Dragon Pharmaceutical Inc. (TSX: DDD; OTC BB: DRUG; BBSE: DRP) today announced that 2.23 million common shares of the Company have been placed in escrow by Dr. Liu, a director of the Company, to secure the debt obligation to the Company pursuant to the Settlement Agreement among Dragon, Dr. Liu and Novagen Holding Inc., Dr. Liu’s associated research company.
With the Settlement Agreement as announced on April 22, 2004, Dragon decided not to pursue the research projects on G-CSF, insulin and a patent project with Dr. Liu and his associated research partners in exchange for Dragon to receive $1.33 million reimbursement of expenses. In addition, the 1 million warrants granted to Dr. Liu for the patent development project are also cancelled. Together with the $3.71 million of principal and interest owing under the Hepatitis B vaccine project, Dr. Liu will pay Dragon a total of $5.04 million, which will be due on December 31, 2004. It was a condition of the Settlement Agreement that 2.2 million common shares of the Company be placed in escrow by June 30, 2004 and such condition has been fulfilled.
“The Settlement Agreement signified a milestone for Dragon to finally move on and disengage itself from any related party transaction and potential conflict of interest in the future. We believe that the settlement will prove to have a positive impact on the Company in the long run especially as we have just announced entering into a definitive agreement to acquire Oriental Wave Holding Ltd. The Company can now concentrate on what is important to create better shareholders value by focusing on growth at both top and bottom lines.” said Dr. Alexander Wick, President and CEO of Dragon.