"We believe that SciCLone is likely caught up in a broadly sweeping 'pharma initiative' that is targeted at investigating bribes paid by pharmaceutical and medical device companies in foreign countries," ThinkEquity LLC analyst Brian Skorney said.
The analyst said the investigation should not weigh significantly on SciClone's stock in the near term.
"We believe that at this early stage, it is difficult to gauge the impact of the investigation, but we believe down the road, the most likely scenario will be a settlement," Skorney said.
In a regulatory filing Monday, SciClone said it received an SEC subpoena and a letter from the U.S. Department of Justice (DoJ) concerning the company's sale, licensing and marketing of products in foreign countries, including China.
SciClone said the investigation will not disrupt its expansion efforts in China, where it has a major presence with its hepatitis B drug Zadaxin. The drug is also indicated as a vaccine enhancer and an immunostimulant.
BWS Financial analyst Hamed Khorsand cut his rating on the stock to "hold" from "buy" citing uncertainties surrounding the SEC probe.
"The fundamentals remain solid and the company should be able to continue to generate revenue. However, such an investigation could result in management changes and other distractions that could slow the sales momentum SciClone is currently experiencing," he added.
Shares of the company were trading down 31 percent at $2.41 in early-morning trade on Nasdaq. They touched a low of $2.08 earlier in the session.
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