Filed pursuant to Rule 425
and deemed filed pursuant to Rule 14a-12
Subject Company: Oriental Wave Holdings Ltd.
Filing Person: Dragon Pharmaceutical, Inc.
File No.: 0-27937
Dragon Reports Second Quarter Results of 2004
Vancouver, BC- August 11, 2004. - Dragon Pharmaceutical Inc. (TSX: DDD; OTC BB:
DRUG; BBSE: DRP) is pleased to announce the results for the second quarter ended
June 30, 2004.
For the three-month ended June 30, 2004
---------------------------------------
During the second quarter in 2004, the Company posted revenues of $908,145 from
the sales of rHu Erythropoietin (EPO) compared to $1,007,686 for the same period
of the prior year. Revenues of $657,645 were generated in China and $250,500
from outside of China during the second quarter of 2004 compared to $576,894 in
China and $430,792 from outside of China for the same period in 2003. The gross
profit margin was 79% for the period in 2004, improved from the gross margin of
68% for the same period in 2003.
Net loss for the second quarter in 2004 was $388,004 or $0.02 per share,
compared to a net loss of $236,424, or $0.01 per share, for the same period in
2003. The increase in net loss for the second quarter in 2004 was mainly due to
an increase in research and development expenses for the EPO product developed
for the European market.
For the six-month ended June 30, 2004
-------------------------------------
Revenues for the six-month period in 2004 were $1.79 million, up from $1.67
million from the same period in 2003. Sales in and outside of China were $1.36
million and $0.43 million respectively during the period in 2004 compared to
$1.03 million in China and $0.64 million outside of China for the same period in
2003. The gross profit margin was 75% for the period of 2004, improved from 68%
for the same period in 2003. Net loss for the period of 2004 was $0.64 million
or $0.03 per share compared to a loss of $0.97 million or $0.05 per share for
the same period in 2003, reflecting the results of effective cost control
measures and a leaner corporate structure.
During the second quarter of 2004, Dragon announced entering into a definitive
agreement to acquire Oriental Wave Holdings Ltd. The proposed acquisition is
subject to a number of conditions including regulatory and shareholders'
approval. If the proposed acquisition is consummated, Oriental Wave will become
a wholly owned subsidiary of Dragon and the combined company, headquartered in
Vancouver, Canada, will have approximately 1,800 employees worldwide plus over
1,200 sales representatives in China. In addition, the acquisition of Oriental
Wave by Dragon will create a competitive and growth oriented pharmaceutical
company focusing on major growth sectors of the global pharmaceutical industry,
namely, generic drugs (prescription and over-the-counter generic drugs), bulk
pharmaceutical chemicals (Clavulanic Acid, 7-ACA and sterilized bulk drugs) and
biotech drugs (EPO and in-licensed G-CSF).
"We are pleased with the progress we have accomplished so far in 2004. On one
hand, we have achieved operational improvement with an increase in gross profit
margin. On the other hand, we have received regulatory approval for the sale of
our EPO product in Ecuador in addition to China, India, Egypt, Brazil and Peru.
At the same time, we are investing in our future by expanding our research and
development efforts for our anticipated EPO product specifically designed for
the European market to ensure Dragon a timely entry to this prominent market",
said Dr. Alexander Wick, President and CEO of Dragon Pharmaceutical Inc.
"However, probably the most important and exciting news for Dragon during the
quarter was that Dragon has entered into a definitive agreement to acquire
Oriental Wave Holdings Ltd. Now, with a Registration Statement on Form S-4,
relating to the acquisition of Oriental Wave filed with the U.S. Securities and
Exchanges Commission, we are currently targeting to have the proposed
acquisition completed during the fourth quarter of 2004. While we are very
pleased with the progress of the proposed acquisition, we look forward to
completing the acquisition process as soon as possible so that the combined
company will start generating the anticipated benefits as a result of the
business combination."
About Dragon Pharmaceutical Inc.
--------------------------------
Dragon Pharmaceutical Inc. is an international bio-pharmaceutical company
headquartered in Vancouver, Canada, with a GMP production facility in Nanjing,
China. Dragon's EPO is currently approved to treat anemia due to renal failure
and surgery in 6 countries: China, India, Brazil, Egypt, Peru, and Ecuador.
Additional regulatory submissions are in progress throughout Central and Eastern
Europe, Asia, Latin America, the Middle East and Africa and the Company is in
the final preparation to enter the European Union market.
Forward Looking Statement:
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995: All statements, other than historical
facts, included in the foregoing press release are forward-looking statements.
These forward looking statements include, but are not limited to, that Dragon
and Oriental Wave will consummate the acquisition. Forward-looking statements
are not guarantees of future performance. They involve risk, uncertainties and
assumptions including risks discussed under "Risks Associated With Dragon
Pharmaceuticals" in the Company's annual report on Form 10-KSB, SEC File No.: 0-
27937 and other documents filed with the SEC. The Company does not undertake the
obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances.
The foregoing may be deemed to be soliciting materials of Dragon in connection
with its definitive agreement to acquire Oriental Wave announced on June 14,
2004. This disclosure is being made in connection with Regulation of Takeovers
and Security Holder Communications (Release Nos. 33-7760 and 34-42055) adopted
by the Securities and Exchange Commission ("SEC") and Rule 14a-12 under the
Securities Exchange Act of 1934, as amended. Dragon shareholders and other
investors are urged to read the proxy statement prospectus that Dragon has filed
with the SEC in connection with the proposed acquisition because it contains
important information about Dragon, Oriental Wave and related matters. Dragon
and its directors and executive officers may be deemed to be participants in
Dragon's solicitation of proxies from Dragon shareholders in connection with the
proposed acquisition. Information regarding the participants and their security
holdings can be found in each of Dragon's most recent proxy statement and Form
10-KSB filed with the SEC, which are or will be available from the SEC and
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Dragon as described below, and the proxy statement when it is filed with the
SEC. The proxy statement / prospectus will be available for free, both on the
SEC web site (http://www.sec.gov) and from Dragon as follows:
Garry Wong
Dragon Pharmaceutical, Inc
1900 - 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9
Telephone: (604) 669-8817 or North American Toll Free: 1-877-388-3784
Fax: (604) 669-4243
Email: ir@dragonbiotech.com
--------------------
Website: www.dragonpharma.com or www.dragonbiotech.com
-------------------- ---------------------
In addition to the proposed proxy statement/prospectus, Dragon files annual,
quarterly and special reports, proxy statements and other information with the
SEC. You may read and copy any reports, statements or other information filed by
Dragon at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Dragon filings with the SEC are also available to the
public from commercial document-retrieval services and on the SEC's web site at
http://www.sec.gov.
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS*
----------------------------------------------
For the Three-month For the Six-month
Ended June 30 Ended June 30
---------------------- ---------------------
2004 2003 2004 2003
---- ---- ---- ----
Sales $908,145 $1,007,686 $1,786,415 $1,672,009
Gross Profit 713,390 680,698 1,344,918 1,143,740
Gross Profit Margin 79% 68% 75% 68%
Net (loss) for the period (388,004) (236,424) (637,427) (970,452)
=================================================================
(Loss) per share - basic and diluted $(0.02) $(0.01) $(0.03) $(0.05)
=================================================================
Weighted average number of common shares
outstanding
Basic and diluted 20,560,022 20,334,000 20,511,011 20,334,000
SELECTED CONSOLIDATED BALANCE SHEET DATA*
-----------------------------------------
June 30, 2004 December 31, 2003
------------- -----------------
Cash and Short-term Securities $ 2,608,594 $ 3,126,667
Total Current Assets $ 5,739,882 $ 5,622,402
Total Current Liabilities $ 1,325,780 $ 1,428,257
Total Shareholders' Equity $ 7,567,029 $ 9,707,795
Total Assets $ 8,892,809 $ 11,136,052
* For greater detail, please refer to the Company's 10-QSB, which has been filed
with the SEC and the Ontario Securities Commission. The full financial
statements will also be available on Dragon's website at www.dragonpharma.com or
www.dragonbiotech.com. The Company's financial statements comply with U.S. GAAP
(Generally Accepted Accounting Principles) and all dollar amounts are expressed
in U.S. currency.
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