Abraxis BioScience splitting into two parts

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LOS ANGELES—November 8, 2007—Abraxis BioScience released details of its separation into two independent, publicly traded companies: Abraxis BioScience and APP Pharmaceuticals. The transaction is expected to close November 13, 2007 and will include APP receiving a loan of $1.15 billion of senior credit facilities: a funded $1.0 billion term loan and an unfunded $150 million revolving credit facility. Each current shareholder will retain the same ownership percentage of each of the new companies, to be listed on the Nasdaq Global Market as "ABII" and "APPX", respectively.
LOS ANGELES – Is it déjà vu all over again? Fewer than 18 months have passed since American Pharmaceutical Partners Inc., and American BioScience Inc., merged to become Abraxis BioScience. Now, that company is splitting into two independent entities: Abraxis Pharmaceutical Products (APP), for injectable hospital products, and Abraxis BioScience, a biotechnology company.

"In general, this separation unlocks the long-term value of each company," says
Patrick Soon-Shiong, who will serve as chairman and CEO of both companies, says "Each is now able to focus on their respective pipelines, compete more effectively in each specialized marketplace, pursue unique strategic initiatives, accommodate differing capital requirements, and ultimately we hope this allows for a valuation within the financial community that is based on the appropriate metrics."

Soon-Shiong says the merger enabled the combined entity to grow to more than 1,900 employees and "revenues that will approach $1 billion by the end of 2007." During their time together, acquisitions—global rights to Abraxane and its underlying technology platform, an AstraZeneca anesthesia and analgesic portfolio, and a Pfizer manufacturing facility in Puerto Rico—enabled the merged company to grow. "None of this would have been possible had it not been for the merger 18 months ago," says Soon-Shiong. Still, Soon-Shiong noted during a July 2 conference call about the separation, the competing capital requirements of generic injectables and biotech became confusing to shareholders.

After the transaction closes late this year, Abraxis BioScience will comprise Abraxis Oncology and Abraxis Research, employ more than 500, and continue drug discovery with the nanoparticle albumin-bound (nab) technology underlying the metastatic breast cancer drug Abraxane. Nab uses albumin to deliver therapies to disease sites. During the conference call, Soon-Shiong also mentioned continuing work on nab's apparent target: SPARC, a protein secreted by cancer cells that induces VEGF.

Abraxis BioScience's intent to simultaneously pursue personalized medicine is evidenced by its June announcement of licensing an intellectual property portfolio—diagnostic protein biomarkers related to colorectal cancers—from the University of Southern California.

Abraxis BioScience will be funded by Abraxane revenues plus $1 billion of a $1.3 billion bank financing from Deutsche Bank and Wachovia Bank, N.A., that APP will service. "The capital infusion that is a result from this separation will also allow this business to fund organic development through expansion of its proprietary pipeline, retain full ownership of pipeline programs, and expand commercialization efforts as well as pursue possible partnerships or acquisitions," says Soon-Shiong.

APP, with headquarters in Schaumburg, Illinois, will focus on manufacturing and developing technologies for injectable pharmaceuticals in several areas: anti-infective, critical care, oncology, and anesthetic/analgesic. Thomas Silberg, president of APP, emphasized the synergies of the Abraxis units during their time together. "It was a way to give the Abraxis BioScience company a jump start, so to speak, in getting its business platform in place," he says.

APP's role in manufacturing for Abraxis BioScience was no drain, Silberg says. "We make literally hundreds of millions of vials of product every year in our manufacturing facilities," with Abraxane production between 100,000 and 200,000 annual units.

The split enables both companies to pursue individual interests, taking credit for respective performances, says Silberg. Abraxis spent months developing an agreement for sharing and dividing infrastructure and services to ultimately build independence in each entity without interrupting business operations. "It really is a good thing for both companies now that we've both kind of grown up a bit," says Silberg.

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