Dragon Posts 106% Increase in First Quarter Revenues

D For greater detail, please refer to the Company’s 10-QSB, which has been filed with the U.S. Securities and Exchange Commission. The full financial statements will also be available on Dragon’s website at www.dragonbiotech.com. All dollar amounts are expressed in U.S. currency.

Recent Highlights:

– Generated revenues of $1.37 million, up 106% from Q1 2001
– Submitted SDA application for marketing approval of EPO in surgical patients
– Acquired remaining 25% of GMP-certified manufacturing facility in Nanjing, China
– Obtained a TSX listing under the symbol ‘DDD’ subsequent to quarter-end

Operational Review

“This quarter marks the first time that EPO sales outside of China have surpassed Chinese sales,” said Dr. Longbin Liu, President and CEO. “While maintaining our 30% market share position in China’s EPO market, we have successfully diversified our customer base and expanded our international presence by marketing our lead product in other developing countries. Our current distribution licenses cover over 90 countries and we expect key approvals to come on line throughout the year, leading to continued growth in international sales.”

Dragon’s EPO is currently approved and marketed for use in the treatment of anemia related to chronic renal failure in China, India, Egypt and Peru. During the quarter, the Company submitted its application to the Chinese State Drug Administration (SDA) for the use of EPO in surgical patients and expects to receive a New Drug License in China for this indication shortly.

“Use of EPO for surgical indications is a key step in the development and marketing of our lead product,” said Dr. Liu. “We expect the surgical indication to really expand our potential market in many countries. Additionally, we are working on a chemotherapy-related indication for EPO, for which we expect to complete Phase III clinical trials late in 2002.”

During the quarter, Dragon acquired the remaining 25% equity interest in its GMP-certified production facility located in Nanjing, China. The acquisition will allow Dragon to meet the growing demand for its commercially available therapeutic protein, EPO, and expedite the development of other pipeline products.

Subsequent to quarter-end, Dragon began trading on the Toronto Stock Exchange on May 9, 2002 under the symbol DDD. Listing on a senior stock exchange should help the Company gain an institutional following and raise its profile in the Canadian investment community.

Financial Review

Revenues for the first quarter totalled $1.37 million, an increase of over 106% from $664,000 in the first quarter 2001. Gross profit margin rose to 86% from 78% of the same period last year. The significant increase in gross profit margin is mainly due to the economies of scale the company achieved over the year.

Operating expenses for the first quarter 2002 were $2.15 million, up from $1.54 million from the same period last year, largely due to increased investment in Research and Development efforts.

Net loss for the period was $938,000, or $0.05 per share, compared to $856,000, or $0.05 per share, for the first three months of fiscal 2001.

“With the anticipated growth of our top line revenues, we expect to see significant improvement to our bottom line,” said Dr. Liu. “In addition to obtaining additional international marketing approvals as well as regulatory approvals for new applications of our EPO, our upcoming development efforts will focus on commercializing the additional protein therapeutics in our product pipeline.”

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