Dragon Pharmaceutical Inc. (TSX: DDD; OTC BB: DRUG) today announced results for the three-month and nine-month periods ended September 30, 2003. During the quarter, the Company posted revenues of $1,151,646 from the sales of rHu Erythropoietin (EPO), which is currently marketed for the treatment of anemia related to chronic renal failure and for surgery patients in China, India, Egypt, Peru and Brazil. Of the $1,151,646 in revenues during quarter ended September 30, 2003, $742,467 were generated from sales in China and $409,179 from sales in other countries. Quarter revenues for the prior year were $3,777,326 consisting of $745,326 of sales in China and $3,032,000 in sales outside of China including a one-time order of $3,000,000, in 2002.
Operating expenses for the third quarter of 2003 were $1.08 million, down from $1.72 million for the same period in 2002, reflecting the results of our continued efforts to tighten control of expenses. Net loss for the third quarter of 2003 was $282,582, or $0.01 per share compared to a net profit of $1.6 million, or $0.08 for the third quarter of 2002. As discussed previously, revenues for the third quarter of 2002 included a one-time EPO bulk sale of $3 million.
For the 9-months ended September 30, 2003 revenues were $2.8 million down from $6.2 million for the same period in 2002, which included a $3.7 million one-time order of bulk EPO. Operating expenses were reduced to $3.2 million for the 9-month period in 2003 compared to $6.6 million for the same period in 2002. Net loss for the 9-month period in 2003 was $1.25 million, or $0.06 per share, compared to $1.14 million, or $0.06 per share for the same period in 2002.
“The Company has managed to achieve sequential improvement in sales and continued efforts to tighten control of expenses. As a result, the net loss per share for the nine months ended September 30, 2003, was approximately the same as the prior period in 2002 which included a one-time order of $3.7 million. However, we are disappointed that we are unlikely to achieve the break-even point this year due to intense competition in certain markets driving down the average price of our products and the delay of decision by certain customers on bulk purchases,” stated Dr. Alexander Wick, President and Chief Executive Officer of Dragon Pharmaceutical Inc. “Given that we have significantly improved our cost structure and reduced the operating expenses, the Company believes that the net loss for the full year ending December 31, 2003 will be significantly less than last year.”
Further, the Company also announced that as previously reported, in 2002, Dr. Longbin Liu, a director of the Company, exercised his right to repurchase the Company’s Hepatitis B vaccine project for the original purchase price of $4 million, of which $500,000 has been paid and the balance of $3.5 million plus interest was due during the third quarter 2003 but remained unpaid. “The Company does not see any significant financial impact of this event on the 2003 results because the Company had chosen to write off such balance in the fourth quarter of 2002 due to conservative consideration at that time. The Company is fully committed to pursue collection of the full amount owing,”said Dr. Wick. Subsequent to the quarter end, the Board of Directors removed Dr. Liu as Chairman of the Board of Directors.
“During the third quarter of 2003, the Company completed an upgrade of its current production facility in Nanjing, China, doubling the production capacity of its roller bottle technology to fulfill demand from China and other developing markets.”said, Dr. Wick, “In addition, subsequent to quarter-end, the Company signed an agreement with a European biotechnology company specialized in research and development of recombinant human proteins to develop a high yield and proprietary EPO cell-line and production process technology which will be the cornerstone of our entry strategy to the European market upon the expiry of the related patents in 2004.”