Sinovac Biotech Ltd.

Sinovac Biotech Ltd.

March 15, 2005 09:00 ET

Sinovac Biotech Ltd. Announces That it Has Received the New Drug Certificate From the Chinese Government for its Split Flu Vaccine


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: SINOVAC BIOTECH LTD.

AMEX SYMBOL: SVA

MARCH 15, 2005 - 09:00 ET

Sinovac Biotech Ltd. Announces That it Has Received
the New Drug Certificate From the Chinese Government
for its Split Flu Vaccine

BEIJING, CHINA--(CCNMatthews - March 15, 2005) - Sinovac Biotech Ltd.
("Sinovac") ("the Company") (AMEX:SVA) announces that it has received
the New Drug Certificate from the Chinese State Food and Drug
Administration (SFDA) for its Split Influenza vaccine. The SFDA approval
comes as the Company is nearing completion of its new production line in
Beijing.

The official approval marks a significant milestone in the growth of
Sinovac's portfolio of low-cost, high quality inactivated vaccines. The
Company's Split Flu vaccine, which is safe for use in children as well
as the elderly, is the third Sinovac vaccine for which the SFDA has
granted a new drug certificate. The first two Sinovac products,
Healive™, a hepatitis A vaccine, and Bilive™, a combined vaccine
for hepatitis A & B, have helped establish the Company as an emerging
leader in the Chinese biotechnology sector.

Sinovac president, Dr. Wei Dong Yin stated, "I would again like to thank
our shareholders for their patience and continued support of our efforts
towards becoming a major vaccine developer and manufacturer for the
domestic Chinese and international markets. We are excited to move
closer towards sales of this key vaccine in our product portfolio."

The Company first undertook split flu vaccine research and development
in 2001, completed clinical trials in early 2004 and filed its New Drug
Application with the SFDA in June 2004. Sales approval of Sinovac's flu
vaccine is expected upon completion and GMP certification of the flu
vaccine production line. Sinovac also intends to build another, much
larger flu vaccine production facility if the Company can obtain
necessary financing.

Influenza

Influenza, commonly known as the flu, is an acute respiratory infection
that is very contagious. In a typical flu season, between 5 to 10% of
the world's population (300 to 600 million people) may get infected.
Influenza epidemics typically occur during the winter months and are
responsible for as many as 200,000 hospitalizations and 36,000 deaths
per year in the United States alone. Influenza viruses also can cause a
pandemic during which rates of illness and death from influenza-related
complications can increase dramatically worldwide. Since the influenza
virus tends to mutate constantly, it is very difficult to treat. There
is no effective cure. Therefore, vaccination is the only effective
defense against outbreaks of influenza.

Split Flu Vaccine

Significantly, Sinovac's split flu vaccine is the safest type produced
for influenza inoculations. According to an official World Health
Organization paper published in February 2003, "Split vaccines and
subunit vaccines show reduced systemic reactogenicity both in children
and in adults as compared to whole virus preparations. Consequently,
subunit and split virus vaccines are more attractive than whole-particle
vaccines, particularly for use in children,"
(www.who.int/vaccines/en/influenza.shtml). From a marketing and sales
perspective this gives Sinovac an important advantage.

Split Flu Vaccine Production Line

Sinovac's flu production line has now nearly been completed at a new
manufacturing facility next to the Company's existing Beijing
headquarters. The 2600 square meter facility is being built to meet
global Good Manufacturing Practice (GMP) standards at a fraction of
Western costs: the investment for construction and equipment is about US
$4million. This initial manufacturing workshop is designed with a
production capacity of 2 million doses of flu vaccine per year.

Dr. Yin commented further on some of the expertise behind Sinovac's
development and production capabilities, "Our inactivated hepatitis
vaccine production facilities were developed in consultation with highly
specialized international design and engineering consulting firms. The
facilities are fully compliant with the GMP Quality Assurance System
(QAS) for international standards on bio-pharmaceutical management.
Sinovac's flu production line has also been designed in accordance with
these international standards. In the near-term, upon completion of the
flu production facilities, the Company will apply for GMP certification
in China."

Influenza Epidemiology

There are three types of influenza virus. Influenza A viruses infect
mammals (humans, pigs, ferrets, horses) and birds. Influenza B and
Influenza C viruses only infect humans.

All type A influenza viruses, including those that regularly cause
seasonal epidemics of influenza in humans, are well adapted to elude
host defenses. Influenza viruses lack mechanisms for the "proofreading"
and repair of errors that occur during replication. As a result of these
uncorrected errors, the genetic composition of the viruses can change as
they replicate in humans and animals, and the existing strains are
replaced with a new antigenic variant. These constant, permanent and
usually small changes in the antigenic composition of influenza A
viruses are known as antigenic "drift".

The tendency of influenza viruses to undergo frequent and permanent
antigenic changes necessitates constant monitoring of the global
influenza situation and annual adjustments in the composition of
influenza vaccines. Both activities have been a cornerstone of the WHO
Global Influenza Program since its inception in 1947.

Influenza viruses have a second characteristic of great concern to
public health: influenza A viruses, including subtypes from different
species, can swap or "re-assort" genetic materials and merge. This
re-assortment process, known as antigenic "shift", results in a novel
subtype different from both parent viruses. As populations will have no
immunity to the new subtype, and as no existing vaccines can confer
protection, antigenic shift has historically resulted in highly lethal
pandemics. For antigenic shift to take place, the novel subtype needs to
have genes from human influenza viruses that make it readily
transmissible from person to person for a sustainable period. The
appearance of a new strain of influenza for which most of the population
lacks immunity can result in worldwide outbreaks or pandemics. Pandemic
strains are associated with global spread over a short time frame and
with high attack rates. Three such pandemics occurred during the 20th
century; the most severe was the Spanish influenza pandemic in 1918 and
1919, which caused 20 to 50 million deaths worldwide and over 500,000
deaths in the United States.

Influenza viruses A and B cause annual outbreaks of illness affecting
approximately 5% to 10% of the world's adult population, with higher
rates in children. In the United States, influenza causes an average of
over 36,000 deaths and 130,000 to 170,000 hospitalizations during each
year. In China, influenza is responsible for 100,000 to 500,000 deaths
annually. During epidemic years, an estimated 2 million patients are
hospitalized at a cost of $750 million to $1 billion. Globally, persons
65 years of age and older constitute nearly 50% of excess
hospitalizations and over 85% of deaths from influenza.

A Growing Chinese Influenza Vaccine Market

Sinovac's world-class proprietary influenza vaccine is essential to
meeting China's vaccine shortage since demand is expected to grow
many-fold over the next few years. Furthermore, since individuals
require vaccination against the flu on an annual basis, demand should
remain high every year.

According to a Merrill Lynch report on the Global Vaccine Market (2003),
"world flu vaccine demand will grow at a compound five year growth rate
from 2002 to 2007 of 16%." The report expands further, "in the past few
years, there has been significant growth in the use of flu vaccines in
Central and Eastern Europe, China, Taiwan, Mexico, and Japan. The market
in developing countries is mainly comprised of the affluent middle
classes who can afford Western medicines. We expect these international
markets for flu vaccines to expand at least at the rate of forecast GDP
growth in developing countries," (Merrill Lynch report, page 3). After
the SARS epidemic in China and the danger of avian flu (H5N1) infection,
vaccination against the flu has been greatly encouraged by Chinese
health authorities, which is further driving the flu vaccine market to
grow at a higher rate than global levels. This rapid demand growth is
further compounding the opportunity for Sinovac.

Even in North America, flu vaccine supply delays and shortages have been
highlighted in the media even before Chiron's recent production problems
in the UK: http://www.boston.com/news/nation/articles/2004/08/26/
us_warns_of_flu_vaccine_shortage/.

(Due to the length of this URL, it may be necessary to copy and paste
this hyperlink into your Internet browser's URL address field.)

About Sinovac Biotech Ltd.

Sinovac Biotech Ltd. specializes in the research, development,
commercialization, and sales of human vaccines for infectious illnesses
such as hepatitis A and hepatitis B, influenza, "SARS", and avian flu.
Sinovac is one of the leading emerging biotechnology companies in China.

Sinovac now has two vaccines fully approved for sale in China -
Healive™ for Hepatitis A and Bilive™ for Hepatitis A&B combined.
The Hepatitis A vaccine, Healive™, is currently experiencing strong
sales growth in China. Sinovac's Hepatitis A&B combined vaccine,
Bilive™, received approval in China in January 2005 and is expected
to achieve similar sales growth to Healive™. Sinovac's split flu
vaccine received approval of its New Drug Certificate in March 2005.
Final approval of the Company's flu vaccine is expected in 2005 after
GMP certification of the new flu vaccine production line.

Sinovac is currently the world leader in the development of a SARS
vaccine. Preliminary Phase I results show that this SARS vaccine is safe
and induces SARS-neutralizing antibodies in the human body. In addition,
the Company is co-developing a human vaccine targeting the avian flu
virus in partnership with the China Center of Disease Control (CDC). CDC
controls the Chinese vaccine market through its two main functions: as
both the commercial sales agency and the governmental department in the
pharmaceutical sector for China.

For further information please refer to the Company's filings with the
SEC or refer to Sinovac's website at www.sinovac.com.

If you would like to receive regular updates on Sinovac please send your
email request to info@sinovac.com.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Sinovac Biotech Ltd.
    Tracey Gabert
    Investor Relations
    1-888-888-8312 or (604) 684-5990 outside of North America
    info@sinovac.com
    www.sinovac.com