle East, principally for the
treatment of hepatitis C and hepatitis B, and as a vaccine adjuvant for patients
with weakened immune systems. Total ZADAXIN sales for 1999 were $9.1 million, a
151% increase over 1998 sales of $3.6 million, and for the six-months ended June
30, 2000, sales were $7.7 million, a 115% increase over sales of $3.6 million in
the six months ended June 30, 1999. We have filed 17 ZADAXIN marketing
applications.

         Our second product in clinical development, CPX, is a novel, orally
available, protein-repair therapy for cystic fibrosis, the most common fatal
genetic disease among Caucasians. Currently approved drugs treat only the
symptoms of cystic fibrosis, not the underlying cause of the disease. CPX, which
we in-licensed from the United States National Institutes of Health, is designed
to repair the underlying protein-associated defect that is responsible for
cystic fibrosis in over 70% of patients, not just the symptoms of the disease.
CPX is currently undergoing phase 2 development in the U.S.

         Additional preclinical drug candidates include SCV-07, the lead orally
active compound in our new class of immunotherapies, and DAX, a potential second
generation protein-repair therapy. We expect to develop SCV-07 for
drug-resistant tuberculosis, cancer and hepatitis. DAX is targeted at cystic
fibrosis.

         From commencement of our operations in 1989 through June 30, 2000, we
had incurred a cumulative net loss of approximately $116.5 million. We expect
our operating expenses to increase over the next several years consistent with
our expansion of sales, research and development, and preclincial and clinical
testing. Our ability to expand our operations or achieve profitability is
dependent in part on successful expansion of the market for ZADAXIN in Asia,
Latin America and the Middle East, obtaining additional regulatory approvals for
ZADAXIN and/or future products in the U.S., Europe and Japan, entering into
additional strategic arrangements for product development and commercialization,
where appropriate, obtaining additional financing to support our long-term
product development and commercialization efforts, and continuing to transition
from a development operation into a successful marketing and development
operation.

                                       9

<PAGE>   10

        Our operating results may fluctuate from period to period as a result
of, among other things, market acceptance of ZADAXIN, the timing and costs
associated with preclinical and clinical development of our products,
particularly ZADAXIN, the regulatory approval process, and the acquisition of
additional product rights.

RESULTS OF OPERATIONS

        Total revenue was approximately $4,206,000 and $7,705,000 for the
three-month and six-month periods ended June 30, 2000, as compared to
approximately $2,108,000 and $3,885,000 for the corresponding period in 1999.
For the six-month period ended June 30, 2000, all of our total revenue was
derived from sales of ZADAXIN. For the six month period ended June 30, 1999,
$307,000 of the $3,885,000 was contract revenue. For the three-month period
ended June 30, 2000, four distributors in China accounted for 78% of our ZADAXIN
sales. We have received ZADAXIN marketing approval in 20 countries, but we have
not yet commercially launched ZADAXIN in all of these countries. ZADAXIN sales
to China continue to grow, but demonstrated this quarter, as more markets are
brought into the mix, China's percentage of overall sales should decrease over
time. We have filed for approval to market ZADAXIN in 17 additional countries.
As a result, if we are able to increase sales of ZADAXIN in existing markets,
and commence sales of ZADAXIN in new markets once we have secured the requisite
regulatory approvals, we expect our product revenue to continue to increase in
2000. However, because the level of ZADAXIN sales in newly approved markets and
increased sales in existing markets is dependent upon a number of factors,
including our long-term product development and commercialization efforts,
particularly those in the U.S., Europe and Japan, approved pricing levels,
increased market penetration, additional marketing approvals and successful
launch activities, we cannot assure you that our product revenue will continue
to increase in 2000.

        Cost of product sales was approximately $849,000 and $1,584,000 for the
three-month and six-month periods ended June 30, 2000, as compared to
approximately $397,000 and $756,000 for the corresponding periods in 1999. The
increase was attributable to increased ZADAXIN sales. We expect cost of product
sales to vary from quarter to quarter, dependent upon the level of ZADAXIN
sales, the absorption of fixed product-related costs, and any charges associated
with excess or expiring finished product.

        Research and development expenses were approximately $1,297,000 and
$2,556,000 for the three-month and six-month periods ended June 30, 2000, as
compared to approximately $891,000 and $2,803,000 for the corresponding periods
in 1999. The increase in the comparable three-month period was primarily
attributable to increases in clinical trial expenses, license fees and
professional services partially offset by decreased payroll expenses. The
decrease in the six-month period was primarily attributable to decreased payroll
expenses, legal fees and consulting fees partially offset by increased clinical
trial expenses. We expect product research and development expenses to increase
quarter to quarter as we execute our strategies of initiating additional
clinical trials and testing, particularly trials relating to ZADAXIN in the U.S.
and Japan, acquiring product rights, and continuing and expanding regulatory
activities.

        Marketing expenses were approximately $2,036,000 and $3,952,000 for the
three-month


                                       10
<PAGE>   11
and six-month periods ended June 30, 2000, as compared to approximately
$1,485,000 and $2,757,000 for the corresponding periods in 1999. The increase
relates to increased payroll expenses and expenses for advertising associated
with the expansion in our existing ZADAXIN markets. We expect our marketing
expenses to increase as we continue to expand our commercialization and
marketing efforts and strategic relationships.

         General and administrative expenses were approximately $897,000 and
$1,540,000 for the three-month and six-month periods ended June 30, 2000, as
compared to approximately $863,000 and $1,772,000 for the corresponding periods
in 1999. The increase in the comparable three-month period was primarily
attributable to increased fees for professional services partially offset by
decreased payroll expenses. The decrease in the six-month period is primarily
attributable to decreased payroll, legal and consulting expenses, partially
offset by increased fees for other professional services. In the near term, we
expect general and administrative expenses to increase quarter to quarter as we
initiate and continue additional clinical trials and testing, particularly
ZADAXIN trials in the U.S. and Japan, and regulatory, pre-commercialization and
marketing activities.

         Net interest and investment income was approximately $284,000 and
$463,000 for the three-month and six-month periods ended June 30, 2000, as
compared to approximately $17,000 and $69,000 for the corresponding period in
1999. The increase primarily resulted from increased interest and investment
income due to higher average invested cash balances.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2000 and 1999, we had approximately $18,001,000 and
$846,000, respectively, in cash, cash equivalents and marketable securities. The
marketable securities consist primarily of highly liquid short-term investments.

         Net cash used by us in operating activities amounted to approximately
$4,718,000 for the six-month period ended June 30, 2000. Net cash used in
operating activities in the 2000 period was greater than our net loss for such
period due to increases in accounts receivable and decreases in accrued
compensation and benefits and accrued professional fees. These uses of cash from
increased ZADAXIN sales were partially offset by non-cash charges associated
with depreciation and amortization, and increases in prepayments of certain
future expenses, inventory, accounts payable and other accrued expenses. Net
cash used by us in operating activities amounted to approximately $5,679,000 for
the six-month period ended June 30, 1999. Net cash used in operating activities
in the 1999 period was greater than our net loss for such period due to
increases in accounts receivable from increased ZADAXIN sales and decreases in
amounts owed to third parties for clinical trials and to employees for
compensation and benefits.

         Net cash provided by investing activities amounted to approximately
$1,760,000 for the six-month period ended June 30, 2000 and related to the net
sale of approximately $1,803,000 of marketable securities and the purchase of
approximately $43,000 in equipment and furniture. Net cash provided by investing
activities amounted to approximately $1,904,000 for the six-month period ended
June 30, 1999 and related to the net sale of approximately $1,918,000 of
marketable securities offset by the purchase of approximately $14,000 in
equipment and

                                       11
<PAGE>   12

furniture.

         Net cash provided by financing activities for the six-month period
ended June 30, 2000 amounted to approximately $19,131,000 in net proceeds,
approximately $5,652,000 of which related to a private placement of common stock
and redeemable warrants to institutional investors, approximately $8,606,000
from the exercise of outstanding redeemable warrants to purchase common stock by
institutional and accredited investors, approximately $93,000 in net proceeds
from the issuance of common stock under our employee stock purchase plan,
approximately $3,100,000 in net proceeds from a private placement to Sigma-Tau,
our European ZADAXIN development and marketing partner, and approximately
$1,680,000 in connection with exercises of outstanding options under our
employee stock option plans. Net cash provided by financing activities for the
six-month period ended June 30, 1999 amounted to approximately $1,124,000,
primarily consisting of $1,000,000 in net proceeds received from a private
placement of unregistered common stock to Sigma-Tau, repayment of $235,000 on a
note receivable from an officer, and net proceeds from issuances of common stock
under our employee stock purchase plan offset by $111,000 in various costs
related to our 1999 financing activities.

         Our capital requirements may change depending upon numerous factors,
including the level of ZADAXIN sales, the availability of complementary
products, technologies and businesses, the initiation of and continuation of
preclinical and clinical trials and testing, particularly ZADAXIN trials in the
U.S. and Japan, the timing of regulatory approvals, developments in
relationships with existing or future collaborative parties and the status of
competitive products. Assuming ZADAXIN sales continue to increase quarter to
quarter at growth rates similar to what we have achieved over the past ten
quarters, management believes our existing capital resources and interest on
funds available are adequate to maintain our current and planned operations. The
initiation and continuation of U.S. and Japanese clinical development programs
could, however, require additional funding either from a collaborative source or
through equity or debt financing. The timing and sustainability of our operating
profitability and capital requirements may change depending upon numerous
factors, including the level of ZADAXIN sales, the timing and amount of
manufacturing costs related to ZADAXIN and CPX, the availability of
complementary products, technologies and businesses, the initiation and
continuation of preclinical and clinical trials and testing, particularly
ZADAXIN trials in the U.S. and Japan, the timing of regulatory approvals,
developments in relationships with existing or future collaborative parties and
the status of competitive products. In the event we need to raise additional
financing, the unavailability or the timing of financing could prevent or delay
our long-term product development and commercialization programs.

RISK FACTORS

         You should carefully consider the risks described below, together with
all of the other information included in this report on Form 10-Q, before making
an investment decision. The risks below are not the only ones we face. If any of
the following risks actually occurs, our business, financial condition or
operating results could be harmed. In such case, the trading price of our common
stock could decline, and you may lose all or part of your investment.

                                       12
<PAGE>   13

                          RISKS RELATED TO OUR BUSINESS

WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT AND EXPECT TO
CONTINUE TO INCUR LOSSES IN THE NEAR TERM AND MAY NEVER ACHIEVE PROFITABILITY.

         We have experienced significant operating losses since our inception
and as of June 30, 2000, we had an accumulated deficit of $116,493,000. We
expect our operating expenses to increase over the next several years as we plan
to dedicate substantially all of our resources to expanding our development,
testing and marketing capabilities. Accordingly, we may never achieve
profitability.

IF WE DO NOT INCREASE THE AMOUNT OF REVENUE WE DERIVE FROM SALES OF ZADAXIN AND
ACHIEVE OPERATING PROFITABILITY, WE WILL NEED TO OBTAIN ADDITIONAL CAPITAL TO
SUPPORT OUR LONG-TERM PRODUCT DEVELOPMENT AND COMMERCIALIZATION PROGRAMS.

         Our strategy in the near term to achieve and sustain operating
profitability depends in large part on our ability to:

         -    increase ZADAXIN sales in existing markets;

         -    launch ZADAXIN in new markets; and

         -    commence and continue clinical programs for, and obtain additional
              regulatory approvals for, ZADAXIN, CPX, SCV-07, DAX and/or future
              products, particularly in the U.S., Europe and Japan.

         If we do not increase the revenue we derive from the sales of ZADAXIN
and achieve operating profitability, we will need to obtain additional financing
to support our long-term product development and commercialization programs. We
may seek additional funds through public and private stock offerings,
arrangements with corporate partners, borrowings under lease lines of credit or
other sources. If we cannot raise the necessary funds, we will have to reduce
our capital expenditures, scale back our development of new products, reduce our
workforce and license to others products or technologies that we otherwise would
seek to commercialize ourselves.

         The amount of capital we need will depend on many factors, including:

         -    the level of future ZADAXIN sales;

         -    the timing, location, scope and results of ongoing and planned
              preclinical studies and clinical trials;

         -    the cost of manufacturing or obtaining preclinical and
              clinical materials;

                                       13
<PAGE>   14

         -    the timing and cost involved in applying for and obtaining FDA
              and international regulatory approvals;

         -    the costs involved in filing, prosecuting and enforcing patent
              claims;

         -    competing technological and market developments;

         -    whether any or all of our outstanding common stock warrants
              are exercised and the timing and amount of these exercises;

         -    our ability to establish and maintain strategic arrangements
              for development, sales, manufacturing and marketing of our
              products; and

         -    whether we elect to establish additional partnering
              arrangements for development, sales, manufacturing, and
              marketing of our products.

         Many of the foregoing factors are not within our control. If we need to
raise additional funds and such funds are not available on reasonable terms, we
may be required to delay or cancel our long-term product development and
commercialization programs. We have no commitments or arrangements for
additional funding and we may not be able to obtain financing if and when
needed. Any additional equity financing may be dilutive to shareholders, and
debt financing, if available, may include restrictive covenants.

WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP OR COMMERCIALIZE OUR PRODUCTS.

         Many of our products are in the development stage and will require the
commitment of substantial resources, devoted to extensive research, development,
preclinical testing, clinical trials, manufacturing scale-up and regulatory
approval prior to being ready for sale. We have not yet sold any product other
than ZADAXIN. All of our other products will require further preclinical
development, clinical testing and regulatory approvals, and we can not assure
you that commercially viable products will result from these efforts. We face
significant technological risks inherent in developing these products. We may
also abandon some or all of our proposed products before they become
commercially viable. If any of our products, even if developed and approved,
cannot be successfully commercialized in a timely manner, our business will be
harmed and the price of our stock may decline.

IF WE EXPERIENCE DIFFICULTIES IN OUR FOREIGN SALES AND OPERATIONS, OUR FINANCIAL
CONDITION WILL BE HARMED.

         Our financial condition in the near term is highly dependent on the
sale of ZADAXIN in foreign jurisdictions. If we experience difficulties in our
foreign sales and operations, our business will suffer and our financial
condition will be harmed. The majority of our ZADAXIN sales are to customers in
China. Sales of ZADAXIN in China may be limited due to its low average income
and poorly developed infrastructure. In addition, our ZADAXIN sales and
operations in other parts of Asia, as well as in Latin America and the Middle
East, are subject to a number of risks, including:

                                       14
<PAGE>   15

         -    difficulties and delays in obtaining pricing approvals and
              reimbursement;

         -    difficulties and delays in obtaining product health
              registration;

         -    difficulties and delays in obtaining importation permits;

         -    unexpected changes in regulatory requirements;

         -    tariffs and other barriers;

         -    political instability;

         -    difficulties in staffing and managing foreign operations;

         -    long payment cycles;

         -    difficulties in accounts receivable collection;

         -    currency fluctuations; and

         -    potential adverse tax consequences.

         We do not have any product sales in the U.S. with which to offset any
decrease in our revenue from ZADAXIN sales in Asia, Latin America and the Middle
East. In addition, some countries in these regions regulate pharmaceutical
prices. These regulations may reduce prices for ZADAXIN to levels significantly
below those that would prevail in a free market, which will cause our revenues
to fall and our business to suffer.

IF WE FAIL TO COMPLY WITH GOVERNMENTAL REGULATIONS, OUR BUSINESS WILL SUFFER.

         All new drugs, including our products which have been developed or are
currently under development, are subject to extensive and rigorous regulation by
the FDA, and comparable agencies in state and local jurisdictions and in foreign
countries. These regulations govern, among other things, the development,
testing, manufacturing, labeling, storage, premarket approval, advertising,
promotion, sale and distribution of our products. Satisfaction of these
requirements typically takes several years and the time needed to satisfy them
vary substantially, based on the type, complexity and novelty of the
pharmaceutical product. The effect of government regulation may be to delay or
to prevent marketing of our existing or potential products for a considerable
period of time and to impose costly procedures upon our activities. If
regulatory approval of our products is granted, such approval may impose
limitations on the indicated uses for which our products may be marketed.
Further, even if regulatory approval is obtained for a product, later discovery
of previously unknown products may result in restrictions of the product,
including withdrawal of the product from the market.

IF WE FAIL TO OBTAIN REGULATORY APPROVALS IN THE UNITED STATES, EUROPE OR JAPAN,
OUR REVENUE MAY NOT GROW SIGNIFICANTLY AND OUR STOCK PRICE MAY DECLINE.

                                       15
<PAGE>   16

         If we fail to obtain regulatory approvals for ZADAXIN in the U.S.,
Europe or Japan for the treatment of hepatitis C, our revenue may not grow
significantly and the price of our stock may fall. To secure these approvals in
the U.S., Europe and Japan, we need favorable results from additional clinical
trials of ZADAXIN. We cannot assure you that these additional clinical trials
will yield favorable results or that if they do, we will obtain any regulatory
approvals.

         Our failure to obtain regulatory approvals for, and successfully
commercialize, CPX for the treatment of cystic fibrosis will harm our
operations. Our failure to demonstrate, in preclinical and clinical trials, the
safety and efficacy of CPX as a treatment for cystic fibrosis and to obtain
regulatory approval of CPX in the U.S. as a treatment for cystic fibrosis will
impair our operations. CPX is currently undergoing phase 2 testing in the U.S.
We cannot assure you that we will not experience delays and difficulties in the
preclinical and clinical development of CPX. In addition, future clinical trials
may prove that CPX is not an effective treatment for cystic fibrosis.

WE HAVE LIMITED SALES, MARKETING AND DISTRIBUTION CAPABILITIES, WHICH MAY
ADVERSELY AFFECT OUR ABILITY TO SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS.

         We currently have limited sales, marketing and distribution
capabilities, and we anticipate that we will be relying on third parties to
sell, market and distribute our products in the foreseeable future. If our
arrangements with third parties are not successful, or if we are unable to enter
into third-party arrangements, we may need to substantially expand our sales,
marketing and distribution force. Our plans to expand may not succeed, or we may
lack sufficient resources to expand in a timely manner. If we are able to
further develop our sales, marketing and distribution capabilities, we will
compete with other companies that have experienced and well funded operations.
If we fail to establish successful sales and marketing capabilities or to enter
into successful marketing arrangements with third parties, or if our third party
distributors fail to perform their obligations, our business and operations will
be materially and adversely affected.

IF WE FAIL TO SUCCESSFULLY MARKET AND COMMERCIALIZE OUR PRODUCTS, OUR REVENUE
WILL NOT GROW.

         ZADAXIN is a premium priced pharmaceutical that treats life-threatening
diseases such as cancer and viral hepatitis. Our current sales and marketing
activities are targeted at a limited number of specialists and medical opinion
leaders in our existing and potential markets, not the general medical
population. In the markets outside the U.S., Europe and Japan, the relatively
few patients of the specialists to whom we market ZADAXIN have a demonstrated
willingness and ability to pay for ZADAXIN therapy. However, our future revenue
growth depends on increased market acceptance and commercialization of ZADAXIN
in additional countries. If we fail to successfully market ZADAXIN, or if we
cannot commercialize this drug in additional markets, our revenue and operating
results will suffer. Our future revenue will also depend in part on our ability
to develop other commercially viable and accepted products. Market acceptance of
our products will depend on many factors, including our ability to:

         -    convince prospective strategic partners and customers that our
              products are an attractive alternative to other treatments and
              therapies; and

                                       16
<PAGE>   17

         -    manufacture products in sufficient quantities with acceptable
              quality and at an acceptable cost.

         In many of our current markets for ZADAXIN, particularly China, low
average per capita income and poorly developed distribution infrastructure may
make it difficult to successfully commercialize ZADAXIN.

IF WE ARE NOT ABLE TO ESTABLISH AND MAINTAIN ADEQUATE MANUFACTURING AND SUPPLY
RELATIONSHIPS, THE DEVELOPMENT AND SALE OF OUR PRODUCTS COULD BE IMPAIRED.

         To be successful, our products must be manufactured in commercial
quantities, in compliance with regulatory requirements and at an acceptable
cost. We may not be able to maintain the long-term manufacturing relationships
we currently have with our suppliers of ZADAXIN and CPX. Manufacturing
interruptions, if any, could significantly delay clinical development of
potential products and reduce third-party or clinical researcher interest and
support of proposed trials. These interruptions could also impede
commercialization of our products, including sales of ZADAXIN in approved
markets, and impair our competitive position. Any of these developments would
harm our business. We have recently changed our manufacturing source of ZADAXIN
for our international markets, excluding Japan. In some countries, this change
may require additional regulatory approvals. If we do not obtain the required
regulatory approvals of this manufacturing change in a timely fashion, new
ZADAXIN marketing approvals may be delayed or sales may be interrupted until the
manufacturing change is approved. Either of these results will hurt our
business.

         Manufacturing, supply and quality control problems may arise as we,
either alone or with subcontractors, attempt to scale-up manufacturing
procedures. We may not be able to scale-up in a timely manner or at a
commercially reasonable cost. Problems could lead to delays or pose a threat to
the ultimate commercialization of our products and harm us.

IF WE DO NOT OBTAIN RIGHTS TO ADDITIONAL PRODUCTS FROM THIRD PARTIES, OUR
REVENUE MAY DECLINE AND OUR FUTURE DEVELOPMENT EXPENSES MAY INCREASE.

         We are only actively pursuing clinical development of ZADAXIN and CPX
at this time. If we do not advance SCV-07 and DAX, the other products to which
we have in-licensed rights, from preclinical into clinical development, or
license or otherwise acquire rights to additional drugs, we may have a shortage
of drugs to develop and commercialize. Any shortage in the number of drugs that
we are able to develop and commercialize may cause our revenues to fall and
increase our future development expenses.

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 depend in part on our licensees to develop and/or promote our drugs,
and if they are not successful in their efforts or fail to do so, our business
will suffer. We have exclusively sublicensed certain of our rights to ZADAXIN in
Europe to Sigma-Tau S.p.A. and in Japan to Schering-Plough K.K. However, we
generally do not have control over the amount and timing

                                       17
<PAGE>   18

of resources that Sigma-Tau and Schering-Plough devote to ZADAXIN. If they do
not perform their obligations as we expect, our development expenses would
increase and the development and sale of our products could be limited or
delayed, which could cause our business to suffer and our stock price to
decline. Our relationships with these companies may not be successful. Disputes
may arise over ownership rights to intellectual property, know-how or
technologies developed with our collaborators, and we may not be able to
negotiate similar additional arrangements in the future in Europe and Japan or
other major markets to develop and commercialize ZADAXIN.

IF WE FAIL TO PROTECT OUR PRODUCTS, TECHNOLOGIES AND TRADE SECRETS, WE MAY NOT
BE ABLE TO SUCCESSFULLY USE, MANUFACTURE OR MARKET AND SELL OUR PRODUCTS OR WE
MAY FAIL TO ADVANCE OR MAINTAIN OUR COMPETITIVE POSITION.

         Our success depends significantly on our ability to obtain and maintain
meaningful patent protection for our products and technologies, to preserve our
trade secrets and to avoid infringing on the proprietary rights of third
parties. Our pending patent applications may not result in the issuance of
patents in the future. Our patent applications may not have priority over
others' applications and, even if any patents are issued, they may not provide a
competitive advantage to us or may be invalidated or circumvented by our
competitors. Others may independently develop similar products or design around
patents issued or licensed to us. Patents issued to, or patent applications
filed by, other companies could harm our ability to use, manufacture or market
our products or maintain our competitive position with respect to our products.
Many of our patents relating to ZADAXIN have expired, and we have rights to
other patents and patent applications relating to ZADAXIN under exclusive
licenses. If we breach the terms of any of these licenses, we could lose our
rights to these patents and patent applications.

         Our commercial success also depends in part on us neither infringing
valid, enforceable patents or proprietary rights of third parties, nor breaching
any licenses that may relate to our technologies and products. We are aware of
third-party patents that may relate to our technology. It is possible that we
may unintentionally infringe these patents or other patents or proprietary
rights of third parties. We may in the future receive notices claiming
infringement from third parties as well as invitations to take licenses under
third-party patents. Any legal action against us or our collaborative partners
claiming damages and seeking to enjoin commercial activities relating to our
products and processes affected by third-party rights may require us or our
collaborative partners to obtain licenses in order to continue to manufacture or
market the affected products and processes. Our efforts to defend against such
claims, even if unmeritorious, would require us to devote resources and
attention that could have been directed to our operation and growth plans. In
addition, these actions may subject us to potential liability for damages. We or
our collaborative partners may not prevail in a patent action and any license
required under a patent may not be made available on commercially acceptable
terms, or at all.

         Pharmaceuticals are either not patentable or have only recently become
patentable in some of the countries outside of the United States, in which we
have exclusive rights to ZADAXIN. Past enforcement of intellectual property
rights in many of these countries has been limited or non-existent. Future
enforcement of patents and proprietary rights in many other


                                       18
<PAGE>   19

countries will likely be problematic or unpredictable. Moreover, the issuance of
a patent in one country does not assure the issuance of a similar patent in
another country. Claim interpretation and infringement laws vary by nation, so
the extent of any patent protection is uncertain and may vary in different
jurisdictions.

IF WE FAIL TO OBTAIN REGULATORY APPROVALS IN COUNTRIES IN WHICH OUR PRODUCTS
HAVE NOT BEEN APPROVED, OUR REVENUE GROWTH MAY BE HARMED.

         The research, preclinical and clinical development, manufacturing,
marketing and sale of ZADAXIN, CPX and our other drug candidates are subject to
extensive regulation by governmental authorities. ZADAXIN, CPX and any other
products must be approved by the FDA or its foreign counterparts before they can
be sold in any jurisdiction. Obtaining regulatory approval is time-consuming and
expensive. In some countries where we are contemplating marketing and selling
ZADAXIN, the regulatory approval process for drugs that have not been previously
approved in countries with established clinical trial review procedures is
uncertain, and this may delay the grant of regulatory approvals for ZADAXIN. Our
failure to obtain, develop, market and sell our products in countries where we
currently do not have such approvals may limit the growth of our revenues.

         We may not be able to commence or complete the clinical trials we have
sponsored or are planning relating to ZADAXIN and CPX in a timely or
cost-effective manner. Even if completed, these trials may not fulfill the
applicable regulatory approval criteria, in which case we will not be able to
obtain regulatory approvals in these countries. Failure to obtain additional
regulatory approvals will harm our operating results. In addition, adverse
results in our development programs also could result in restrictions on the use
of ZADAXIN and, if approved, CPX.

         Our failure, or the failure by one or more of our partners, to comply
with applicable U.S. or foreign regulatory requirements could, among other
things, result in warning letters, fines, suspensions of regulatory approvals,
product recalls or seizures, operating restrictions, injunctions and criminal
prosecutions. In addition, government regulations may be established or imposed
which prevent or delay regulatory approval of ZADAXIN, CPX or our future
products.

         Our ability to obtain regulatory approval in one country may be delayed
or adversely affected by the timing of regulatory activities and approvals in
other countries, particularly if we do not participate in the regulatory
approval process in these other countries. Any delay or failure to achieve
regulatory approvals may limit our potential future revenue.

IF WE MAKE ANY ACQUISITIONS, WE WILL INCUR A VARIETY OF COSTS AND MAY NEVER
REALIZE THE ANTICIPATED BENEFITS.

         If appropriate opportunities become available, we may attempt to
acquire products, product candidates or businesses that we believe fit
strategically with our business. We currently have no commitments or agreements
with respect to material acquisitions. If we do undertake any transaction of
this sort, the process of integrating an acquired product, product candidate
or

                                       19
<PAGE>   20

business may result in operating difficulties and expenditures and may absorb
significant management attention that would otherwise be available for our
ongoing business development plans. Moreover, we may never realize the
anticipated benefits of any acquisition. Future acquisitions could result in
potentially dilutive issuances of equity securities, the incurrence of debt,
contingent liabilities and/or amortization expenses related to goodwill and
other intangible assets, which could adversely affect our business, financial
condition and results of operations.

WE MAY LOSE MARKET SHARE OR OTHERWISE FAIL TO COMPETE EFFECTIVELY IN THE
INTENSELY COMPETITIVE BIOPHARMACEUTICAL INDUSTRY.

         Competition in the bio-pharmaceutical industry is intense and we expect
that competition to increase. Our success depends on our ability to compete. We
believe that the principal competitive factors in this industry include the
efficacy, safety, price, therapeutic regimen and manufacturing quality assurance
associated with a given drug. Our competitors include bio-pharmaceutical
companies, biotechnology firms, universities and other research institutions,
both in the U.S. and abroad, that are actively engaged in research and
development of chronic and life-threatening diseases such as hepatitis C,
hepatitis B, cancer, immune system disorders and cystic fibrosis.

         Most of our competitors, particularly large pharmaceutical companies,
have substantially greater financial, technical, regulatory, manufacturing,
marketing and human resource capabilities than we do. Most of them also have
extensive experience in undertaking the preclinical and clinical testing and
obtaining the regulatory approvals necessary to market drugs. We currently rely
on sales of ZADAXIN as a treatment for hepatitis C and hepatitis B as our
primary source of revenue. However, several large bio-pharmaceutical companies
have substantial commitments to alpha interferon, which is an approved drug for
treating hepatitis B and hepatitis C and the primary competitor to ZADAXIN. We
cannot assure you that we will compete successfully against our competitors or
that our competitors, or potential competitors, will not develop drugs or other
treatments for hepatitis C, hepatitis B, cystic fibrosis, cancer and other
diseases that will be superior to ours. Increased competitive pressure could
also lead to intensified price-based competition resulting in lower prices and
margins, which would hurt our operating results.

IF THIRD-PARTY REIMBURSEMENT IS NOT AVAILABLE OR PATIENTS CANNOT OTHERWISE PAY
FOR ZADAXIN, WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET ZADAXIN.

         If third-party reimbursement, either from government health
administration authorities, private health insurers and other organizations, is
not available or patients cannot otherwise pay for ZADAXIN, we may not be able
to successfully market ZADAXIN. Third-party reimbursement for new therapeutic
products such as ZADAXIN is highly uncertain and may not be available for our
future products. In most of the emerging markets in which we sell ZADAXIN or
intend to sell ZADAXIN, reimbursement for ZADAXIN under government or private
health insurance programs is not yet widely available. The failure to obtain
third-party reimbursement for our products in the U.S., Europe and Japan will
hurt our business. In the U.S., proposed health care reforms could limit the
amount of third-party reimbursement available


                                       20
<PAGE>   21



for our products. In many emerging markets where we have marketing rights to
ZADAXIN, government resources and per capita income may be so low that our
products will be prohibitively expensive. In these countries, we may not be able
to market our products on economically favorable terms, if at all.

         Efforts by governmental and third-party payors to contain or reduce
health care costs could cause us to reduce the prices at which we market our
drugs, which will reduce our gross margins and may harm our business. There are
efforts by governmental and third-party payors to contain or reduce the costs of
health care through various means. We expect that there will continue to be a
number of legislative proposals to implement government controls. The
announcement of proposals or reforms could cause us to reduce the prices at
which we market our drugs, which will reduce our gross margins and may harm our
business.

IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL, HIGHLY
SKILLED PERSONNEL REQUIRED FOR THE EXPANSION OF OUR ACTIVITIES, OUR BUSINESS
WILL SUFFER.

         We are highly dependent upon our ability to attract and retain
qualified personnel because of the specialized, scientific and international
nature of our business. There is intense competition for qualified management,
scientific and technical personnel in the pharmaceutical industry, and we may
not be able to attract and retain the qualified personnel we need to grow and
develop our business globally. In addition, numerous key responsibilities at
SciClone are assigned to a small number of individuals. If we are unable to
attract and retain qualified personnel as needed or promptly replace those
employees who are critical to our product development and commercialization, the
development and commercialization of our products would adversely be affected.
At this time, we do not maintain "key person" life insurance on any of our key
personnel.

WE MAY BE SUBJECT TO PRODUCT LIABILITY LAWSUITS AND OUR INSURANCE MAY BE
INADEQUATE TO COVER DAMAGES.

         Clinical trials or marketing of any of our current and potential
products may expose us to liability claims from the use of these products. We
currently carry product liability insurance. However, we cannot be certain that
we will be able to maintain insurance on acceptable terms for clinical and
commercial activities or that the insurance would be sufficient to cover any
potential product liability claim or recall. If we fail to have sufficient
coverage, our business, results of operation and cash flows could be adversely
affected.

IF WE ARE UNABLE TO COMPLY WITH ENVIRONMENTAL LAWS AND REGULATIONS, OUR BUSINESS
MAY BE HARMED.

         We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials and waste products. We currently maintain a supply of hazardous
materials at our facilities. In the event of an accident, we could be liable for
any damages that result, and the liability could exceed our resources. While we
currently outsource our research and development programs involving the
controlled use of biohazardous materials, if in the future we conduct these
programs, we might be required


                                       21
<PAGE>   22



to incur significant cost to comply with the environmental laws and regulations.

THE PRICE OF OUR COMMON STOCK HAS EXPERIENCED SUBSTANTIAL VOLATILITY AND MAY
FLUCTUATE DUE TO FACTORS BEYOND OUR CONTROL.

         There has been significant volatility in the market prices for publicly
traded shares of pharmaceutical and biotechnology companies, including ours. The
following factors may have an adverse impact on the market price of our common
stock:

         -    announcements of technical or product developments by us or our
              competitors;

         -    market conditions for pharmaceutical and biotechnology stocks;

         -    market conditions generally;

         -    governmental regulation;

         -    healthcare legislation;

         -    public announcements regarding advances in the treatment of the
              disease states that we are targeting;

         -    public announcements from government officials relating to the
              biotechnology or pharmaceutical industries;

         -    patent or proprietary rights developments;

         -    changes in third-party reimbursement policies for our products;
              and

         -    fluctuations in our operating results.

         The price of our common stock may not remain at or exceed current
levels.

SUBSTANTIAL SALES OF OUR STOCK OR CONVERTIBLE SECURITIES MAY IMPACT THE MARKET
PRICE OF OUR COMMON STOCK.

         As of July 15, 2000, stock options for 4,162,478 shares of common stock
were outstanding, of which options for 3,267,898 shares were currently
exercisable, and there were warrants exercisable for 1,970,500 shares of common
stock outstanding. Upon exercise and issuance, all of these shares of common
stock will be freely tradable.

         Future sales of substantial amounts of our common stock could adversely
affect the market price of our common stock. Similarly, if we raise additional
funds through the issuance of common stock or securities convertible into or
exercisable for common stock, the percentage ownership of our shareholders will
be reduced and the price of our common stock may fall.

ISSUING PREFERRED STOCK WITH RIGHTS SENIOR TO THOSE OF OUR COMMON STOCK COULD
ADVERSELY

                                       22
<PAGE>   23

AFFECT HOLDERS OF COMMON STOCK.

     Our charter documents give our board of directors the authority to issue
additional series of preferred stock without a vote or action by our
shareholders. The board also has the authority to determine the terms of
preferred stock, including price, preferences and voting rights. The rights of
holders of our common stock may be adversely affected by the rights granted to
holders of preferred stock. For example, a series of preferred stock may be
granted the right to receive a liquidation preference -- a pre-set distribution
in the event SciClone is liquidated -- that would reduce the amount available
for distribution to holders of common stock. In addition, the issuance of
preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. As a result, common shareholders could
be prevented from participating in transactions that would offer an optimal
price for their shares.


                                       23
<PAGE>   24

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The primary objective of our investment activities is to preserve
principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we invest in highly liquid and high
quality debt securities. Our investments in debt securities are subject to
interest rate risk. To minimize the exposure due to adverse shift in the
interest rates we invest in short term securities and maintain an average
maturity of less than 1 year. A hypothetical 60 basis point increase in interest
rates would result in an approximate $50,650 decrease (0.6%) in fair value of
our available-for-sale securities.

         The potential change noted above is based on sensitivity analyses
performed on our financial positions at June 30, 2000. Actual results may differ
materially.

                                       24
<PAGE>   25

PART II.  OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(c)      Recent Sales of Unregistered Securities

          During the three-month period ended June 30, 2000, we received
approximately $1,207,000 in connection with exercises of outstanding warrants to
purchase 828,348 shares of common stock.

(d)

         None.

                                       25
<PAGE>   26

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         We held our Annual Meeting of Shareholders on June 2, 2000 to elect
five (5) directors, to amend our 1995 equity incentive plan and nonemployee
director stock option plan, and to ratify the appointment of the independent
auditors of our Company.

         At the Annual Meeting, all of the nominees were elected as follows:


<TABLE>
<CAPTION>

                                                          Votes
                                                          -----
                                               For                      Withheld
                                               ---                      --------

<S>                                        <C>                          <C>
               Jere E. Goyan, Ph.D.        24,136,713                   323,608
               Donald R. Sellers           24,185,143                   275,178
               John D. Baxter, M.D.        24,144,428                   315,893
               Edwin C. Cadman,  M.D.      24,189,883                   270,438
               Rolf H. Henel               24,187,513                   272,808
</TABLE>


         The shareholders voted to amend our 1995 equity incentive plan to
increase the number of shares authorized to be issued thereunder by 1,250,000
shares with voting as follows: 23,228,647 for; 1,087,833 against; and 143,841
abstaining.

         The shareholders also voted to amend our 1995 nonemployee director
stock option plan to increase the number of shares authorized to be issued
thereunder by 250,000 shares with voting as follows: 23,455,359 for; 829,177
against; and 175,785 abstaining.

         The shareholders then ratified the appointment of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending December 31,
2000 with voting as follows: 24,254,073 for; 160,211, against; and 46,037
abstaining.

                                       26
<PAGE>   27

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         3(i).1   Restated Articles of Incorporation (incorporated by reference
                  from the Company's Registration Statement on Form S-1 (No.
                  33-45446), declared effective by the Commission on March 17,
                  1992).
         3(i).2   Certificate of Amendment of Restated Articles of Incorporation
                  (incorporated by reference from the Company's Registration
                  Statement on Form S-8 (No. 33-66832) filed with the Commission
                  on August 3, 1993).
         3(i).3   Certificate of Determination (incorporated by reference from
                  the Company's Current Report on Form 8-K filed on October 14,
                  1997).
         3(ii).1  Bylaws (incorporated by reference from the Company's
                  Registration Statement on Form S-1 (No. 33-45446), declared
                  effective by the Commission on March 17, 1992).
         3(ii).2  Certificate of Amendment of Bylaws (incorporated by reference
                  from the Company's Registration Statement on Form S-8 (No.
                  33-66832) filed with the Commission on August 3, 1993).
         4.2      Rights Agreement, dated as of July 25, 1997, between SciClone
                  and ChaseMellon Shareholder Services, LLC. (incorporated by
                  reference to the Company's Current Report on Form 8-K filed on
                  October 14, 1997).
         27       Financial Data Schedule

(b)      Reports on Form 8-K

         None.

                                       27
<PAGE>   28

                                   SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.



                                       SCICLONE PHARMACEUTICALS, INC.
                                                 (Registrant)


Date:  August 11, 2000                         Donald R. Sellers
                                  ------------------------------------------
                                               Donald R. Sellers
                                   President, Chief Executive Officer and
                                        Interim Chief Financial Officer
                                  (Principal Executive Officer and Principal
                                        Financial & Accounting Officer)


                                       28
<PAGE>   29


                                EXHIBIT INDEX


         27       Financial Data Schedule