Aoxing Reports Progress in Narcotic API Manufacturing JV

| About: Aoxing Pharmaceutical (AXN)

Aoxing Pharma (NYSEMKT:AXN) reported its JV, which will produce narcotic drug APIs, has passed a GMP inspection conducted by the SFDA. The company expects its newly renovated facility to earn full GMP certification by the end of 2010, allowing manufacturing to begin in 2011. Hebei Aoxing API Pharmaceutical Company, Ltd. is a JV between Aoxing and Johnson Matthey Plc. of the UK.

The JV, which was announced in April of this year, is Aoxing’s latest attempt to take advantage of its valuable China narcotics license. The PRC government has granted only a few such licenses, but Aoxing has not been able to generate a profitable business out of its franchise. In fiscal 2010 (ended June 30, 2010), Aoxing announced revenues of $6 million, which were down almost 30%, and a net loss of $.9 million.

The JV will receive a capital investment of $15 million over 5 years. Initially, the entity will develop eight narcotic API products for the China market, but its potential product portfolio could exceed 30 products.

Earlier this year, Aoxing announced a collaboration with Australian pharma, QRxPharma Limited (OTCPK:QRXPY) to develop MoxDuoIV for the China market. MoxDuoIV is an IV formulation of QRxPharma's patented morphine and oxycodone Dual-Opioid technology for the acute treatment of moderate to severe pain.

American Oriental (NYSE: AOB), expressing faith in Aoxing’s long-term prospects, has purchased a 35% stake in Aoxing.

Disclosure: none.