SINOVAC BIOTECH LTD. -------------------- UPDATES ON ITS AVIAN INFLUENZA VACCINE DEVELOPMENT -------------------------------------------------- BEIJING

SINOVAC BIOTECH 6K, PRESS RELEASE 3.2.05

SINOVAC BIOTECH LTD.

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UPDATES ON ITS AVIAN INFLUENZA VACCINE DEVELOPMENT

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BEIJING, March 2, 2005 - Sinovac Biotech Ltd. ("Sinovac") ("the Company") (AMEX:

SVA) updates today on the development of its human vaccine targeting the avian

Sinovac's Avian Flu Vaccine Development

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Sinovac is currently advancing its Inactivated New Human Influenza (H5N1)

vaccine (also referred to as Pandemic Influenza Vaccine) through the various

stages of pre-clinical studies.

On March 25 2004, Sinovac received a reassortant influenza strain (NIBRG-14) for

developing a Pandemic Influenza Vaccine (H5N1) from the British National

Biological Standard and Control (NIBSC), which is the WHO International

Laboratory for Biological Standards. The WHO distributed this virus strain to

major vaccine manufacturers all over the world and recommended them to use it to

develop a Pandemic Influenza Vaccine, since they considered that this strain

will be the epidemic strain in the next potential outbreak caused by avian flu

Sinovac completed a research protocol for developing an avian flu vaccine in

April 2004 after receiving the reassortant influenza strain for bird flu H5N1

virus from the World Health Organization network.

According to the New Human Influenza Vaccine R & D Protocol, the vaccine is

produced through the pre-clinical steps of manual cultivation, propagation,

inactivation, purification, and splitting of virus strain (H5N1). This set of

processes mainly includes: studies on virus strain breeding; infectious titer;

antigenicity; immunogenicity; establishment and testing on primary seed lot;

master seed lot; working seed lot of viral seed; passage stability study;

vaccine bulk production technology study; preparation prescription method study;

testing method study; animal protection study; animal-safety evaluation; final

product stability study; and scaled-production method study.

Current epidemiology shows that H5N1 is highly infectious and pathogenic for

birds, but not that serious for humans. However, whenever H5N1 virus combines

with human flu virus and both of them recombine to become a new flu virus, then

it is possible for that virus to be highly infectious and pathogenic to humans."

This kind of pandemic caused by the recombination of human-animal flu virus has

historically happened three times. It caused worldwide disaster each time.

Moreover, according to Mr. Yin, president of SInovac, in order to prevent "Newly

developed reassortant strain of highly pathogenic New Human Influenza" caused by

the genetic mixing of human and bird flu virus together, Sinovac decided to

develop an inactivated vaccine with reassortant bird flu virus strain for humans

by using gene reassorting techniques.

In December 2004, Sinovac signed a major co-development agreement with the

Chinese Centre of Disease Control and Prevention (China CDC) to accelerate the

development of an avian flu vaccine for which Sinovac will own commercial

rights. The Center for Disease Control and Prevention (China CDC) is the main

government institution in China involved in the field of disease control and

In order to further discuss the vaccine development, in early January, Sinovac

invited Dr. John Wood and Dr. Lisa Major from NIBSC to Beijing for a "Symposium

on Flu virus and Avian Flu Virus". Officials from the State Food and Drug

Administration (China FDA) and scientists from China CDC attended the symposium

The ultimate aim of the vaccine is to provoke the human immune system into

action, so that it can destroy the reassortant bird flu virus if infected. The

drug approval process regulated by the State Drug Administration (SFDA) in China

is similar to the one regulated by the FDA in the United States. The process

involves pre-clinical in vitro laboratory and in vivo animal testing; IND study

(Investigational New Drug); clinical Phases I, II and III; New Drug Application;

and finally Marketing Approval for sale. The SFDA has stated that it is

fast-tracking the drug approval process for Sinovac's potential avian flu

vaccine. Sinovac is currently progressing through the pre-clinical stage - the

first step of this process.

The following information is intended to provide investors with a summary of

background information currently available on avian influenza.

Potential for an Influenza Pandemic

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All influenza viruses can change. It is possible that an avian influenza virus

could change so that it would infect humans and spread easily from person to

person. Because these viruses do not commonly infect humans, there is little or

no immune protection against them in the human population. If an avian virus

were able to infect people and gain the ability to spread easily from person to

person, an "influenza pandemic" could begin.

Avian flu is currently drawing significant media attention as world health

authorities warn of a global pandemic caused by the spread and mutation of the

A 28-nation conference on avian flu held in Ho Chi Minh City, Vietnam has just

concluded. The conference was staged by the United Nations' Food and Agriculture

Organization (FAO), the World health Organization (WHO), and the World

Organization for Animal Health (OIE).

"The threat is real and the potential is very high" for a pandemic, Samuel Jutzi

of the FAO told a news conference at the end of the three day event. "The longer

the virus continues to circulate in poultry-production systems and ducks, the

higher is the probability of infection of humans."

The Associated Press quoted Dr. Shigeru Omi, the WHO's Western Pacific regional

director, as saying, "We at WHO [the World Health Organization] believe that the

world is now in the gravest possible danger of a pandemic. If the virus becomes

highly contagious among humans, the health impact in terms of deaths and

sickness will be enormous, and certainly much greater than SARS [severe acute

respiratory syndrome]."

The WHO official further warned that governments should develop preparedness

plans to ensure the continuation of basic public services such as

transportation, sanitation, and power in the event of a pandemic. The virus in

question, the H5N1 strain, has shown itself to be very versatile and resilient,

having infected tigers and domestic cats, which were not believed to be

susceptible to influenza. The H5N1 virus is well entrenched, according to Jutzi.

He added further, "We must assume that avian influenza will persist for many

years in some of the countries that had disease outbreaks in 2004-2005."

Vietnam has been hit hardest by the avian flu virus, which erupted across much

of Asia at the end of 2003 and has killed 46 people: 33 Vietnamese, 12 Thais and

a Cambodian. Another case has been reported in 21-year-old man whose younger

sister may also have caught the virus, officials said. Almost all other people

known to have caught the virus contracted it from contact with sick birds. It