SciClone Pharmaceuticals

(SCLN)

, recently named one of the 50 fastest-growing technology companies in Silicon Valley by

Deloitte & Touche

, continues to have a fast-growing IOU list.

The company, which sells a hepatitis drug called Zadaxin in developing countries, said Thursday that sales in its latest third quarter rose 86% from a year ago, to $4.6 million. SciClone also said it reached "break-even net profit status" a quarter ahead of when expected. The stock closed 38 cents lower Friday at $9.38.

But accounts receivable -- money the company has yet to collect on sales it has recorded -- nearly tripled during the same period, to $9.4 million this year from $3.6 million a year earlier. That means the company is owed more than twice as much money as it reported in sales last quarter.

Over There

Shawn Singh, a SciClone business development officer, acknowledged that its rising IOU levels have worried some investors concerned about whether the company is "stuffing the channel," or boosting its sales numbers by delivering goods and not getting paid.

But "It's a slightly different ballgame overseas," said Singh. He said it's not uncommon for some overseas distributors to take six months or more to pay, well beyond standard Western agreements. "We've never had a single bad debt."

Singh said SciClone recognizes revenue when it delivers goods to distributors, not when it actually gets paid -- a legal but controversial accounting method.

SciClone is approved to sell Zadaxin in 20 countries, but 78% of its sales are in China, where it uses two importing agents and four distributors, according to

Securities and Exchange Commission

filings. It acknowledged that one of its business risks is "long payment cycles."

Growing Sales

Some analysts defend the company, saying rising sales are indicative of demand for the product, which costs about $5,000 for a course of treatment. But they said the rising accounts receivable raise concerns about how well the company is collecting money and about its accounting methods.

"When you grow sales, your accounts receivable grow as well," said David Moskowitz, analyst with

UBS Warburg

who rates the stock buy and whose firm does no current underwriting for SciClone. But while he added that SciClone deals with "the highest-quality distributors," he called the rising accounts receivable "a concern."

Such a jump in money owed to the company wouldn't be a concern if it were a one-time occurrence, analysts said. But accounts receivable have been growing faster than sales throughout the year. Third-quarter sales of Zadaxin rose 35% from first-quarter levels, for instance. But over the same period, accounts receivable jumped 47%.

While the company is in no financial danger, with $17.5 million in cash, the trend is worrisome to some. "It's an excellent question, and one I am going to ask the company," said Wayne Lottinville of the

RedChip Review

, a small-cap research company in Portland, Ore.

SciClone's strategy is to build sales for Zadaxin in developing markets while it tests the drug in the bigger and more profitable markets of Europe, the U.S. and Japan. Its development partner in Europe is

Sigma-Tau

, an Italian company, while

Schering-Plough

( SGP) is developing the drug in Japan.

Some investors have questioned the quality of Zadaxin and whether it would ever get approved in the U.S. or other Western countries, which require drugs to pass stringent efficacy and safety tests.