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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q

(Mark One)

|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2007



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 0-33407

Abraxis BioScience, Inc.

(Exact name of registrant as specified in its charter)



|                                                     |  |                                     
|---------------------------------------------------- |  | ------------------------------------
|Delaware                                             |  | 68-0389419                          
|(State of Incorporation)                             |  | (I.R.S. Employer Identification No.)
|                                                     | 
|11755 Wilshire Boulevard, Suite 2000 Los Angeles, CA |  | 90025                               
|(Address of principal executive offices)             |  | (Zip Code)                          

(310) 883-1300

(Registrants telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ            No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated
filer    þ            Accelerated Filer ̈Non-Accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as determined by rule 12b-2 of the Exchange Act).
Yes ̈No  þ

As of May 3, 2007, the registrant had 166,183,546 shares of $0.001 par value common stock outstanding, including 6,705,116 shares
held by the registrant in treasury.



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##### Table of Contents

Abraxis BioScience, Inc.

INDEX



|                              |  |                                                                                              |  |     
|----------------------------- |  | -------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                              |  | Page
|PART I. Financial Information |  |                                                                                             
|                              |  |                                                                                             
|Item 1.                       |  | Financial Statements (Unaudited)                                                             |  | 3   
|                              |  |                                                                                             
|                              |  | Condensed consolidated balance sheets  March 31, 2007 and December 31, 2006                 |  | 3   
|                              |  |                                                                                             
|                              |  | Condensed consolidated statements of income  Three months ended March 31, 2007 and 2006     |  | 4   
|                              |  |                                                                                             
|                              |  | Condensed consolidated statements of cash flows  Three months ended March 31, 2007 and 2006 |  | 5   
|                              |  |                                                                                             
|                              |  | Notes to condensed consolidated financial statements  March 31, 2007                        |  | 6   
|                              |  |                                                                                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations        |  | 14  
|                              |  |                                                                                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                   |  | 26  
|                              |  |                                                                                             
|Item 4.                       |  | Controls and Procedures                                                                      |  | 27  
|                              | 
|PART II. Other Information    |  |                                                                                             
|                              |  |                                                                                             
|Item 1.                       |  | Legal Proceedings                                                                            |  | 28  
|                              |  |                                                                                             
|Item 1A.                      |  | Risk Factors                                                                                 |  | 28  
|                              |  |                                                                                             
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                  |  | 36  
|                              |  |                                                                                             
|Item 3.                       |  | Defaults Upon Senior Securities                                                              |  | 36  
|                              |  |                                                                                             
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                          |  | 36  
|                              |  |                                                                                             
|Item 5.                       |  | Other Information                                                                            |  | 36  
|                              |  |                                                                                             
|Item 6.                       |  | Exhibits                                                                                     |  | 36  
|                              | 
|Signatures                    |  | 37                                                                                          



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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Abraxis BioScience, Inc.

Condensed Consolidated Balance Sheets



|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                      |  | March 31,2007 |           |   | December 31,2006 |  
|(in thousands, except share data)                                                                                                                     |  | (Unaudited)   |           |   | (Note 1)         |  
|Assets                                                                                                                                                |  |               |           |   |                  |   |           |  
|Current assets:                                                                                                                                       |  |               |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                             |  | $             | 29,745    |   |                  | $ | 39,297    |  
|Accounts receivable, less of allowances for doubtful accounts                                                                                         |  |               | 82,685    |   |                  |   | 84,684    |  
|Inventories                                                                                                                                           |  |               | 223,656   |   |                  |   | 218,280   |  
|Prepaid expenses and other current assets                                                                                                             |  |               | 13,821    |   |                  |   | 15,570    |  
|Deferred income taxes                                                                                                                                 |  |               | 83,144    |   |                  |   | 78,955    |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total current assets                                                                                                                                  |  |               | 433,051   |   |                  |   | 436,786   |  
|Property, plant and equipment, net                                                                                                                    |  |               | 254,563   |   |                  |   | 217,819   |  
|Investment in Drug Source Company, LLC                                                                                                                |  |               | 6,222     |   |                  |   | 5,504     |  
|Intangible assets, net of accumulated amortization                                                                                                    |  |               | 720,821   |   |                  |   | 738,440   |  
|Goodwill                                                                                                                                              |  |               | 401,600   |   |                  |   | 401,600   |  
|Non-current receivables from related parties                                                                                                          |  |               | 39        |   |                  |   | 39        |  
|Other non-current assets, net of accumulated amortization                                                                                             |  |               | 25,482    |   |                  |   | 25,320    |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total assets                                                                                                                                          |  | $             | 1,841,778 |   |                  | $ | 1,825,508 |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Liabilities and stockholders equity                                                                                                                  |  |               |           |   |                  |   |           |  
|Current liabilities:                                                                                                                                  |  |               |           |   |                  |   |           |  
|Accounts payable                                                                                                                                      |  | $             | 51,471    |   |                  | $ | 65,471    |  
|Accrued liabilities                                                                                                                                   |  |               | 64,645    |   |                  |   | 61,428    |  
|Income taxes payable                                                                                                                                  |  |               | 17,836    |   |                  |   | 80,054    |  
|Deferred revenue                                                                                                                                      |  |               | 39,225    |   |                  |   | 39,225    |  
|Minimum royalties payable                                                                                                                             |  |               | 1,027     |   |                  |   | 1,017     |  
|Notes payable                                                                                                                                         |  |               | 73,608    |   |                  |   | 72,248    |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total current liabilities                                                                                                                             |  |               | 247,812   |   |                  |   | 319,443   |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Long-term debt                                                                                                                                        |  |               | 233,000   |   |                  |   | 165,000   |  
|Deferred income taxes, non-current                                                                                                                    |  |               | 141,297   |   |                  |   | 142,563   |  
|Long-term portion of deferred revenue                                                                                                                 |  |               | 148,291   |   |                  |   | 158,135   |  
|Other non-current liabilities                                                                                                                         |  |               | 10,198    |   |                  |   | 7,006     |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total liabilities                                                                                                                                     |  |               | 780,598   |   |                  |   | 792,147   |  
|Stockholders equity:                                                                                                                                 |  |               |           |   |                  |   |           |  
|Common stock$.001 par value; 350,000,000 shares authorized; 166,158,345 and 165,928,134 shares issued and outstanding in 2007 and 2006,
respectively |  |               | 166       |   |                  |   | 166       |  
|Additional paid-in capital                                                                                                                            |  |               | 1,101,444 |   |                  |   | 1,085,196 |  
|Retained earnings                                                                                                                                     |  |               | 15,512    |   |                  |   | 4,483     |  
|Accumulated other comprehensive income                                                                                                                |  |               | 1,799     |   |                  |   | 1,257     |  
|Less treasury stock at cost, 6,705,116 common shares in both 2007 and 2006                                                                            |  |               | (57,741   | ) |                  |   | (57,741   | )
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total stockholders equity                                                                                                                            |  |               | 1,061,180 |   |                  |   | 1,033,361 |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Total liabilities and stockholders equity                                                                                                            |  | $             | 1,841,778 |   |                  | $ | 1,825,508 |  
|                                                                                                                                                      |  |               |           |   |                  |   |           |  

See notes to condensed consolidated financial statements.



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Abraxis BioScience, Inc.

Condensed Consolidated Statements of Income

(Unaudited)



|                                                                          |  |                                      |         |   |      |   |         |  
|------------------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                          |  | Three Months EndedMarch 31,          |        
|                                                                          |  | 2007                                 |         |   | 2006 |  
|                                                                          |  | (in thousands, exceptper share data) |        
|Revenue                                                                   |  | $                                    | 212,161 |   |      | $ | 144,528 |  
|Cost of sales                                                             |  |                                      | 82,084  |   |      |   | 58,080  |  
|                                                                          |  |                                      |         |   |      |   |         |  
|Gross profit                                                              |  |                                      | 130,077 |   |      |   | 86,448  |  
|Operating expenses:                                                       |  |                                      |         |   |      |   |         |  
|Research and development                                                  |  |                                      | 26,880  |   |      |   | 24,344  |  
|Selling, general and administrative                                       |  |                                      | 69,543  |   |      |   | 30,897  |  
|Amortization of merger related intangibles                                |  |                                      | 13,509  |   |      |   |        |  
|Other merger related costs                                                |  |                                      |        |   |      |   | 5,639   |  
|Equity in net income of Drug Source Co., LLC                              |  |                                      | (481    | ) |      |   | (476    | )
|                                                                          |  |                                      |         |   |      |   |         |  
|Total operating expenses                                                  |  |                                      | 109,451 |   |      |   | 60,404  |  
|                                                                          |  |                                      |         |   |      |   |         |  
|Income from operations                                                    |  |                                      | 20,626  |   |      |   | 26,044  |  
|Interest income and other                                                 |  |                                      | 562     |   |      |   | 1,094   |  
|Interest expense                                                          |  |                                      | (3,876  | ) |      |   | (3,265  | )
|Minority interests                                                        |  |                                      |        |   |      |   | (9,342  | )
|                                                                          |  |                                      |         |   |      |   |         |  
|Income before income taxes                                                |  |                                      | 17,312  |   |      |   | 14,531  |  
|Provision for income taxes                                                |  |                                      | 6,197   |   |      |   | 12,647  |  
|                                                                          |  |                                      |         |   |      |   |         |  
|Net income                                                                |  | $                                    | 11,115  |   |      | $ | 1,884   |  
|                                                                          |  |                                      |         |   |      |   |         |  
|                                                                          |  |                                     
|Income per common share:                                                  |  |                                      |         |   |      |   |         |  
|Basic                                                                     |  | $                                    | 0.07    |   |      | $ | 0.01    |  
|                                                                          |  |                                      |         |   |      |   |         |  
|Diluted                                                                   |  | $                                    | 0.07    |   |      | $ | 0.01    |  
|                                                                          |  |                                      |         |   |      |   |         |  
|The composition of stock-based compensation included above is as follows: |  |                                      |         |   |      |   |         |  
|Cost of sales                                                             |  | $                                    | 769     |   |      | $ | 728     |  
|Research and development                                                  |  |                                      | 3,579   |   |      |   | 155     |  
|Selling, general and administrative                                       |  |                                      | 5,372   |   |      |   | 1,849   |  
|                                                                          |  |                                      |         |   |      |   |         |  
|                                                                          |  | $                                    | 9,720   |   |      | $ | 2,732   |  
|                                                                          |  |                                      |         |   |      |   |         |  

See notes to condensed consolidated financial statements.



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Abraxis BioScience, Inc.

Condensed Consolidated Statements of Cash Flows



|                                                                                            |  |                             |         |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                            |  | Three Months EndedMarch 31, |        
|                                                                                            |  | 2007                        |         |   | 2006 |  
|                                                                                            |  | (unaudited, in thousands)   |        
|Cash flows from operating activities:                                                       |  |                             |         |   |      |   |         |  
|Net income                                                                                  |  | $                           | 11,115  |   |      |   | 1,884   |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |                             |         |   |      |   |         |  
|Depreciation                                                                                |  |                             | 6,230   |   |      |   | 4,245   |  
|Amortization                                                                                |  |                             | 211     |   |      |   | 284     |  
|Amortization of product rights                                                              |  |                             | 4,110   |   |      |   |        |  
|Amortization of merger related intangibles                                                  |  |                             | 13,509  |   |      |   |        |  
|Stock-based compensation                                                                    |  |                             | 9,720   |   |      |   | 2,732   |  
|Loss on disposal of property, plant and equipment                                           |  |                             | 275     |   |      |   | 6       |  
|Excess tax benefit from stock-based compensation                                            |  |                             | (307    | ) |      |   | (817    | )
|Deferred income taxes                                                                       |  |                             | (5,455  | ) |      |   | 1,297   |  
|Minority interest                                                                           |  |                             |        |   |      |   | 9,342   |  
|Equity in net income of Drug Source Company, LLC, net of dividends received                 |  |                             | (718    | ) |      |   | (582    | )
|Changes in operating assets and liabilities:                                                |  |                             |         |   |      |   |         |  
|Accounts receivable, net                                                                    |  |                             | 1,999   |   |      |   | 42,110  |  
|Inventories                                                                                 |  |                             | (5,376  | ) |      |   | (4,539  | )
|Prepaid expenses and other current assets                                                   |  |                             | 1,774   |   |      |   | (6,562  | )
|Non-current receivables from related parties                                                |  |                             |        |   |      |   | 155     |  
|Deferred revenue                                                                            |  |                             | (9,844  | ) |      |   | (753    | )
|Minimum royalties payable                                                                   |  |                             | 10      |   |      |   | 10      |  
|Amounts due to officer/stockholder                                                          |  |                             |        |   |      |   | (1,255  | )
|Other non-current liabilities                                                               |  |                             | (83     | ) |      |   |        |  
|Income taxes payable                                                                        |  |                             | (62,218 | ) |      |   | 2,810   |  
|Accounts payable and accrued expenses                                                       |  |                             | (5,252  | ) |      |   | 4,949   |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Net cash (used in) provided by operating activities                                         |  |                             | (40,300 | ) |      |   | 55,316  |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Cash flows from investing activities:                                                       |  |                             |         |   |      |   |         |  
|Purchases of property, plant and equipment                                                  |  |                             | (42,043 | ) |      |   | (9,654  | )
|Purchase of other non-current assets                                                        |  |                             | (354    | ) |      |   | (1,963  | )
|Net purchases of short-term investments                                                     |  |                             |        |   |      |   | (45,837 | )
|                                                                                            |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                       |  |                             | (42,397 | ) |      |   | (57,454 | )
|                                                                                            |  |                             |         |   |      |   |         |  
|Cash flows from financing activities:                                                       |  |                             |         |   |      |   |         |  
|Proceeds from the exercise of stock options                                                 |  |                             | 942     |   |      |   | 4,808   |  
|Proceeds from issuance of debt                                                              |  |                             | 153,000 |   |      |   | 24,000  |  
|Proceeds from the sale of stock under employee retirement and stock purchase plans          |  |                             | 1,956   |   |      |   | 1,665   |  
|Notes payable                                                                               |  |                             | 1,360   |   |      |   |        |  
|Excess tax benefit from stock-based compensation                                            |  |                             | 307     |   |      |   | 817     |  
|Repayment of borrowings                                                                     |  |                             | (85,000 | ) |      |   |        |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                   |  |                             | 72,565  |   |      |   | 31,290  |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Effect of exchange rates on cash                                                            |  |                             | 580     |   |      |   | 47      |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                        |  |                             | (9,552  | ) |      |   | 29,199  |  
|Cash and cash equivalents, at beginning of period                                           |  |                             | 39,297  |   |      |   | 28,818  |  
|                                                                                            |  |                             |         |   |      |   |         |  
|Cash and cash equivalents, at end of period                                                 |  | $                           | 29,745  |   |      | $ | 58,017  |  
|                                                                                            |  |                             |         |   |      |   |         |  

See notes to condensed consolidated financial statements



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ABRAXIS BIOSCIENCE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the
information and notes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007 or for other future periods. The
balance sheet information at December 31, 2006 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principles for complete
financial statements. All material intercompany balances and transactions have been eliminated in consolidation and certain balances in prior periods have been reclassified to conform to the presentation adopted in the current period.

On April 18, 2006, we, Abraxis BioScience, Inc., formerly known as American Pharmaceutical Partners, Inc., or APP, completed a merger with American
BioScience, Inc., or ABI, our former parent pursuant to the terms of an Agreement and Plan of Merger dated November 27, 2005 entered into with ABI and certain shareholders of ABI. On April 18, 2006, our certificate of incorporation was
amended to change our name from American Pharmaceutical Partners, Inc. to Abraxis BioScience, Inc., or Abraxis.

For accounting purposes,
the merger between APP and ABI has been treated as a downstream merger with ABI viewed as the surviving entity, although APP was the surviving entity for legal purposes. As such, the merger has been accounted for in our unaudited condensed
consolidated financial statements as an implied acquisition of our minority interests using the purchase method of accounting. Under this accounting method, our accounts, including goodwill, have been adjusted to reflect the minority interests
share of any differences between their fair values and book values as of the merger closing date. Our total fair value was based on the weighted average market price of our common stock for the period three trading days prior to and three trading
days subsequent to the merger announcement date. Pre-acquisition stockholders equity and earnings per share have been retroactively restated for the equivalent number of shares received by the accounting acquirer in the merger, with
differences between the par value of the issuers and accounting acquirers stock recorded in paid-in-capital.

Furthermore, because
ABI is treated as the continuing reporting entity for accounting purposes, our filed reports, as the surviving corporation in the merger, after the date of the merger will parallel the financial reporting required under generally accepted accounting
principles in the United States and SEC reporting rules as if ABI were the legal successor to its reporting obligation as of the date of the merger. Accordingly, our unaudited condensed consolidated financial statements, for all periods prior to the
date of the merger, reflect this basis of accounting.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the assets, liabilities and results of operations of Abraxis and our wholly owned
subsidiaries, Pharmaceutical Partners of Canada, Abraxis BioScience Manufacturing, LLC, Pharmaceutical Partners Switzerland GmbH, VivoRx AutoImmune, Inc., Chicago BioScience, LLC and Transplant Research Institute, as well as our majority-owned
subsidiary, Resuscitation Technologies, LLC, and our investment in Drug Source Company, LLC, which is accounted for using the equity method. All material intercompany balances and transactions have been eliminated in consolidation.

One of our wholly owned subsidiaries holds a 50% interest in Drug Source Company, LLC. Drug Source Company is a joint venture with three other partners
established in June 2000 to purchase raw materials for resale to pharmaceutical companies, including us. Because our 50% interest in Drug Source Company does not provide financial or operational control of the entity, we account for our interest in
Drug Source Company under the equity method. Our equity in the net income of Drug Source Company, net of intercompany profit on purchases in ending inventory, is classified in operating expenses in the accompanying condensed consolidated statements
of income. Our share of Drug Source Companys profit was $0.5 million for the three month periods ending March 31, 2007 and 2006. At March 31, 2007 and December 31, 2006, the carrying value of our equity investment in Drug Source Company was
$6.2 million and $5.5 million respectively. Research and development expense includes raw material purchases from Drug Source Company of $0.0 million and $0.1 million for the three-month periods ended March 31, 2007 and 2006, respectively. Ending
inventory included raw material purchased from Drug Source Company of $4.3 million at March 31, 2007 and $4.0 million at December 31, 2006.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates may
also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



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Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157 which redefines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value measurements. SFAS No. 157 applies where other accounting pronouncements require or permit fair value measurements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. The effects of adoption will be determined by the types of instruments carried at fair value in a companys financial statements at the time of adoption as well as the methods utilized
to determine their fair values prior to adoption. Based on our current use of fair value measurements, SFAS No. 157 is not expected to have a material effect on our results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been
elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for our company on January 1, 2008. We are evaluating the impact that the adoption of SFAS No. 159 will have on our consolidated
financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with SFAS
No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We adopted the provisions of FIN 48 effective January 1, 2007 (See
Note 6Income taxes). The adoption of FIN 48 did not have a material impact on our consolidated results of operations and financial condition.

(2) Earnings Per Share Information

Basic income per common share is computed by dividing net income by the weighted-average
number of common shares outstanding, excluding treasury shares. Dilutive income per common share is computed by dividing net income by the weighted-average number of common shares used for the basic calculations plus potentially dilutive shares for
the portion of the year that the shares were outstanding, unless the impact is anti-dilutive. Potentially dilutive common shares resulted from outstanding stock options and restricted stock awards. Calculations of basic and diluted income per common
share information are based on the following:



|                                                     |  |                                       |         |      |   |        
|---------------------------------------------------- |  | ------------------------------------- | ------- | ---- | - | -------
|                                                     |  | Three Months Ended March 31,         
|                                                     |  | 2007                                  |         | 2006
|                                                     |  | (in thousands, except per share data)
|Basic and dilutive numerator:                        |  |                                       |         |      |   |        
|Net income                                           |  | $                                     | 11,115  |      | $ | 1,884  
|                                                     |  |                                       |         |      |   |        
|Denominator:                                         |  |                                       |         |      |   |        
|Weighted average common shares outstanding - basic   |  |                                       | 159,356 |      |   | 158,490
|Net effect of dilutive securities:                   |  |                                       |         |      |   |        
|Stock options and restricted stock awards            |  |                                       | 1,000   |      |   | 1,296  
|                                                     |  |                                       |         |      |   |        
|Weighted average common shares outstanding - diluted |  |                                       | 160,356 |      |   | 159,786
|                                                     |  |                                       |         |      |   |        
|Net income per common share - basic                  |  | $                                     | 0.07    |      | $ | 0.01   
|                                                     |  |                                       |         |      |   |        
|Net income per common share - diluted                |  | $                                     | 0.07    |      | $ | 0.01   
|                                                     |  |                                       |         |      |   |        



7



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##### Table of Contents

For the three months ended March 31, 2007 and 2006, employee stock options for which the exercise
price exceeded the average market price of our common stock in the respective periods were excluded from the computation of diluted income per common share as follows:



|                                   |  |                                       |              |      |   |             
|---------------------------------- |  | ------------------------------------- | ------------ | ---- | - | ------------
|                                   |  | Three Months Ended March 31,         
|                                   |  | 2007                                  |              | 2006
|                                   |  | (in thousands, except per share data)
|Number of shares excluded          |  |                                       | 2,204        |      |   | 987         
|Range of exercise prices per share |  | $                                     | 26.71-$56.02 |      | $ | 32.89-$56.02

(3) Inventories

Inventories are valued at the lower of cost or market as determined under the first-in, first-out, or FIFO, method, as follows:



|                |  |                |         |                           |   |                |  |          |         |                           |   |                |  |   |        |  |   |        
|--------------- |  | -------------- | ------- | ------------------------- | - | -------------- |  | -------- | ------- | ------------------------- | - | -------------- |  | - | ------ |  | - | -------
|                |  | March 31, 2007 |         | December 31, 2006        
|                |  | Approved       |         | PendingRegulatoryApproval |   | TotalInventory |  | Approved |         | PendingRegulatoryApproval |   | TotalInventory
|                |  | (in thousands)
|Finished goods  |  | $              | 59,909  |                           | $ | 233            |  | $        | 60,142  |                           | $ | 55,248         |  | $ |       |  | $ | 55,248 
|Work in process |  |                | 32,466  |                           |   | 2,383          |  |          | 34,849  |                           |   | 26,698         |  |   | 3,566  |  |   | 30,264 
|Raw materials   |  |                | 94,650  |                           |   | 34,015         |  |          | 128,665 |                           |   | 110,642        |  |   | 22,126 |  |   | 132,768
|                |  |                |         |                           |   |                |  |          |         |                           |   |                |  |   |        |  |   |        
|                |  | $              | 187,025 |                           | $ | 36,631         |  | $        | 223,656 |                           | $ | 192,588        |  | $ | 25,692 |  | $ | 218,280
|                |  |                |         |                           |   |                |  |          |         |                           |   |                |  |   |        |  |   |        

Inventories consist of products currently approved for marketing and may include certain products
pending regulatory approval. From time to time, we capitalize inventory costs associated with products prior to regulatory approval based on our judgment of probable future commercial success and realizable value. Such judgment incorporates our
knowledge and best judgment of where the product is in the regulatory review process, our required investment in the product, market conditions, competing products and our economic expectations for the product post-approval relative to the risk of
manufacturing the product prior to approval. If final regulatory approval for such products is denied or delayed, we may need to provide for and expense such inventory.

At March 31, 2007 and December 31, 2006, inventory included $36.6 million and $25.7 million, respectively, in cost relating to products pending FDA and European approval. Included in the amount pending
approval at March 31, 2007 were $23.6 million of paclitaxel (whole plant), $3.9 million in other Abraxane® related materials and $3.0 million of Cefotetan. Individually, all other items pending approval were less that 1% of total inventory. Included in the amount pending approval at
December 31, 2006 were $17.7 million of paclitaxel (whole plant) and $2.6 million in other Abraxane® related materials.

We routinely review our inventory and establish reserves
when the cost of the inventory is not expected to be recovered or our product cost exceeds realizable market value. In instances where inventory is at or approaching expiry, is not expected to be saleable based on our quality and control standards
or for which the selling price has fallen below cost, we reserve for any inventory impairment based on the specific facts and circumstances. In evaluating the market value of inventory pending regulatory approval as compared to its cost, we
considered the market, pricing and demand for competing products, our anticipated selling price for the product and the position of the product in the regulatory review process. Provisions for inventory reserves are reflected in the financial
statements as an element of cost of sales with inventories presented net of related reserves.



8



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##### Table of Contents

(4) Acquisition

On February 14, 2007, we completed the acquisition of the Pfizer Inc. Cruce Davila manufacturing facility in Barceloneta, Puerto Rico for $32.5 million plus transaction costs. This 56-acre site consists of a
172,000 square foot validated manufacturing plant with capabilities of producing EU and US compliant injectable pharmaceuticals, as well as protein based biologics and metered dosed inhalers. In addition, the acquisition included a state-of-the-art,
computer-controlled 90,000 square foot active pharmaceutical ingredients manufacturing plant, and two support facilities with quality assurance and laboratories, totaling 262,000 square feet. Under the terms of the agreement, Abraxis has leased part
of the active pharmaceuticals ingredients plant back to Pfizer. We expect to begin manufacturing commercial products from this facility in the first half of 2007. Costs incurred prior to commercial manufacturing from this facility is charged to
research and development expense. The acquisition was accounted for as an asset purchase and the purchase price was allocated based upon estimated fair values of the acquired assets.

(5) Accrued Liabilities

Accrued liabilities consisted of the following at:



|                              |  |                |        |                  |   |       
|----------------------------- |  | -------------- | ------ | ---------------- | - | ------
|                              |  | March 31,2007  |        | December 31,2006
|                              |  | (in thousands)
|Sales and marketing           |  | $              | 30,143 |                  | $ | 26,876
|Payroll and employee benefits |  |                | 25,688 |                  |   | 27,417
|Legal and insurance           |  |                | 3,663  |                  |   | 2,045 
|Other                         |  |                | 5,151  |                  |   | 5,090 
|                              |  |                |        |                  |   |       
|                              |  | $              | 64,645 |                  | $ | 61,428
|                              |  |                |        |                  |   |       

(6) Income Taxes

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109 (FIN 48), which provides
specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax positions taken or expected to be taken in a tax return. FIN 48 addresses the determination of whether tax benefits, either permanent or
temporary, should be recorded in the financial statements. We adopted FIN 48 as of the beginning of our 2007 fiscal year and as a result recognized a $0.1 million decrease to retained earnings from the cumulative effect of adoption.

As of the beginning of our 2007 fiscal year, the total amount of gross unrecognized tax benefits recorded on adoption of FIN 48 and are reported in
other liabilities in our condensed consolidated balance sheets, was $5.8 million. Of this amount, approximately $4.7 million would impact our effective tax rate over time, if recognized. In addition, we have accrued $0.5 million for interest and any
necessary penalties related to unrecognized tax positions in our provision for income taxes.

We or one of our subsidiaries files income
tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Internal Revenue Service (IRS) has commenced a routine examination of our U.S. income tax return for tax year 2004. Our federal income tax return remains
open for routine examination for the 2003 through 2005 tax years. For U.S. state and local tax returns and foreign tax returns, years after 2001 remain open for routine examination. At this time, we estimate that it is reasonably possible that
unrecognized tax benefits of $1 million - $1.7 million will decrease in the next twelve months due to the completion of the IRS audit currently in progress.



9



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##### Table of Contents

(7) Comprehensive Income

Elements of comprehensive income, net of income taxes, were as follows:



|                                                            |  |                              |        |      |   |      
|----------------------------------------------------------- |  | ---------------------------- | ------ | ---- | - | -----
|                                                            |  | Three Months Ended March 31,
|                                                            |  | 2007                         |        | 2006
|                                                            |  | (in thousands)              
|Foreign currency translation adjustments                    |  | $                            | 43     |      | $ | 47   
|Unrealized gain on marketable equity securities             |  |                              | 499    |      |   | 422  
|                                                            |  |                              |        |      |   |      
|Other comprehensive gain, net of tax and minority interests |  |                              | 542    |      |   | 469  
|Net income                                                  |  |                              | 11,115 |      |   | 1,884
|                                                            |  |                              |        |      |   |      
|Comprehensive income                                        |  | $                            | 11,657 |      | $ | 2,353
|                                                            |  |                              |        |      |   |      

At March 31, 2007 and 2006, we had cumulative foreign currency translation gain adjustments
of $0.8 million and $0.1 million, respectively. In addition, at March 31, 2007 and 2006, we had cumulative unrealized gains on marketable equity securities of $1.0 million and $2.1 million, respectively.

(8) Contingencies

Litigation

In December 2004, a former officer and employee and a former director of ABI filed a demand for arbitration with the American
Arbitration Association against us and Dr. Soon-Shiong, our Chief Executive Officer. In August 2005, this individual filed an amended arbitration demand adding ABI as a defendant. In the arbitration, this individual asserts that we improperly
terminated his employment and that the defendants breached various promises allegedly made to him. This individual is seeking various forms of relief, including monetary damages and equity interests in our common stock. The arbitration began in May
2007.

In addition, in May 2006, this same former officer filed an action against us, ABI and certain of our directors in Cook County
Illinois relating to the merger between us and ABI alleging that the defendants breached fiduciary duties to our stockholders by causing us to enter into the merger agreement. The complaint seeks $12 million in damages. The defendants have moved to
dismiss or stay this case on a number of grounds.

On or about December 7, 2005, several stockholder derivative and class action
lawsuits were filed against us, our directors and ABI in the Delaware Court of Chancery relating to the merger between us and ABI. We are a nominal defendant in the stockholder derivative actions. The lawsuits allege that our directors breached
their fiduciary duties to stockholders by causing us to enter into the merger agreement, which, it is alleged unjustly enriched ABIs shareholders and caused the value of the shares held by our public stockholders to be significantly
diminished. The lawsuits seek, among other things, an unspecified amount of damages and the rescission of the merger. We have moved to dismiss the derivative claims filed on our behalf, and certain of the director defendants have moved to dismiss
some of the claims alleged against them.

On July 19, 2006, Élan Pharmaceutical Intl Ltd. filed a lawsuit against us
alleging that we willfully infringed upon two of their patents by asserting that Abraxane® uses technology protected by Élan-owned patents. Élan seeks unspecified damages and an injunction. In August 2006, we filed a response to Élans complaint contending that we did not
infringe on the Élan patents and that the Élan patents are invalid. The trial has been set to begin in June 2008.

On
November 25, 2004, an opposition was filed in the European Patent Office challenging the validity of a European patent relating to our nab technology, including Abraxane®. The true party initiating the opposition was not identified. The opposition has subsequently been withdrawn. A hearing
took place before the Opposition Division of the European Patent Office in April 2007 at which the patent was upheld on the basis of a new set of claims.

We are from time to time subject to claims and litigation arising in the ordinary course of business. These claims have included assertions that our products infringe existing patents, product liability and also
claims that the use of our products has caused personal injuries. We intend to defend vigorously any such litigation that may arise under all defenses that would be available to us. In the opinion of management, the ultimate outcome of proceedings
of which management is aware, even if adverse to us, will not have a material adverse effect on our consolidated financial position or results of operations.



10



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##### Table of Contents

Regulatory Matters

The Company is subject to regulatory oversight by the United States Food and Drug Administration and other regulatory authorities with respect to the
development and manufacturing of its products. Failure to comply with regulatory requirements can have a significant effect on our business and operations. Management has designed and operates a system of controls to attempt to ensure compliance
with regulatory requirements.

In late December 2006, we received a warning letter from the FDA regarding our Melrose Park facility
following a periodic review of the facility earlier in the year. The letter does not in any way relate to the plant shutdown in 2005. The focus of the letter is the agencys belief that we needed to accelerate the implementation of
certain improvements identified in our response to the warning letter, as well as make some of the improvements more robust. We are continuing to proactively work with the FDA to address the agencys concerns and to fully resolve any
issues promptly. Although the FDA can recommend disapproval of any drug applications listing this facility as the manufacturer, we do not believe the FDA letter will adversely affect our anticipated product approvals. We do not believe the
FDA letter will adversely affect our consolidated financial position or results of operations.

(9) Segment Information

Abraxis BioScience is comprised of Abraxis Pharmaceutical Products, Abraxis Oncology and Abraxis Research. Beginning in the fourth quarter of 2006, we
re-aligned our segment presentation to better reflect how the business is managed. We intend to continue to report our business in two segments: the ABI segment, representing the combined operations of Abraxis Oncology and Abraxis Research; and the
APP segment, representing the hospital-based operations. The ABI segment focuses primarily on our internally developed proprietary products, including Abraxane®, and the proprietary pipeline. The APP segment manufactures and markets one of the broadest portfolio of injectable
drugs, including oncology, critical care and anti-infectives, and markets the proprietary products we acquired from AstraZeneca. Prior periods segment information has been reclassified to conform to the current period presentation.



11



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##### Table of Contents

General and administrative costs, which consist of executive management, accounting and finance, human
resources, information technology, investor relations, legal and business development, were not allocated to the individual segments. Information regarding these two segments, which operate primarily in North America, is summarized below:



|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|-------------------------------------- |  | -------------- | ------- | --- | ------------------- | ------- | - | ----- | - | ------ | - |  | - | --------- | -
|                                       |  | Segment        |         |     | UnallocatedCosts(1) |         |   |       |  
|                                       |  | APP            |         | ABI |                     |         |   | Total |  
|                                       |  | (in thousands) |        
|Three Months Ended March 31, 2007      |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Hospital-based products                |  | $              | 140,268 |     | $                   | 237     |   |       | $ |       |   |  | $ | 140,505   |  
|Abraxane revenue                       |  |                |        |     |                     | 70,882  |   |       |   |       |   |  |   | 70,882    |  
|Research revenue and other             |  |                |        |     |                     | 774     |   |       |   |       |   |  |   | 774       |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Total revenue                          |  |                | 140,268 |     |                     | 71,893  |   |       |   |       |   |  |   | 212,161   |  
|Cost of sales                          |  |                | 70,062  |     |                     | 7,143   |   |       |   | 4,879  |   |  |   | 82,084    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Gross profit                           |  |                | 70,206  |     |                     | 64,750  |   |       |   | (4,879 | ) |  |   | 130,077   |  
|Operating expenses:                    |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Research and development               |  |                | 10,177  |     |                     | 13,124  |   |       |   | 3,579  |   |  |   | 26,880    |  
|Selling and marketing                  |  |                | 3,535   |     |                     | 32,569  |   |       |   |       |   |  |   | 36,104    |  
|Equity (income) in Drug Source Company |  |                |        |     |                     | (481    | ) |       |   |       |   |  |   | (481      | )
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Total operating expenses               |  |                | 13,712  |     |                     | 45,212  |   |       |   | 3,579  |   |  |   | 62,503    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Pretax segment operating income(2)     |  | $              | 56,494  |     | $                   | 19,538  |   |       | $ | (8,458 | ) |  | $ | 67,574    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Depreciation and amortization          |  | $              | 11,222  |     | $                   | 10,630  |   |       | $ | 2,208  |   |  | $ | 24,060    |  
|Capital expenditures                   |  | $              | 40,205  |     | $                   | 1,351   |   |       | $ | 487    |   |  | $ | 42,043    |  
|Long lived assets                      |  | $              | 803,318 |     | $                   | 533,367 |   |       | $ | 72,042 |   |  | $ | 1,408,727 |  
|                                       |  |                |         |    
|Three Months Ended March 31, 2006      |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Hospital-based products                |  | $              | 113,472 |     | $                   |        |   |       | $ |       |   |  | $ | 113,472   |  
|Abraxane revenue                       |  |                |        |     |                     | 30,282  |   |       |   |       |   |  |   | 30,282    |  
|Research revenue                       |  |                |        |     |                     | 774     |   |       |   |       |   |  |   | 774       |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Total revenue                          |  |                | 113,472 |     |                     | 31,056  |   |       |   |       |   |  |   | 144,528   |  
|Cost of sales                          |  |                | 52,492  |     |                     | 4,860   |   |       |   | 728    |   |  |   | 58,080    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Gross profit                           |  |                | 60,980  |     |                     | 26,196  |   |       |   | (728   | ) |  |   | 86,448    |  
|Operating expenses:                    |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Research and development               |  |                | 3,924   |     |                     | 20,265  |   |       |   | 155    |   |  |   | 24,344    |  
|Selling and marketing                  |  |                | 3,064   |     |                     | 11,791  |   |       |   |       |   |  |   | 14,855    |  
|Equity (income) in Drug Source Company |  |                |        |     |                     | (476    | ) |       |   |       |   |  |   | (476      | )
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Total operating expenses               |  |                | 6,988   |     |                     | 31,580  |   |       |   | 155    |   |  |   | 38,723    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Pretax segment operating income(2)     |  | $              | 53,992  |     | $                   | (5,384  | ) |       | $ | (883   | ) |  | $ | 47,725    |  
|                                       |  |                |         |     |                     |         |   |       |   |        |   |  |   |           |  
|Depreciation and amortization          |  | $              | 2,767   |     | $                   | 622     |   |       | $ | 1,140  |   |  | $ | 4,529     |  
|Capital expenditures                   |  | $              | 5,384   |     | $                   | 570     |   |       | $ | 3,700  |   |  | $ | 9,654     |  
|Long lived assets                      |  | $              | 105,402 |     | $                   | 47,076  |   |       | $ | 28,747 |   |  | $ | 181,225   |  

---

|(1) | Segment costs not allocated for the three months ended March 31, 2007 included $4.1 million of purchase price amortization from the AstraZeneca product purchase and $0.8
million of stock compensation expense, both included in cost of sales, and $3.6 million of stock compensation expense included in research and development. For the three months ended March 31, 2006, $0.7 million of stock compensation expense
was not allocated in cost of sales and $0.2 million of stock compensation expense was not allocated to research and development. Additionally, depreciation and amortization expense, capital expenditure and long lived assets related to corporate
activities were not allocated to the segments.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | General and administrative expense, merger related costs and amortization, interest income and income tax expense were not allocated to the segments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



12



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##### Table of Contents

The following is a reconciliation of pretax segment operating income as stated above to consolidated net
income:



|                                            |  |                             |         |   |      |   |         |  
|------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                            |  | Three Months EndedMarch 31, |        
|                                            |  | 2007                        |         |   | 2006 |  
|                                            |  | (in thousands)              |        
|Segment operating income (loss) from above: |  |                             |         |   |      |   |         |  
|APP segment                                 |  | $                           | 56,494  |   |      | $ | 53,992  |  
|ABI segment                                 |  |                             | 19,538  |   |      |   | (5,384  | )
|Segment costs not allocated                 |  |                             | (8,458  | ) |      |   | (883    | )
|                                            |  |                             |         |   |      |   |         |  
|Operating income from segments              |  |                             | 67,574  |   |      |   | 47,725  |  
|General and administrative expense          |  |                             | (33,439 | ) |      |   | (16,042 | )
|Amortization of merger related intangibles  |  |                             | (13,509 | ) |      |   |        |  
|Other merger related costs                  |  |                             |        |   |      |   | (5,639  | )
|                                            |  |                             |         |   |      |   |         |  
|Income from operations                      |  |                             | 20,626  |   |      |   | 26,044  |  
|Interest income and other                   |  |                             | 562     |   |      |   | 1,094   |  
|Interest expense                            |  |                             | (3,876  | ) |      |   | (3,265  | )
|Minority interests                          |  |                             |        |   |      |   | (9,342  | )
|Income tax expense                          |  |                             | (6,197  | ) |      |   | (12,647 | )
|                                            |  |                             |         |   |      |   |         |  
|Net income                                  |  | $                           | 11,115  |   |      | $ | 1,884   |  
|                                            |  |                             |         |   |      |   |         |  



(10) Revenue By Product Line

Revenue by product line were as follows:



|                                 |  |                             |         |     |      |   |        
|-------------------------------- |  | --------------------------- | ------- | --- | ---- | - | -------
|                                 |  | Three Months EndedMarch 31,
|                                 |  | 2007                        |         |     | 2006
|                                 |  | (in thousands)             
|Hospital-based products:         |  |                             |         |     |      |   |        
|Critical care                    |  | $                           | 84,932  | (1) |      | $ | 45,274 
|Anti-infective                   |  |                             | 39,780  |     |      |   | 52,846 
|Oncology                         |  |                             | 11,277  |     |      |   | 13,704 
|Contract manufacturing and other |  |                             | 4,516   |     |      |   | 1,648  
|                                 |  |                             |         |     |      |   |        
|Total hospital-based revenue     |  |                             | 140,505 |     |      |   | 113,472
|Abraxane ® revenue               |  |                             | 70,882  |     |      |   | 30,282 
|Research revenue and other       |  |                             | 774     |     |      |   | 774    
|                                 |  |                             |         |     |      |   |        
|Total revenue                    |  | $                           | 212,161 |     |      | $ | 144,528
|                                 |  |                             |         |     |      |   |        



|(1) | Net revenue of Hospital-based critical care products included $44.1 million of net sales relating to analgesic and anesthetics products purchased from AstraZeneca in June 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(11) Subsequent Event

In April 2007, we formed a joint venture with Cenomed, Inc. to create Cenomed BioSciences, LLC. This venture is designed to further the research and development of novel drugs that interact with the central nervous system focused on
psychiatric and neurological diseases, including the treatment of schizophrenia, neuroprotection, mild cognitive impairment and memory/attention impairment associated with aging, attention deficit hyperactivity disorder and pain. We will make an
upfront payment to the joint venture and help to fund further development of these drugs.



13



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##### Table of Contents

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding
Forward-Looking Statements

This Quarterly Report on Form 10-Q and other documents we file with the Securities and Exchange Commission
contain forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in press releases or written statements, or in our communications and discussions
with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such forward-looking statements, whether expressed or implied, are subject to risks and uncertainties which can cause actual
results to differ materially from those currently anticipated, due to a number of factors, which include, but are not limited to:



| |  |  | the market adoption of and demand for our existing and new pharmaceutical products, including Abraxane® and the U.S. branded products acquired from AstraZeneca UK Limited, a wholly owned
subsidiary of AstraZeneca plc;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount and timing of costs associated with Abraxane®;
| | - |  | ---------------------------------------------------------



| |  |  | the actual results achieved in further clinical trials of Abraxane® may or may not be consistent with the results achieved to date;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impact of competitive products and pricing;
| | - |  | -----------------------------------------------



| |  |  | the ability to successfully manufacture products in an efficient, time-sensitive and cost effective manner;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the impact on our products and revenues of patents and other proprietary rights licensed or owned by us, our competitors and other third parties;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability, and that of our suppliers, to comply with laws, regulations and standards, and the application and interpretation of those laws, regulations and
standards, that govern or affect the pharmaceutical industry, the non-compliance with which may delay or prevent the sale of our products;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the difficulty in predicting the timing or outcome of product development efforts and regulatory approvals;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the availability and price of acceptable raw materials and components from third-party suppliers;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | evolution of the fee-for-service arrangements being adopted by our major wholesale customers;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | inventory reductions or fluctuations in buying patterns by wholesalers or distributors; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | the impact of recent legislative changes to the governmental reimbursement system.
| | - |  | ----------------------------------------------------------------------------------

Forward-looking statements also include the assumptions underlying or relating to any of the foregoing or other such statements. When used in this
report, the words may, will, should, could, expect, plan, anticipate, believe, estimate, predict and similar expressions are
generally intended to identify forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect managements opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, whether as a result of new information,
changes in assumptions, future events or otherwise. Readers should carefully review the factors described in Item 1A: Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2006, Item 1A: Risk
Factors of Part II belowand other documents we file from time to time with the Securities and Exchange Commission. Readers should understand that it is not possible to predict or identify all such factors. Consequently, readers
should not consider any such list to be a complete set of all potential risks or uncertainties.



14



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##### Table of Contents

OVERVIEW

The following managements discussion and analysis of financial condition and results of operations, or MD&A, is intended to assist the reader in understanding our company. The MD&A is provided as a supplement to, and should be
read in conjunction with our Annual Report on Form 10-K and 10-K/A for the year ended December 31, 2006, including Item 1: Business; Item 1A: Risk Factors; Item 6: Selected Financial Data; and Item 8:
Financial Statements and Supplemental Data.

Background

Abraxis BioScience, Inc., formerly known as American Pharmaceutical Partners, Inc., or APP, is an integrated global biopharmaceutical company dedicated to meeting the needs of critically ill patients. We develop,
manufacture and market one of the broadest portfolios of injectable products and leverage revolutionary technology such as our nab platform to discover and deliver breakthrough therapeutics that transform the treatment of cancer and
other life-threatening diseases. The first FDA approved product to use this nab platform, Abraxane® , was launched in 2005 for the treatment of metastatic breast cancer. We believe that we are the only independent U.S. public company with a primary focus on the injectable oncology,
anti-infective and critical care markets, and we further believe that we offer one of the most comprehensive injectable product portfolios in the pharmaceutical industry. We manufacture products in each of the three basic forms in which injectable
products are sold: liquid, powder and lyophilized, or freeze-dried.

We are a Delaware corporation that was formed in 2001 as successor to
a California corporation formed in 1996. On April 18, 2006, we completed a merger with American BioScience, Inc., or ABI. In connection with the closing of that merger, our certificate of incorporation was amended to change our name from
American Pharmaceutical Partners, Inc. to Abraxis BioScience, Inc.

For accounting purposes, the merger between us and ABI was treated as a
downstream merger with ABI viewed as the surviving entity, although we were the surviving entity for legal purposes. As such, effective as of the merger date, the merger has been accounted for in our unaudited condensed consolidated financial
statements as an implied acquisition of our minority interests using the purchase method of accounting. Therefore, the historical book value of the minority interests has been stepped up to its estimated fair values and the historical
shareholders equity of the accounting acquirer, ABI, has been retroactively restated for the equivalent number of shares received in the merger.

The unaudited condensed consolidated financial statements at March 31, 2007 include the assets, liabilities and results of operations of Abraxis and our wholly owned subsidiaries, Pharmaceutical Partners of
Canada, Abraxis BioScience Manufacturing, LLC, Pharmaceutical Partners Switzerland GmbH, VivoRx AutoImmune, Inc., Chicago BioScience, LLC and Transplant Research Institute, as well as our majority-owned subsidiary, Resuscitation Technologies, LLC,
and our investment in Drug Source Company, LLC, which is accounted for using the equity method. All material intercompany balances and transactions have been eliminated in consolidation.

We operate in two business segments: the ABI segment, representing the combined operations of Abraxis Oncology and Abraxis Research; and the APP segment,
representing the hospital-based operations. The ABI segment focuses primarily on our internally developed proprietary products, including Abraxane®; and our proprietary product pipeline. The APP segment manufactures and markets one of the broadest portfolio of injectable drugs, including oncology,
critical care and anti-infectives, and markets the proprietary products we acquired from AstraZeneca. Comparative segment revenues and related financial information for the three months ended March 31, 2007 and 2006 are presented in Note
9, Segment Information to our unaudited condensed consolidated financial statements.

Acquisitions

On February 14, 2007, we completed the acquisition of the Pfizer Inc. Cruce Davila manufacturing facility in Barceloneta, Puerto Rico for $32.5
million plus transaction costs. This 56-acre site consists of a 172,000 square foot validated manufacturing plant with capabilities of producing EU and US compliant injectable pharmaceuticals, as well as protein based biologics and metered dosed
inhalers. In addition, the acquisition included a state-of-the-art, computer-controlled 90,000 square foot active pharmaceutical ingredients manufacturing plant, and two support facilities with quality assurance and laboratories, totaling 262,000
square feet. Under the terms of the agreement, Abraxis has leased part of the active pharmaceuticals ingredients plant back to Pfizer. We expect to begin manufacturing commercial products from this site in the first half of 2007. Costs incurred
prior to commercial manufacturing from this facility is charged to research and development expense. The acquisition was accounted for as an asset purchase and the purchase price was allocated based upon the estimated fair values of the acquired
assets.



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##### Table of Contents

Abraxane® Co-Promotion and Product Acquisition Agreement

Effective June 28, 2006, we entered into a Co-Promotion and Strategic Marketing Services Agreement with AstraZeneca UK Limited, a wholly owned subsidiary of AstraZeneca PLC. Under the agreement:



| |  |  | Abraxis Oncology, one of our divisions, and AstraZeneca began co-promoting Abraxane® , our proprietary taxane oncology product, in the United States on July 1, 2006 for a term of five and one-half
years;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | AstraZeneca paid us a $200 million up-front signing fee in May 2006, which is being recognized as deferred revenue over the term of the agreement beginning
July 1, 2006;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the parties are sharing in certain of the costs associated with advertising and promoting Abraxane® in the U.S. and the cost of certain clinical trials that are part of the products
overall clinical development program. Any reimbursement from AstraZeneca relating to the cost sharing are recorded as a reduction of operating expenses;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we pay AstraZeneca a 22% commission on U.S. net sales of Abraxane® during the term of the agreement, with a trailing commission of ten percent for the first year and five percent for the second year following
the end of the five and one-half year term. The related commission expense is recorded as a component of selling, general and administrative expenses. Payments commenced in November 2006; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we are entitled to receive certain milestone payments from AstraZeneca in the event of FDA approvals for new indications for Abraxane® are obtained within specific timelines.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Also, under the terms of this agreement, we granted AstraZeneca a right of first offer to license or co-promote Abraxane® outside the U.S., other than in certain countries, should we seek to
co-license or promote Abraxane® outside of the U.S.
and a right of first offer to license or co-promote nab-docetaxel in the U.S. and certain other countries should we seek to license or co-promote nab-docetaxel in those countries.

We also entered into an Asset Purchase Agreement with AstraZeneca UK Limited to acquire AstraZenecas U.S. anesthetics and analgesic product
portfolio, which included Diprivan® (propofol),
Naropin® (ropivacaine), as well as a variety of
local anesthetics including EMLA® (Eutectic Mixture
of Lidocaine and Prilocaine), Xylocaine®
(lidocaine), Polocaine® (mepivacaine),
Nesacaine® (chloroprocaine HCl Injection, USP),
Sensorcaine® (bupivacaine), and Astramorph® (morphine sulfate injection, USP). Under the agreement,
we paid AstraZeneca approximately $259 million at closing and will pay $75 million upon the first anniversary of closing, June 28, 2007, and these costs are being amortized, on a straight line basis, over twenty years. At the closing,
AstraZeneca entered into an exclusive supply agreement with us under which AstraZeneca has agreed to supply these products to us for an initial term of five years. In addition, AstraZeneca has agreed that we will be its preferred partner for
consideration of certain proprietary injectable products when patents on these products expire. Under the terms of the agreement, AstraZeneca has also granted us a right of first offer to purchase or license AstraZenecas anesthetics and
analgesics portfolio outside of the U.S. should AstraZeneca decide to divest these assets.



16



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##### Table of Contents

RESULTS OF OPERATIONS

Three Months Ended March 31, 2007 and March 31, 2006

The following table sets forth the results of our operations
for each of the three months ended March 31, 2007 and 2006, and forms the basis for the following discussion of our operating activities:

ABRAXIS
BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)



|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|------------------------------------------------ |  | ---------------------------- | ------- | - | ----------------------------- | - | ------- | - |  | - | ------- | - |  | ---- | -
|                                                 |  | Three months ended March 31, |         |   | Change Favorable(Unfavorable) |  
|                                                 |  | 2007                         |         |   | 2006                          |   |         | $ |  |   | %       |  
|Hospital-based products                          |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Critical care                                    |  | $                            | 84,932  |   |                               | $ | 45,274  |   |  | $ | 39,658  |   |  | 88   | %
|Anti-infective                                   |  |                              | 39,780  |   |                               |   | 52,846  |   |  |   | (13,066 | ) |  | -25  | %
|Oncology                                         |  |                              | 11,277  |   |                               |   | 13,704  |   |  |   | (2,427  | ) |  | -18  | %
|Contract manufacturing                           |  |                              | 4,516   |   |                               |   | 1,648   |   |  |   | 2,868   |   |  | 174  | %
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total hospital-based revenue                     |  |                              | 140,505 |   |                               |   | 113,472 |   |  |   | 27,033  |   |  | 24   | %
|Abraxane®                                        |  |                              | 70,882  |   |                               |   | 30,282  |   |  |   | 40,600  |   |  | 134  | %
|Research revenue and other                       |  |                              | 774     |   |                               |   | 774     |   |  |   |        |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total revenue                                    |  |                              | 212,161 |   |                               |   | 144,528 |   |  |   | 67,633  |   |  | 47   | %
|Cost of sales                                    |  |                              | 82,084  |   |                               |   | 58,080  |   |  |   | (24,004 | ) |  | -41  | %
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Gross profit                                     |  |                              | 130,077 |   |                               |   | 86,448  |   |  |   | 43,629  |   |  | 50   | %
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Percent to total revenue                         |  |                              | 61.3    | % |                               |   | 59.8    | % |  |   |         |   |  |      |  
|Research and development                         |  |                              | 26,880  |   |                               |   | 24,344  |   |  |   | (2,536  | ) |  | -10  | %
|Selling, general and administrative              |  |                              | 69,543  |   |                               |   | 30,897  |   |  |   | (38,646 | ) |  | -125 | %
|Amortization of merger related intangible assets |  |                              | 13,509  |   |                               |   |        |   |  |   | (13,509 | ) |  |      |  
|Merger and transaction expense                   |  |                              |        |   |                               |   | 5,639   |   |  |   | 5,639   |   |  |      |  
|Equity income                                    |  |                              | (481    | ) |                               |   | (476    | ) |  |   | 5       |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total operating expenses                         |  |                              | 109,451 |   |                               |   | 60,404  |   |  |   | (49,047 | ) |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Percent to total revenue                         |  |                              | 51.6    | % |                               |   | 41.8    | % |  |   |         |   |  |      |  
|Income from operations                           |  |                              | 20,626  |   |                               |   | 26,044  |   |  |   | (5,418  | ) |  |      |  
|Percent to total revenue                         |  |                              | 9.7     | % |                               |   | 18.0    | % |  |   |         |   |  |      |  
|Interest income                                  |  |                              | 562     |   |                               |   | 1,094   |   |  |   | (532    | ) |  |      |  
|Interest expense                                 |  |                              | (3,876  | ) |                               |   | (3,265  | ) |  |   | (611    | ) |  |      |  
|Minority interests                               |  |                              |        |   |                               |   | (9,342  | ) |  |   | 9,342   |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Income before income taxes                       |  |                              | 17,312  |   |                               |   | 14,531  |   |  |   | 2,781   |   |  |      |  
|Income tax expense                               |  |                              | 6,197   |   |                               |   | 12,647  |   |  |   | 6,450   |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Net income                                       |  | $                            | 11,115  |   |                               | $ | 1,884   |   |  | $ | 9,231   |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Net income per share:                            |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Basic                                            |  | $                            | 0.07    |   |                               | $ | 0.01    |   |  |   |         |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Diluted                                          |  | $                            | 0.07    |   |                               | $ | 0.01    |   |  |   |         |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Weighted average common shares outstanding:      |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Basic                                            |  |                              | 159,356 |   |                               |   | 158,490 |   |  |   |         |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Diluted                                          |  |                              | 160,356 |   |                               |   | 159,786 |   |  |   |         |   |  |      |  
|                                                 |  |                              |         |   |                               |   |         |   |  |   |         |   |  |      |  



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##### Table of Contents

Total Revenue

Total revenue for the three months ended March 31, 2007 increased $67.6 million, or 47%, to $212.2 million as compared to the same 2006 quarter.

Abraxane® revenue for the three months ended March 31, 2007 increased $40.6 million to $70.9 million as compared to $30.3 million in the same quarter of 2006. The increase was primarily due
to increased market penetration and the inclusion of $9.1 million of deferred revenue recognized relating to the co-promotion agreement with AstraZeneca. Excluding the recognition of deferred revenue, total Abraxane® revenue increased to $61.8 million, or 104%, from the previous years
comparable quarter.

Total revenue of our core hospital-based products for the first
quarter of 2007 increased $27.0 million, or 24%, to $140.5 million, versus $113.5 million for the same quarter of 2006. This increase was due primarily to sales of the products acquired from AstraZeneca. The 24% increase in total revenue in our core
hospital-based products over the prior year quarter was comprised of a 25% overall unit volume increase offset by a 6% overall decrease in unit prices. Net sales of critical care products for the first quarter of 2007 increased $39.7 million, or
88%, to $84.9 million as compared to the prior first quarter due primarily to $44.1 million in sales of products acquired from AstraZeneca, offset by reduce sales in our cephalosporin products. Net sales of anti-infective products for the first
quarter of 2007 decreased $13.1 million, or 25%, to $39.8 million due mainly to our cephalosporin products, which were negatively impacted by a voluntary precautionary distribution hold we placed on product manufactured with certain materials while
additional testing was completed. We resumed distribution of these products in April 2007. Net sales of oncology products, excluding Abraxane® , for the first quarter of
2007 decreased $2.4 million, or 18%, to $11.3 million due to decreased demand for pamidronate as a result of the impact of reimbursement changes which became effective in 2005 and market price pressure on several higher volume products.

Gross Profit

Gross profit for the
three months ended March 31, 2007 was $130.1 million, or 61.3% of total revenue, inclusive of the recognition of $9.1 million of revenue previously deferred under the AstraZeneca co-promotion agreement, and a $4.1 million charge relating to the
amortization of intangible product rights associated with the AstraZeneca product purchase, as compared to $86.4 million, or 59.8% of total revenue, in the same quarter of 2006. Excluding the deferred revenue recognized as part of the co-promotion
agreement, and non-cash items associated with the AstraZeneca agreement, gross profit as a percentage of total revenue for the three months ended March 31, 2007 was 61.6%, with the increase over the same quarter of 2006 due primarily to product mix
as Abraxane® represented a greater percentage of
sales during the current quarter as compared to the prior year first quarter. Abraxane® sales, net of deferred revenue, represented 30.4% of consolidated net sales during the first three months of 2007 as compared to 21.0% for the first quarter of 2006.

Research and Development

Research and development expense for the three months ended March 31, 2007 increased $2.5
million, or 10%, to $26.9 million as compared to the same quarter in 2006. The increase was due primarily to expense associated with the transfer of products to the recently-acquired Puerto Rico facility, increased stock compensation expense
relating to the RSU plans assumed from ABI in connection with the merger and Abraxane® scale-up toward EU compliant production in our Grand Island facility. These costs were
partially offset by lower research spending related to our Abraxis Oncology division.

Selling, General and Administrative

Selling, general and administrative expense for the three months ended
March 31, 2007 increased $38.6 million to $69.5 million, or 32.8% of total revenue, from $30.9 million, or 21.4% of total revenue for the same period in 2006. The increase was due primarily to additional Abraxane® costs for commission expense relating to the co-promotion agreement with AstraZeneca, which went into effect on June 28, 2006, the recent expansion and marketing activities relating to
Abraxane® and to a lesser extent costs associated with the launch of Abraxane® in Canada,
increased stock compensation expense relating to the RSU plans assumed in connection with the merger and professional fees. The increase in selling, general and administrative expense was partially offset by the cost sharing agreement between us and
AstraZeneca.

Amortization and Merger Costs

The three months ended March 31, 2007 included $13.5 million of amortization related to intangible assets associated with the merger. The three months ended March 31, 2006 included approximately $5.6 million
in direct merger and transaction related costs and professional fees.



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##### Table of Contents

Other Income

Drug Source Company, LLC is 50% owned by us and is a selling agent of raw material to the pharmaceutical industry, including us. Our investment in Drug Source Company is intended to both generate a return on our
investment and to strengthen our strategic sourcing capabilities over time. Because our 50% ownership interest in Drug Source Company does not provide financial or operational control of Drug Source Company, we account for our interest in Drug
Source Company under the equity method. Our equity income in Drug Source Company for each of the three months ended March 31, 2007 and 2006 was $0.5 million. Ending inventory included raw material purchased from Drug Source Company of $4.9
million at March 31, 2007 and $4.0 million at December 31, 2006.

Other Non-Operating Items

Interest income consisted primarily of interest earned on invested cash. Interest income decreased to $0.6 million for the three months ended
March 31, 2007 from $1.1 million for the comparable period in 2006.

Interest expense and other consisted primarily of interest
expense, the impact of foreign currency charges on intercompany trading accounts and other financing costs. Interest expense increased to $3.9 million for the three months ended March 31, 2007 as compared to $3.3 million for the three months
ended March 31, 2006. The increase in interest expense was primarily the result of interest expense related to the note payable due to AstraZeneca in June 2007, partially offset by a decrease in interest expense associated with our bank debt
due to lower average debt levels and lower average interest rates between the first quarter of 2007 and the first quarter of 2006.

Minority interest of $9.3 million represented the net earnings attributable to minority shareholders prior to the closing of the merger. For accounting purposes, the merger between us and ABI was treated as a downstream merger with ABI
viewed as the surviving entity, although we were the surviving entity for legal purposes. As such, effective as of the merger date, the merger has been accounted for in our unaudited condensed consolidated financial statements as an implied
acquisition of our minority interests using the purchase method of accounting.

Provision for Income Taxes

Prior to our merger with ABI, ABI and APP had filed separate, stand-alone federal income tax returns. As a result, ABI did not expect to realize the
benefit of $17.9 million of net operating loss carry forwards. These net operating loss carry forwards are now available and were recognized in the second quarter of 2006 in connection with the closing of the merger. Our effective rate was 35.8% and
87% for the three months ended March 31, 2007 and 2006, respectively.

Segment Information

Abraxis BioScience is comprised of Abraxis Pharmaceutical Products, Abraxis Oncology and Abraxis
Research. Beginning in the fourth quarter of 2006, we re-aligned our segment presentation to better reflect how the business is managed. We intend to continue to report our business in two segments: the ABI segment, representing the combined
operations of Abraxis Oncology and Abraxis Research; and the APP segment, representing the hospital-based operations. The ABI segment focuses primarily on our internally developed proprietary products, including Abraxane®, and our proprietary product pipeline. The APP segment manufactures and markets one of the broadest
portfolio of injectable drugs, including oncology, critical care and anti-infectives, and markets the proprietary products we acquired from AstraZeneca. Prior years information regarding our segments has been reclassified to conform with the
current year presentation.

Pretax segment operating income does not include general and administrative expense, merger related costs and
amortization, interest income, interest expense and other income, minority interests and income tax expense. Additionally, pretax segment operating income does not include amortization of intangible product rights associated with the AstraZeneca
product purchase, stock compensation expense and merger costs, which were not allocated to cost of sales and research and development for the segments.

The following table sets forth the results of our pretax segment operations for the three months ended March 31, 2007 and 2006 and forms the basis for the following discussion:



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##### Table of Contents

|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|-------------------------------------- |  | --------------------------- | ------- | - | ----------------------------- | - | ------- | - |  | - | ------- | - |  | ---- | -
|                                       |  | Three Months EndedMarch 31, |         |   | Change favorable(unfavorable) |  
|                                       |  | 2007                        |         |   | 2006                          |   |         | $ |  |   | %       |  
|                                       |  | (unaudited, in thousands)   |        
|APP Segment                            |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total revenue                          |  | $                           | 140,268 |   |                               | $ | 113,472 |   |  | $ | 26,796  |   |  | 24   | %
|Cost of sales                          |  |                             | 70,062  |   |                               |   | 52,492  |   |  |   | (17,570 | ) |  | -33  | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Gross profit                           |  |                             | 70,206  |   |                               |   | 60,980  |   |  |   | 9,226   |   |  | 15   | %
|Percent to total revenue               |  |                             | 50.1    | % |                               |   | 53.7    | % |  |   |         |   |  |      |  
|Operating expenses:                    |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Research and development               |  |                             | 10,177  |   |                               |   | 3,924   |   |  |   | (6,253  | ) |  | -159 | %
|Selling and marketing                  |  |                             | 3,535   |   |                               |   | 3,064   |   |  |   | (471    | ) |  | -15  | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total operating expenses               |  |                             | 13,712  |   |                               |   | 6,988   |   |  |   | (6,724  | ) |  | -96  | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Pre-tax segment operating income       |  | $                           | 56,494  |   |                               | $ | 53,992  |   |  | $ | 2,502   |   |  | 5    | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|ABI Segment                            |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total revenue                          |  | $                           | 71,893  |   |                               | $ | 31,056  |   |  | $ | 40,837  |   |  | 131  | %
|Cost of sales                          |  |                             | 7,143   |   |                               |   | 4,860   |   |  |   | (2,283  | ) |  | 47   | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Gross profit                           |  |                             | 64,750  |   |                               |   | 26,196  |   |  |   | 38,554  |   |  | 147  | %
|Percent to total revenue               |  |                             | 90.1    | % |                               |   | 84.4    | % |  |   |         |   |  |      |  
|Operating expenses:                    |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Research and development               |  |                             | 13,124  |   |                               |   | 20,265  |   |  |   | 7,141   |   |  | 35   | %
|Selling and marketing                  |  |                             | 32,569  |   |                               |   | 11,791  |   |  |   | (20,778 | ) |  | -176 | %
|Equity (income) in Drug Source Company |  |                             | (481    | ) |                               |   | (476    | ) |  |   | 5       |   |  | 1    | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Total operating expenses               |  |                             | 45,212  |   |                               |   | 31,580  |   |  |   | 13,632  |   |  | -43  | %
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  
|Pretax segment operating income (loss) |  | $                           | 19,538  |   |                               | $ | (5,384  | ) |  | $ | 24,922  |   |  |     |  
|                                       |  |                             |         |   |                               |   |         |   |  |   |         |   |  |      |  

APP Segment

The pretax operating income of the APP segment increased $2.5 million, or 5%, to $56.5 million in the three months ended March 31, 2007 as compared to pretax operating income of $54.0 million in the comparable
period of 2006. The increase was primarily due to a $26.8 million, or 24%, increase in revenue as compared to the prior year. Gross profit as a percentage of total revenue decreased to 50.1% in the three months ended March 31, 2007, as compared
to 53.7% in the prior year comparable period due to higher freight costs associated with expedited shipments to our customers and increased need for climate controlled shipping relating to certain products purchased from AstraZeneca in June 2006.
Margins were also impacted by lower volume and higher plant costs associated with the voluntary precautionary distribution hold we placed on our cephalosporin products manufactured with certain materials while additional testing was completed.

Research and development expense increased by $6.3 million for the three months ended March 31, 2007 to $10.2 million due to the
ongoing transition of products to our recently-acquired Puerto Rico manufacturing facility.

Selling and marketing expenses increased $0.5
million supporting the increased revenue base. As a percentage of total revenue, selling and marketing expenses in the three months ended March 31, 2007 were 2.5% as compared to 2.7% in the prior year quarter.

ABI Segment

The pretax operating
income of the ABI segment increased $24.9 million to $19.5 million in the first three months of 2007, as compared to a loss of $5.4 million in the prior year quarter. Revenue increased $40.8 million, or 131%, in the three months ended March 31,
2007 as compared to the same period in the prior year primarily due to increased market penetration and the inclusion of $9.1 million of previously deferred revenue recognized relating to the co-promotion agreement with AstraZeneca.

Research and development expense decreased by $7.1 million during the three month period ended March 31, 2007 to $13.1 million as compared to
$20.3 million in the prior year period. The decrease was primarily a result of cost savings associated with the merger and a decrease in clinical trial spending as a result of the timing of Phase III clinical trials.



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These decreases were partially offset by an increased effort to refine our production processes, higher legal costs and additional personnel to expand our
research and upcoming clinical trial activities.

Selling and marketing expense increased by $20.8 million in the three months ended
March 31, 2007 to $32.6 million as compared to $11.8 million in the comparable 2006 period. The change was primarily due to increased payments to AstraZeneca under the profit sharing arrangement, co-promotional expenses and an expansion of
medical activities and staff.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The following table summarizes key elements of our financial position and sources and (uses) of cash and cash
equivalents as follows:



|                                                            |  |                              |           |   |                   |   |           |  
|----------------------------------------------------------- |  | ---------------------------- | --------- | - | ----------------- | - | --------- | -
|                                                            |  | March 31, 2007               |           |   | December 31, 2006 |  
|                                                            |  | (unaudited, in thousands)    |          
|Summary Financial Position:                                 |  |                              |           |   |                   |   |           |  
|Cash, cash equivalents and short-term investments           |  | $                            | 29,745    |   |                   | $ | 39,297    |  
|                                                            |  |                              |           |   |                   |   |           |  
|Working capital                                             |  | $                            | 185,239   |   |                   | $ | 117,343   |  
|                                                            |  |                              |           |   |                   |   |           |  
|Total assets                                                |  | $                            | 1,841,778 |   |                   | $ | 1,825,508 |  
|                                                            |  |                              |           |   |                   |   |           |  
|Total stockholders equity                                  |  | $                            | 1,061,180 |   |                   | $ | 1,033,361 |  
|                                                            |  |                              |           |   |                   |   |           |  
|                                                            | 
|                                                            |  | Three Months Ended March 31, |          
|                                                            |  | 2007                         |           |   | 2006              |  
|                                                            |  | (unaudited, in thousands)    |          
|Summary of Sources and (Uses) of Cash and Cash Equivalents: |  |                              |           |   |                   |   |           |  
|Operating activities                                        |  | $                            | (40,300   | ) |                   | $ | 55,316    |  
|                                                            |  |                              |           |   |                   |   |           |  
|Purchase of property, plant and equipment                   |  | $                            | (42,043   | ) |                   | $ | (9,654    | )
|                                                            |  |                              |           |   |                   |   |           |  
|Purchase of other non-current assets                        |  | $                            | (354      | ) |                   | $ | (1,963    | )
|                                                            |  |                              |           |   |                   |   |           |  
|Sale of short-term investments                              |  | $                            |          |   |                   | $ | (45,837   | )
|                                                            |  |                              |           |   |                   |   |           |  
|Financing activities                                        |  | $                            | 72,565    |   |                   | $ | 31,290    |  
|                                                            |  |                              |           |   |                   |   |           |  

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities was $40.3 million for the
three months ended March 31, 2007 as compared to cash provided by operations of $55.3 million for the same period in 2006. This $95.6 million decrease in 2007 cash provided by operating activities was due primarily to our payment of
2006 federal income taxes in the first quarter of 2007. The impact of this payment on operating cash flows was partially offset by strong operating results after eliminating non-cash expenses associated with depreciation, amortization of intangibles
associated with our merger with ABI, our product rights purchase from AstraZeneca and stock compensation expense.

Investing
Activities

Our investing activities have included capital expenditures necessary to expand and maintain our manufacturing
capabilities and infrastructure and outlays necessary to acquire various product or intellectual property rights. Cash used in investing activities during the three months ended March 31, 2007 includes $33.8 million for the acquisition of our
manufacturing facility in Puerto Rico as well as $8.2 million for the purchase of other property, plant and equipment primarily as investment in our core manufacturing and development capabilities. Cash used in investing activities for the three
months ended March 31, 2006 primarily related to $45.8 million of purchases of short term municipal variable rate demand notes. Investing activities in the first quarter of 2006 also included $9.7 million relating to the purchase of property,
plant and equipment primarily as investment in our core manufacturing and development capabilities.



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Financing Activities

Financing activities generally include borrowings under our credit facility, the issuance or repurchase of our common stock and proceeds from the exercise
of employee stock options. Net cash provided by financing activities was $72.6 million for the three months ended March 31, 2007, which represented net borrowings on our line of credit of $68.0 million, an increase in notes payable
associated with the AstraZeneca product rights purchase of $1.4 million and net proceeds relating to stock transactions of $3.2 million.

Net cash provided by financing activities totaled $31.3 million for the three months ended March 31, 2006, which consisted of $24.0 million in net proceeds under our credit facilities and $7.3 million in proceeds relating to
employee stock plans and related tax benefits.

Sources of Financing and Capital Requirements

We have historically funded our research and development activities through product license fees, including milestones, and borrowings, whereas our
primary source of liquidity has been cash flow from operations.

We have a three-year, $450 million, unsecured credit facility, that
includes a facility to issue up to $10 million in letters of credit and the ability to borrow up to $20 million for swing line loans. Interest rates under the facility are based on the type of loan made and the leverage ratio as defined in
the credit agreement. The agreement contains various restrictive covenants pertaining to the maintenance of minimum net worth, leverage and interest coverage ratios. In addition, the agreement restricts our ability to declare or pay dividends, make
advances or loans to third parties and incur any additional indebtedness.

As of March 31, 2007, $233.0 million was outstanding
on our credit facility with a weighted average interest rate of 6.13%. As we are not obligated to repay our outstanding balances prior to termination of the facility in 2009, borrowings are classified as non-current on the balance sheet. Outstanding
letters of credit, which reduce overall available borrowings, were $0.7 million at March 31, 2007. We were in compliance with all covenants at March 31, 2007.

Capital Requirements

Our
future capital requirements will depend on numerous factors, including:



| |  |  | working capital requirements and production, sales, marketing and development costs required to support
Abraxane®, the newly acquired AstraZeneca products and our hospital-based injectable
products;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | research and development, including clinical trials, spending to develop further product candidates and ongoing studies;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | the need for manufacturing expansion and improvement;
| | - |  | -----------------------------------------------------



| |  |  | the transfer of products to the newly acquired Puerto Rico manufacturing facility.
| | - |  | ----------------------------------------------------------------------------------



| |  |  | the requirements of any potential future acquisitions, asset purchases, equity investments, including the repurchase of our stock, or other strategic transactions;
and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount of cash generated by operations, including potential milestone and license revenue.
| | - |  | ----------------------------------------------------------------------------------------------

We anticipate that cash and short-term investments, cash generated from operations and funds available under our credit facility will be sufficient to
finance operations of the company, including ongoing activity relating to Abraxane®, product development and capital expenditures for the remainder of the year. In the event we engage in future acquisitions or capital projects or other strategic transactions, we may have to raise additional
capital through additional borrowings or the issuance of debt or equity securities.



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. The most significant estimates in our consolidated financial statements are discussed below. Actual results could vary from those estimates.

Revenue Recognition

Research Revenue Recognition

Research revenue generally consists of amounts earned from the development and research to advance the commercial application of pharmaceutical compounds
for third parties. Such research revenue may include upfront license fees, milestone payments and reimbursement of development and other costs, and royalties. Non-refundable upfront license fees under which we have continuing involvement in the form
of development, manufacturing or commercialization are recognized as revenue ratably over either: the development period if the development risk is significant, or the estimated product useful life if development risk has been substantially
eliminated. Achievement based milestone payments are recognized as revenue when the milestone objective is attained. Reimbursement of development and other costs are recognized as revenue as the related costs are incurred. Royalties are recognized
as earned in accordance with the contract terms when royalties from licensees can be reliably measured and collectibility is reasonably assured. Royalty estimates are made in advance of amounts collected using historical and forecasted trends.

Product Revenue Recognition

We recognize revenue from the sale of a product when title and risk of loss have transferred to the customer, collection is reasonably assured and we have no further performance obligation. This is typically when the product is received by
the customer. At the time of sale, as further described below, we reduce sales and provide for estimated chargebacks, contractual allowances or customer rebates, product returns and customer credits and cash discounts. Our methodology used to
estimate and provide for these sales provisions was consistent across all periods presented. Accruals for sales provisions are presented in our financial statements as a reduction of net revenue and accounts receivable and, for contractual
allowances, an increase in accrued liabilities. We regularly review information related to these estimates and adjust our reserves accordingly if, and when, actual experience differs from estimates.

We have internal historical information on chargebacks, rebates and customer returns and credits which we use as the primary factor in determining the
related reserve requirements. As further described below, due to the nature of our injectable products and their primary use in hospital and clinical settings with generally consistent demand, we believe that this internal historical data, in
conjunction with periodic review of available third-party data and updated for any applicable changes in available information provides a reliable basis for such estimates.

We periodically review the wholesale supply levels of our more significant products by reviewing inventory reports purchased or available from
wholesalers, evaluating our unit sales volume, and incorporating data from third-party market research firms. Based on these activities, we attempt to keep a consistent wholesale stocking level of approximately two- to six-weeks across our
hospital-based products. The buying patterns of our customers do vary from time to time, both from customer to customer and product to product, but we believe that historic wholesale stocking or speculative buying activity in our hospital-based
distribution channels has not had a significant impact on our historic sales comparisons or sales provisions.

Other Deferred Revenue

Other deferred revenue consists of upfront payments earned from our co-promotion agreement with AstraZeneca and our agreement with
Taiho Pharmaceutical Co., LTD. Such deferred revenue is recognized as earned ratably over the life of each agreement.

Sales
Provisions

Our sales provisions totaled $260.3 million and $145.8 million for the three months ended March 31, 2007 and
2006, respectively, and related reserves totaled $104.6 million and $112.5 million at March 31, 2007 and December 31, 2006, respectively. The increase in provisions relates primarily to chargeback reserves associated with the
sales of products purchased from AstraZeneca, as well as the timing of the related chargeback payments.



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Chargebacks

Following industry practice, we typically sell our products to independent pharmaceutical wholesalers at wholesale list price. The wholesaler in turn sells our products to an end user, normally a hospital or
alternative healthcare facility, at a lower contractual price previously established between us and the end user via a group purchasing organization, or GPO. GPOs enter into collective purchasing contracts with pharmaceutical suppliers to secure
more favorable product pricing on behalf of their end-user members.

Our initial sale to the wholesaler, and the resulting receivable, are
recorded at our wholesale list price. However, as most of these selling prices will be reduced to a lower end-user contract price, at the time of sale revenue is reduced by, and a provision recorded for, the difference between the list price and
estimated end-user contract price multiplied by the estimated wholesale units outstanding pending chargeback that will ultimately be sold under end-user contracts. When the wholesaler ultimately sells the product to the end user at the end-user
contract price, the wholesaler charges us, a chargeback, for the difference between the list price and the end-user contract price and such chargeback is offset against our initial estimated contra asset. The most significant estimates inherent in
the initial chargeback provision relate to wholesale units pending chargeback and the ultimate end-user contract-selling price. We base our estimation for these factors primarily on internal, product-specific sales and chargeback processing
experience, estimated wholesaler inventory stocking levels, current contract pricing and our expectation for future contract pricing changes.

Our net chargeback reserve totaled $74.6 million and $81.4 million at March 31, 2007 and December 31, 2006, respectively. The methodology used to estimate and provide for chargebacks was consistent across all periods
presented. Due to information constraints in the distribution channel, it has not been practical, and has not been necessary, for us to capture and quantify the impact of current versus prior year activity on the chargeback provision. We do review
current year chargeback activity to determine whether material changes in the provision relate to prior period sales; such changes have not been material. A one percent decrease in our estimated end-user contract-selling prices would reduce total
revenue in the three months ended March 31, 2007 by $0.7 million and a one percent increase in wholesale units pending chargeback at March 31, 2007 would decrease total revenue in the three months ended March 31, 2007 by
$0.4 million.

Contractual Allowances, Returns and Credits, Cash discounts and Bad Debts

Contractual allowances, generally rebates or administrative fees, are offered to certain wholesale customers, GPOs and end-user customers, consistent with
pharmaceutical industry practices. Settlement of rebates and fees may generally occur from one to 15 months from date of sale. We provide a general provision for contractual allowances at the time of sale based on the historical relationship
between sales and such allowances. Upon receipt of chargeback, due to the availability of product and customer specific information on these programs, we then establish a specific provision for fees or rebates based on the specific terms of each
agreement. Our reserve for contractual allowances totaled $17.3 million at March 31, 2007 and $16.2 million at December 31, 2006. A one-percent increase in the estimated rate of contractual allowances to total revenue at
March 31, 2007 would decrease net sales by $2.4 million at that point in time. Contractual allowances are reflected in the financial statements as a reduction of total revenue and as a current accrued liability.

Consistent with industry practice, our return policy permits our customers to return products within a window of time before and after the expiration of
product dating. We provide for product returns and other customer credits at the time of sale by applying historical experience factors generally based on our historic data on credits issued by credit category or product, relative to related sales
and we provide specifically for known outstanding returns and credits. Our reserve for customer credits and product returns totaled $7.0 million and $9.5 million at March 31, 2007 and December 31, 2006, respectively. At March 31,
2007, a one percent increase in the estimated reserve requirements for customer credits and product returns would have decreased total revenue for the three months ended March 31, 2007 by $1.5 million.

We generally offer our customers a standard cash discount on our hospital-based products for prompt payments and, from time-to-time, may offer a greater
discount and extended terms in support of product launches or other promotional programs. A provision for cash discounts is established at the time of sale based on the terms of sale.

We establish a reserve for bad debts based on general and identified customer credit exposure. Our historic bad debt losses have been insignificant.

Inventories

Inventories consist of products currently approved for marketing and may include certain products pending regulatory approval. From time to time, we capitalize inventory costs associated with products prior to regulatory approval based on
our judgment of probable future commercial success and realizable value. Such judgment incorporates our knowledge and best judgment of where the product is in the regulatory review process, our required investment in the product, market conditions,
competing products and our economic expectations for the product post-approval relative to the risk of manufacturing the



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product prior to approval. If final regulatory approval for such products is denied or delayed, we may need to provide for and expense such inventory.

At March 31, 2007 and December 31, 2006, inventory included $36.6 million and $25.7 million, respectively, in cost relating
to products pending FDA and European approval. Included in the amount pending approval at March 31, 2007 were $23.6 million of paclitaxel (whole plant), $3.9 million in other Abraxane® related materials and $3.0 million of Cefotetan. Individually, all other items pending
approval were less that 1% of total inventory. Included in the amount pending approval at December 31, 2006 were $17.7 million of paclitaxel (whole plant) and $2.6 million in other Abraxane® related materials.

We routinely review our inventory and establish reserves when the cost of the inventory is not expected to be recovered or our product cost exceeds
realizable market value. In instances where inventory is at or approaching expiry, is not expected to be saleable based on our quality and control standards or for which the selling price has fallen below cost. We reserve for any inventory
impairment based on the specific facts and circumstances. In evaluating the market value of inventory pending regulatory approval as compared to its cost, we consider the market, pricing and demand for competing products, our anticipated selling
price for the product and the position of the product in the regulatory review process. Provisions for inventory reserves are reflected in the financial statements as an element of cost of sales with inventories presented net of related reserves.

Expense Recognition

Cost of sales represents the costs of the products which we have sold and consists of labor, raw materials, components, packaging, quality assurance and quality control, shipping and manufacturing overhead costs and the cost of finished
products purchased from third parties. In addition, for the three months ended March 31, 2007, cost of sales included amortization of product rights purchased from AstraZeneca of $4.1 million.

Research and development costs are expensed as incurred or consumed and consist primarily of salaries and other personnel-related expenses, as well as
depreciation of equipment, allocable facility, raw material and production expenses and contract and consulting fees. Research and development costs also include costs associated with our Puerto Rico and Switzerland facilities activities prior to
commercial production.

Selling, general and administrative expenses consist primarily of salaries, commissions and other personnel-related
expenses, as well as costs for travel, trade shows and conventions, promotional material and catalogs, advertising and promotion, co-promotion commissions to AstraZeneca, facilities, risk management and professional fees.

Stock-Based Compensation

We
account for stock based compensation in accordance with FAS 123®, which requires the recognition of compensation cost for all share-based payments (including employee stock options) at fair value. Effective January 1, 2006, we adopted the provisions of FAS 123®. We use the straight-line attribution method to
recognize share-based compensation expenses over the applicable vesting period of the award. Options currently granted generally expire ten years from the grant date and vest ratably over a four year period, while awards under the RSU II plan
vest over a one, two or four year period. Awards under the RSU I Plan vest immediately.

To determine stock-based compensation, we use the
Black-Scholes option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our stock participation plan. Additionally, expense related to the RSU Plans is based on the
lower of the market-price or $28.27 and is expensed on a straight-line basis over the applicable vesting period. Pre-tax stock-based compensation costs for the three months ended March 31, 2007 and 2006 were $9.7 million, including
$5.5 million relating to the RSU Plans, and $2.7 million, with none relating the RSU Plans, respectively.

Income taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the consolidated
financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated financial statements
in the period that includes the legislative enactment date.

In 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109 (FIN 48),which provides specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax
positions taken or expected to be taken in a tax return.



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FIN 48 addresses the determination of whether tax benefits, either permanent or temporary, should be recorded in the financial statements. We adopted FIN 48
as of the beginning of our 2007 fiscal year and as a result recognized a $0.1 million decrease to retained earnings from the cumulative effect of adoption.

As of the beginning of our 2007 fiscal year, the total amount of gross unrecognized tax benefits recorded on adoption of FIN 48 and are reported in other liabilities in our condensed consolidated balance sheet, was
$5.8 million. Of this amount, approximately $4.7 million would impact our effective tax rate over time, if recognized. In addition, we have accrued $0.5 million for interest and any necessary penalties related to unrecognized tax positions in our
provision for income taxes.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157 which redefines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. SFAS No. 157 applies where other accounting pronouncements require or permit fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The
effects of adoption will be determined by the types of instruments carried at fair value in a companys financial statements at the time of adoption as well as the methods utilized to determine their fair values prior to adoption. Based on
our current use of fair value measurements, SFAS No. 157 is not expected to have a material effect on our results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115. SFAS No. 159
permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting
date. SFAS No. 159 is effective for our company January 1, 2008. We are evaluating the impact that the adoption of SFAS No. 159 will have on our consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109 (FIN 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We adopted the provisions of FIN 48 effective January 1, 2007 (See Note 6Income taxes). The adoption
of FIN 48 did not have a material impact on our consolidated results of operations and financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks
associated with changes in interest rates and foreign currency exchange rates. Interest rate changes affect primarily our investments in marketable securities and our debt obligations. Changes in foreign currency exchange rates can affect our
operations outside of the United States.

Foreign Currency Risk: We have operations in Canada, Switzerland and other parts of
the world; however, both revenue and expenses of those operations are typically denominated in the currency of the country of operations. Nonetheless, these foreign subsidiaries are presented in our financial statement in U.S. dollars and can be
impacted by foreign currency exchange fluctuations through both (i) translation risk, which is the risk that the financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various
currencies against the U.S. dollar, and (ii) transaction risk, which is the risk that the currency impact of transactions denominated in currencies other than the subsidiaries functional currency may vary according to currency fluctuations.

With respect to translation risk, even though there may be fluctuations of currencies against the U.S. dollar, which may impact
comparisons with prior periods, the translation impact is included in accumulated other comprehensive income, a component of stockholders equity, and does not affect the underlying results of operations. Gains and losses related to
transactions denominated in a currency other than the functional currency of the countries in which we operate are included in the consolidated statements of operations. As of March 31, 2007, there were no outstanding hedge arrangements.

Investment Risk: The primary objective of our investment activities is to preserve principal while at the same time
maximizing the income we receive from our activities without increasing risk. Some of the securities that we invest in may have interest rate risk. This means that a change in prevailing interest rates may cause the fair value of the principal
amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the prevailing rate and the prevailing rate later rises, the fair value of the principal amount of our investment will probably
decline.



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To minimize this risk, we maintain an investment portfolio of cash equivalents and short-term investments
consisting of high credit quality securities, including commercial paper, government and non-government debt securities and money market funds. We do not use derivative financial instruments. The average maturity of the debt securities in which we
invest has been less than 90 days and the maximum maturity has been three months.

Interest Rate Risk: We are also exposed to
changes in interest rates on our borrowings. We have a $450 million credit facility, which bears interest at a variable rate. As of March 31, 2007, $233.0 million was outstanding on our credit facility bearing interest at a weighted average
interest rate of 6.13%. If our interest rates were to increase 1%, our interest expense for the remainder of 2007 would increase $1.7 million based on our outstanding debt balances at March 31, 2007.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures, as such term is defined
under Exchange Act Rules 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required
disclosures. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control
objectives and in reaching a reasonable level of assurance we necessarily are required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management, with participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and due to the material weakness in our internal control over
financial reporting related to income taxes identified and disclosed in our Annual Report on Form 10-K for the year end December 31, 2006, management has concluded that our disclosure controls and procedures were not effective as of
March 31, 2007. To address this control weakness, we performed additional analysis and performed other procedures in order to prepare the unaudited quarterly consolidated financial statements in accordance with generally accepted accounting
principles. Accordingly, management believes that the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operation and cash flows
for the periods presented.

In response to the material weakness identified, we have taken steps to strengthen our internal controls over
financial reporting. In particular, we evaluated and continue to evaluate the roles and functions within the tax department and added additional resources to support internal controls over financial reporting relative to income tax. Management has
contracted technical resources to enhance existing policies and procedures and management performed additional control procedures relative to financial reporting of income taxes. Management continues to evaluate permanent personnel resources, which
are intended to be in place by the end of the second quarter of 2007. Management believes the additional personnel, together with the current accounting staff, will improve existing policies and procedures to enable proper control over financial
reporting procedures. Additionally, we plan to provide additional training related to internal controls over financial reporting and accounting for income taxes.

Management believes that the above measures, when fully implemented, will address the material weaknesses described in our Annual Report on Form 10-K, for the year ended December 31, 2006, in the near and
long-term. Management will continue to monitor the effectiveness of our internal controls and procedures on an ongoing basis and will take further action, as appropriate.

Except as otherwise described herein, management determined that, as of March 31, 2007, there were no changes in our internal control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f), that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In December 2004, a former officer and employee and a former director of ABI
filed a demand for arbitration with the American Arbitration Association against us and Dr. Soon-Shiong, our Chief Executive Officer. In August 2005, this individual filed an amended arbitration demand adding ABI as a defendant. In the
arbitration, this individual asserts that we improperly terminated his employment and that the defendants breached various promises allegedly made to him. This individual is seeking various forms of relief, including monetary damages and equity
interests in our common stock. The arbitration began in May 2007.

In addition, in May 2006, this same former officer filed an action
against us, ABI and certain of our directors in Cook County Illinois relating to the merger between us and ABI alleging that the defendants breached fiduciary duties to our stockholders by causing us to enter into the merger agreement. The complaint
seeks $12 million in damages. The defendants moved to dismiss or stay this case on a number of grounds.

On or about December 7, 2005,
several stockholder derivative and class action lawsuits were filed against us, our directors and ABI in the Delaware Court of Chancery relating to the merger between us and ABI. We are a nominal defendant in the stockholder derivative actions. The
lawsuits allege that our directors breached their fiduciary duties to stockholders by causing us to enter into the merger agreement, which, it is alleged unjustly enriched ABIs shareholders and caused the value of the shares held by our public
stockholders to be significantly diminished. The lawsuits seek, among other things, an unspecified amount of damages and the rescission of the merger. We have moved to dismiss the derivative claims filed on our behalf, and certain of the director
defendants have moved to dismiss some of the claims alleged against them.

On July 19, 2006 Élan Pharmaceutical Intl Ltd.
filed a lawsuit against us alleging that we willfully infringed upon two of their patents by asserting that Abraxane® uses technology protected by Élan -owned patents. Élan seeks unspecified damages and an injunction. In August 2006, we filed a response
to Élans complaint contending that we did not infringe on the Élan patents and that the Élan patents are invalid. The trial has been set to begin in June 2008.

On November 25, 2004, an opposition was filed in the European Patent Office challenging the validity of a European patent relating to our nab
technology, including Abraxane®. The true party
initiating the opposition was not identified. The opposition has subsequently been withdrawn. A hearing took place before the Opposition Division of the European Patent Office in April 2007 at which the patent was upheld on the basis of a new set of
claims.

ITEM 1A. RISK FACTORS

Factors That May Affect Future Results of Operations

Our merger with ABI is expected to result in benefits, but we may not realize those benefits due to challenges associated with integrating ABI or other factors.

The success of our merger with ABI will depend in part on our continuing to integrate our operations, technologies and personnel with
those of ABI. Our inability to meet the challenges involved in integrating successfully these operations or otherwise to realize any of the anticipated benefits of the merger could seriously harm our results of operations. In addition, the overall
integration of ABI may result in unanticipated operations problems, expenses, liabilities and diversion of managements attention. The challenges involved in integration include:



| |  |  | integrating ABIs operations, technologies and products;
| | - |  | --------------------------------------------------------



| |  |  | coordinating and integrating sales and marketing, research and development and manufacturing functions;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | demonstrating to our customers that the merger will not result in adverse changes in business focus;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | assimilating the personnel of ABI and integrating the business cultures of ABI;
| | - |  | -------------------------------------------------------------------------------



| |  |  | consolidating corporate and administrative infrastructures and eliminating duplicative operations; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | maintaining employee morale and motivation.
| | - |  | -------------------------------------------

We may not be able to successfully integrate our operations in a timely manner, or at all, and we may not realize the anticipated benefits of the merger, including synergies or sales or growth opportunities, to the extent or in the time
frame anticipated.



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If Abraxane® does not achieve strong market acceptance, our future profitability could be adversely affected and we would be unable to recoup the investments made
to commercialize this product.

We have made and will continue to make a significant investment in Abraxane®, including costs associated with conducting clinical trials and obtaining
necessary regulatory approvals for the use of Abraxane® in other indications and settings and in other jurisdictions, expansion of our marketing, sales and manufacturing staff, the acquisition of paclitaxel raw material, and the manufacture of finished product. The success
of Abraxane® in the Phase III trial for metastatic
breast cancer and other clinical trials may not be representative of the future clinical trial results for Abraxane® with respect to other clinical indications. The results from clinical, pre-clinical studies and early clinical trials conducted to date may not be
predictive of results to be obtained in later clinical trials, including those ongoing at present. Further, the commencement and completion of clinical trials may be delayed by many factors that are beyond our control, including:



| |  |  | slower than anticipated patient enrollment;
| | - |  | -------------------------------------------



| |  |  | difficulty in finding and retaining patients fitting the trial profile or protocols; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | adverse events occurring during the clinical trials.
| | - |  | ----------------------------------------------------

Although approved by the U.S. Food and Drug Association, or the FDA, for the indication of metastatic breast cancer in January 2005, Abraxane® may not generate sales sufficient to recoup our investment. For the three months ended March 31, 2007, total
Abraxane® revenue was $70.9 million, including $9.1
million of previously deferred revenue recognized relating to the co-promotion agreement with AstraZeneca. For the year ended December 31, 2006, total Abraxane® revenue was $174.9 million, including $18.2 million of previously deferred revenue recognized relating to the
co-promotion agreement with AstraZeneca. Abraxane®
revenue represented approximately 33.0% and 22.8% of our total revenue for the three months ended March 31, 2007 and the year ended December 31, 2006, respectively. We anticipate that sales of Abraxane® will remain a significant portion of our total revenue over the next several years.
However, a number of pharmaceutical companies are working to develop alternative formulations of paclitaxel and other cancer drugs and therapies, any of which may compete directly or indirectly with Abraxane® and which might adversely affect the commercial success of Abraxane®. Our inability to successfully manufacture, market and
commercialize Abraxane® could cause us to lose some
of the investment we have made and will continue to make to commercialize this product.

If we are unable to develop and commercialize new products, our
financial condition will deteriorate.

Profit margins for a pharmaceutical product generally decline as new competitors enter the
market. As a result, our future success will depend on our ability to commercialize the product candidates we are currently developing, as well as develop new products in a timely and cost-effective manner. With respect to our hospital-based
operations, we currently have 29 ANDAs pending with the FDA and approximately over 60 product candidates in various stages of development. As a result of the recent FDA warning letter with respect to our Melrose Park manufacturing facility, the FDA
can recommend disapproval of any drug applications listing this facility as the manufacturer. However, we do not believe the FDA letter will adversely affect our anticipated product approvals, nor do we believe the FDA letter will adversely affect
our business or financial condition. Successful development and commercialization of our product candidates will require significant investment in many areas, including research and development and sales and marketing, and we may not realize a
return on those investments. In addition, development and commercialization of new products are subject to inherent risks, including:



| |  |  | failure to receive necessary regulatory approvals;
| | - |  | --------------------------------------------------



| |  |  | difficulty or impossibility of manufacture on a large scale;
| | - |  | ------------------------------------------------------------



| |  |  | prohibitive or uneconomical costs of marketing products;
| | - |  | --------------------------------------------------------



| |  |  | inability to secure raw material or components from third-party vendors in sufficient quantity or quality or at a reasonable cost;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | failure to be developed or commercialized prior to the successful marketing of similar or superior products by third parties;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | lack of acceptance by customers;
| | - |  | --------------------------------



| |  |  | impact of authorized generic competition;
| | - |  | -----------------------------------------



| |  |  | infringement on the proprietary rights of third parties;
| | - |  | --------------------------------------------------------



| |  |  | grant of new patents for existing products may be granted, which could prevent the introduction of newly-developed products for additional periods of time; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | grant to another manufacturer by the FDA of a 180-day period of marketing exclusivity under the Drug Price Competition and Patent Term Restoration Act of 1984, or
the Hatch-Waxman Act, as patents or other exclusivity periods for brand name products expire.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The timely and continuous
introduction of new products is critical to our business. Our financial condition will deteriorate if we are unable to successfully develop and commercialize new products.

If sales of our key products decline, our business may be adversely affected.

Our top ten products,
including Abraxane®, comprised approximately 72%
and 56% of our total revenue for the three months ended March 31, 2007 and year ended December 31, 2006, respectively. Our key products could lose market share or revenue due to numerous factors, many of which are beyond our control,
including:



| |  |  | lower prices offered on similar products by other manufacturers;
| | - |  | ----------------------------------------------------------------



| |  |  | substitute or alternative products or therapies;
| | - |  | ------------------------------------------------



| |  |  | development by others of new pharmaceutical products or treatments that are more effective than our products;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | introduction of other generic equivalents or products which may be therapeutically interchanged with our products;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | interruptions in manufacturing or supply;
| | - |  | -----------------------------------------



| |  |  | changes in the prescribing practices of physicians;
| | - |  | ---------------------------------------------------



| |  |  | changes in third-party reimbursement practices; and
| | - |  | ---------------------------------------------------



| |  |  | migration of key customers to other manufacturers or sellers.
| | - |  | -------------------------------------------------------------

Any factor adversely affecting the sale of our key products may cause our revenues to decline.

Proprietary product
development efforts may not result in commercial products.

We intend to maintain an aggressive research and development program for our
proprietary pharmaceutical products. Successful product development in the biotechnology industry is highly uncertain, and statistically very few research and development projects produce a commercial product. Product candidates that appear
promising in the early phases of development, such as in early stage human clinical trials, may fail to reach the market for a number of reasons, including:



| |  |  | the product candidate did not demonstrate acceptable clinical trial results even though it demonstrated positive pre-clinical trial results;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the product candidate was not effective in treating a specified condition or illness;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the product candidate had harmful side effects in humans or animals;
| | - |  | --------------------------------------------------------------------



| |  |  | the necessary regulatory bodies, such as the FDA, did not approve a product candidate for an intended use;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | the product candidate was not economical to manufacture and commercialize;
| | - |  | --------------------------------------------------------------------------



| |  |  | other companies or people have or may have proprietary rights to a product candidate, such as patent rights, and will not let the product candidate be sold on
reasonable terms, or at all; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the product candidate is not cost effective in light of existing therapeutics.
| | - |  | ------------------------------------------------------------------------------

If we or our suppliers are unable to comply with ongoing and changing regulatory standards, sales of our products could be delayed or prevented.

Virtually all aspects of our business, including the development, testing, manufacturing, processing, quality, safety, efficacy, packaging, labeling,
record-keeping, distribution, storage and advertising and promotion of our products and disposal of waste products arising from these activities, are subject to extensive regulation by federal, state and local governmental authorities in the United
States, including the FDA and the Department of Health and Humans Services Office of Inspector General (OIG). Our business is also subject to regulation in foreign countries. Compliance with these regulations is costly and time-consuming.

Our manufacturing facilities and procedures and those of our suppliers are subject to ongoing regulation, including periodic inspection by
the FDA and foreign regulatory agencies. For example, manufacturers of pharmaceutical products must comply with detailed regulations governing current good manufacturing practices, including requirements relating to quality control and quality
assurance. We must spend funds, time and effort in the areas of production, safety, quality control and quality assurance to ensure compliance with these regulations. In late December 2006, we received a warning letter from



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the FDA regarding our Melrose Park facility following a periodic review of the facility earlier in the year. The letter does not in any way relate to the
plant shutdown in 2005. The focus of the letter is the agencys belief that we needed to accelerate the implementation of certain improvements identified in our response to the warning letter, as well as make some of the improvements more
robust. We are proactively working with the FDA to address the agencys concerns and to fully resolve any issues promptly. We do not believe the FDA letter will adversely affect our business or financial condition. We cannot assure that our
manufacturing facilities or those of our suppliers will not be subject to regulatory action in the future.

Our products generally must
receive appropriate regulatory clearance before they can be sold in a particular country, including the United States. We may encounter delays in the introduction of a product as a result of, among other things, insufficient or incomplete
submissions to the FDA for approval of a product, objections by another company with respect to our submissions for approval, new patents by other companies, patent challenges by other companies which result in a 180-day exclusivity period, and
changes in regulatory policy during the period of product development or during the regulatory approval process. The FDA has the authority to revoke drug approvals previously granted and remove from the market previously approved products for
various reasons, including issues related to current good manufacturing practices for that particular product or in general. We may be subject from time to time to product recalls initiated by us or by the FDA. Delays in obtaining regulatory
approvals, the revocation of a prior approval, or product recalls could impose significant costs on us and adversely affect our ability to generate revenue.

Our inability or the inability of our suppliers to comply with applicable FDA and other regulatory requirements can result in, among other things, warning letters, fines, consent decrees restricting or suspending our
manufacturing operations, delay of approvals for new products, injunctions, civil penalties, recall or seizure of products, total or partial suspension of sales and criminal prosecution. Any of these or other regulatory actions could materially
adversely affect our business and financial condition.

State pharmaceutical marketing compliance and reporting requirements may expose us to regulatory
and legal action by state governments or other government authorities.

In recent years, several states, including California, Vermont,
Maine, Minnesota, New Mexico and West Virginia, in addition to the District of Columbia, have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs and file periodic reports on sales, marketing, pricing
and other activities. Similar legislation is being considered in other states. Many of these requirements are new and uncertain, and available guidance is limited. We are continuing to assess our compliance with these state laws. Unless we are in
full compliance with these laws, we could face enforcement action and fines and other penalties and could receive adverse publicity, all of which could harm our business.

We may be required to perform additional clinical trials or change the labeling of our products if side effects or manufacturing problems are identified after the products are on the market.

If side effects are identified after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and
reformulation of products, additional clinical trials, changes in labeling of products, and changes to or re-approvals of our manufacturing facilities may be required, any of which could have a material adverse effect on sales of the affected
products and on our business and results of operations.

After any of our products are approved for commercial use, we or regulatory bodies
could decide that changes to our product labeling are required. Label changes may be necessary for a number of reasons, including the identification of actual or theoretical safety or efficacy concerns by regulatory agencies or the discovery of
significant problems with a similar product that implicates an entire class of products. Any significant concerns raised about the safety or efficacy of our products could also result in the need to reformulate those products, to conduct additional
clinical trials, to make changes to our manufacturing processes, or to seek re-approval of our manufacturing facilities. Significant concerns about the safety and effectiveness of a product could ultimately lead to the revocation of its marketing
approval. The revision of product labeling or the regulatory actions described above could be required even if there is no clearly established connection between the product and the safety or efficacy concerns that have been raised. The revision of
product labeling or the regulatory actions described above could have a material adverse effect on sales of the affected products and on our business and results of operations.

The manufacture of our products is highly exacting and complex, and if we or our suppliers encounter production problems, our business may suffer.

All of the pharmaceutical products we make are sterile, injectable drugs. We also purchase some such products from other companies. Additionally, the
process for manufacturing the nanometer-sized product Abraxane® is relatively new and unique. The manufacture of all our products is highly exacting and complex, due in part to strict regulatory requirements and standards which govern both the manufacture of a particular product
and the manufacture of these types of products in



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general. Problems may arise during their manufacture due to a variety of reasons including equipment malfunction, failure to follow specific protocols and
procedures and environmental factors. If problems arise during the production of a batch of product, that batch of product may have to be discarded. This could, among other things, lead to loss of the cost of raw materials and components used, lost
revenue, time and expense spent in investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If such problems are not discovered before the product is released to the market, recall costs may also
be incurred. To the extent we experience problems in the production of our pharmaceutical products, this may be detrimental to our business, operating results and reputation.

Additionally, we could incur additional costs if we fail to smoothly transfer products to our newly acquired Puerto Rico manufacturing facility.

Our markets are highly competitive and, if we are unable to compete successfully, our revenue will decline and our business will be harmed.

The markets for injectable pharmaceutical products are highly competitive, rapidly changing and undergoing consolidation. Most of our
products are generic injectable versions of brand name products that are still being marketed by proprietary pharmaceutical companies. The first company to market a generic product is often initially able to achieve high sales, profitability and
market share with respect to that product. Prices, revenue and market size for a product typically decline, however, as additional generic manufacturers enter the market.

We face competition from major, brand name pharmaceutical companies as well as generic manufacturers such as Hospira, Inc., Bedford Laboratories, Baxter Laboratories (including Elkin-Sinn), SICOR Inc. (acquired by
Teva Pharmceuticals USA) and Mayne Pharma (acquired by Hospira, Inc.) and, in the future, increased competition from new, foreign competitors. Smaller and foreign companies may also prove to be significant competitors, particularly through
collaboration arrangements with large and established companies. Abraxane® competes, directly or indirectly, with the primary taxanes in the market place, including Bristol-Myers Squibbs Taxol® and its generic equivalents, Sanofi-Aventis Taxotere® and other cancer therapies. Many pharmaceutical companies have developed and are marketing, or are developing,
alternative formulations of paclitaxel and other cancer therapies that may compete directly or indirectly with Abraxane®. Many of our competitors have significantly greater research and development, financial, sales and marketing, manufacturing, regulatory and other
resources than us. As a result, they may be able to devote greater resources to the development, manufacture, marketing or sale of their products, receive greater resources and support for their products, initiate or withstand substantial price
competition, more readily take advantage of acquisition or other opportunities, or otherwise more successfully market their products.

Any
reduction in demand for our products could lead to a decrease in prices, fewer customer orders, reduced revenues, reduced margins, reduced levels of profitability, or loss of market share. These competitive pressures could adversely affect our
business and operating results.

We face uncertainty related to pricing and reimbursement and health care reform.

In both domestic and foreign markets, sales of our products will depend in part on the availability of reimbursement from third-party payors such as
government health administration authorities, private health insurers, health maintenance organizations and other health care-related organizations. Reimbursement by such payors is presently undergoing reform, and there is significant uncertainty at
this time how this will affect sales of certain pharmaceutical products. There is possible U.S. legislation or regulatory action affecting, among other things, pharmaceutical pricing and reimbursement, including under Medicaid and Medicare, the
importation of prescription drugs that are marketed outside the U.S. and sold at prices that are regulated by governments of various foreign countries.

Medicare, Medicaid and other governmental reimbursement legislation or programs govern drug coverage and reimbursement levels in the United States. Federal law requires all pharmaceutical manufacturers to rebate a
percentage of their revenue arising from Medicaid-reimbursed drug sales to individual states. Generic drug manufacturers agreements with federal and state governments provide that the manufacturer will remit to each state Medicaid agency, on a
quarterly basis, 11% of the average manufacturer price for generic products marketed and sold under abbreviated new drug applications covered by the states Medicaid program. For proprietary products, which are marketed and sold under new drug
applications, manufacturers are required to rebate the greater of (a) 15.1% of the average manufacturer price or (b) the difference between the average manufacturer price and the lowest manufacturer price for products sold during a
specified period.

Both the federal and state governments in the United States and foreign governments continue to propose and pass new
legislation, rules and regulations designed to contain or reduce the cost of health care. Existing regulations that affect the price of pharmaceutical and other medical products may also change before any of our products are approved for marketing.
Cost control



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initiatives could decrease the price that we receive for any product we develop in the future. In addition, third-party payers are increasingly challenging
the price and cost-effectiveness of medical products and services and litigation has been filed against a number of pharmaceutical companies in relation to these issues. Additionally, significant uncertainty exists as to the reimbursement status of
newly approved injectable pharmaceutical products. Our products may not be considered cost effective or adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an adequate return on our
investment.

If we are unable to maintain our key customer arrangements, sales of our products and revenue would decline.

Almost all injectable pharmaceutical products are sold to customers through arrangements with group purchasing organizations, or GPOs, and distributors.
The majority of hospitals contract with the GPO of their choice for their purchasing needs. We currently derive, and expect to continue to derive, a large percentage of our revenue from customers that are members of a small number of GPOs.
Currently, fewer than ten GPOs control a large majority of sales to hospital customers.

We have purchasing arrangements with the major
GPOs in the United States, including AmeriNet, Inc., Broadlane Healthcare Corporation, Consorta, Inc., MedAssets Inc., Novation, LLC, Owen Healthcare, Inc., PACT, LLC, Premier Purchasing Partners, LP, International Oncology Network, or ION, National
Oncology Alliance, or NOA, and U.S. Oncology, Inc. In order to maintain these relationships, we believe we need to be a reliable supplier, offer a broad product line, remain price competitive, comply with FDA regulations and provide high-quality
products. The GPOs through which we sell our products also have purchasing agreements with other manufacturers that sell competing products and the bid process for products such as ours is highly competitive. Most of our GPO agreements may be
terminated on short notice. If we are unable to maintain our arrangements with GPOs and key customers, sales of our products and revenue would decline.

The strategy to license rights to or acquire and commercialize proprietary, biological injectable or other specialty injectable products may not be successful, and we may never receive any return on our investment in these product
candidates.

We may license rights to or acquire products or technologies from third parties. Additionally, we are in the process of
establishing our capabilities in biologic generic products so that we may be able to offer such products when regulatory approvals and patents allow for such products. Other companies, including those with substantially greater financial and sales
and marketing resources, will compete with us to license rights to or acquire these products. We may not be able to license rights to or acquire these proprietary or other products or technologies on acceptable terms, if at all. Even if we obtain
rights to a pharmaceutical product and commit to payment terms, including, in some cases, significant up-front license payments, we may not be able to generate product sales sufficient to create a profit or otherwise avoid a loss.

A product candidate may fail to result in a commercially successful drug for other reasons, including the possibility that the product candidate may:



| |  |  | be found during clinical trials to be unsafe or ineffective;
| | - |  | ------------------------------------------------------------



| |  |  | fail to receive necessary regulatory approvals;
| | - |  | -----------------------------------------------



| |  |  | be difficult or uneconomical to produce in commercial quantities;
| | - |  | -----------------------------------------------------------------



| |  |  | be precluded from commercialization by proprietary rights of third parties; or
| | - |  | ------------------------------------------------------------------------------



| |  |  | fail to achieve market acceptance.
| | - |  | ----------------------------------

The marketing strategy, distribution channels and levels of competition with respect to any licensed or acquired product may be different from those of our current products, and we may not be able to compete favorably in any new product
category.

We are subject to restrictive and negative covenants under our $450 million three-year revolving credit facility, which may prevent us from
capitalizing on business opportunities and taking some actions.

In April 2006, we entered into a credit agreement with a syndicate
of banks for a $450 million three-year unsecured revolving credit facility, with a sub-limit for up to $10 million for standby and commercial letters of credit and $20 million for swing line loans. Among other things, the credit agreement restricts
the payment of dividends by us, and restricts our ability to incur indebtedness and make advances or loans to third parties. In addition, our ability to borrow under this credit facility is subject to our ongoing compliance with certain financial
and other covenants, such as minimum net worth, maximum funded debt to EBITDA ratio and maximum EBITDA to interest expense ratio. These operational and financial covenants could hinder our ability to finance future operations or capital needs or to
pursue available business opportunities, including the possible purchase of additional facilities. A breach of any of these covenants or our inability to maintain the required financial ratios could result in a default under this credit facility. If
a default occurs, the relevant lenders could elect



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to declare the outstanding indebtedness, together with accrued interest and other fees, to be immediately due and payable. Further, we may require additional
capital in the future to expand business operations, acquire businesses or facilities, or replenish cash expended sooner than anticipated and such additional capital may not otherwise be available on satisfactory terms. We were in compliance with
all covenants under the credit agreement as of March 31, 2007.

Entities affiliated with our Chief Executive Officer own a significant percentage
of our common stock and could exercise significant influence over matters requiring stockholder approval, regardless of the wishes of other stockholders.

As of March 31, 2007, entities affiliated with our chief executive officer owned approximately 83.4% of our outstanding common stock, excluding shares held in treasury. Accordingly, they have the ability to
significantly influence all matters requiring stockholder approval, including the election and removal of directors and approval of significant corporate transactions such as mergers, consolidations and sales of assets. Although these entities have
executed a corporate governance and voting agreement in connection with the merger, that agreement will terminate by its terms no later than the 2007 annual stockholders meeting. This concentration of ownership could have the effect of
delaying, deferring or preventing a change in control or impeding a merger or consolidation, takeover or other business combination, which could cause the market price of our common stock to fall or prevent our stockholders from receiving a premium
in such a transaction. This significant concentration of stock ownership may adversely affect the market for and trading price of our common stock if investors perceive that conflicts of interest may exist or arise.

We depend heavily on the principal members of our management and research and development teams, the loss of whom could harm our business.

We depend heavily on the principal members of our management and research and development teams. Each of the members of the executive management team is
employed at will. Only Carlo Montagner, president of the Abraxis Oncology division, and Lisa Gopalakrishnan, our chief financial officer, have employment agreements with us. The loss of the services of any member of the executive
management team may significantly delay or prevent the achievement of product development or business objectives.

To be successful, we must attract,
retain and motivate key employees, and the inability to do so could seriously harm our operations.

To be successful, we must attract,
retain and motivate executives and other key employees. We face competition for qualified scientific, technical and other personnel, which may adversely affect our ability to attract and retain key personnel. We also must continue to attract and
motivate employees and keep them focused on our strategies and goals.

We depend on third parties to supply raw materials and other components and may
not be able to obtain sufficient quantities of these materials, which will limit our ability to manufacture our products on a timely basis and harm our operating results.

The manufacture of our products requires raw materials and other components that must meet stringent FDA requirements. Some of these raw materials and
other components are available only from a limited number of sources. Additionally, our regulatory approvals for each particular product denote the raw materials and components, and the suppliers for such materials, we may use for that product.
Obtaining approval to change, substitute or add a raw material or component, or the supplier of a raw material or component, can be time consuming and expensive, as testing and regulatory approval are necessary. If our suppliers are unable to
deliver sufficient quantities of these materials on a timely basis or we encounter difficulties in our relationships with these suppliers, the manufacture and sale of our products may be disrupted, and our business, operating results and reputation
could be adversely affected.

Other companies may claim that we infringe their intellectual property or proprietary rights, which could cause us to
incur significant expenses or prevent us from selling our products.

Our success depends in part on our ability to operate without
infringing the patents and proprietary rights of third parties. The manufacture, use, offer for sale and sale of pharmaceutical products have been subject to substantial litigation in the pharmaceutical industry. These lawsuits relate to the
enforceability, validity and infringement of patents or proprietary rights of third parties. Infringement litigation is prevalent with respect to generic versions of products for which the patent covering the brand name product is expiring,
particularly since many companies which market generic products focus their development efforts on products with expiring patents. A number of pharmaceutical companies, biotechnology companies, universities and research institutions may have filed
patent applications or may have been granted patents that cover aspects of our products or our licensors products, product candidates or other technologies.

Future or existing patents issued to third parties may contain claims that conflict with our products. We are subject to infringement claims from time to time in the ordinary course of our business, and third parties
could assert infringement



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claims against us in the future with respect to our current products, products we may develop or products we may license. In addition, our patents and patent
applications, or those of our licensors, could face other challenges, such as interference, opposition and reexamination proceedings. Any such challenge, if successful, could result in the invalidation of, or a narrowing of scope of, any such
patents and patent applications. Litigation or other proceedings could force us to:



| |  |  | stop or delay selling, manufacturing or using products that incorporate or are made using the challenged intellectual property;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | pay damages; or
| | - |  | ---------------



| |  |  | enter into licensing or royalty agreements that may not be available on acceptable terms, if at all.
| | - |  | ----------------------------------------------------------------------------------------------------

Any litigation or interference proceedings, regardless of their outcome, would likely delay the regulatory approval process, be costly and require
significant time and attention of key management and technical personnel.

We are currently involved in a patent infringement lawsuit with
Elan Pharmaceutical Intl Ltd. See Item 1Legal Proceedings of this section above.

Our inability to protect our intellectual property
rights in the United States and foreign countries could limit our ability to manufacture or sell our products.

We rely on trade
secrets, unpatented proprietary know-how, continuing technological innovation and patent protection to preserve our competitive position. Our patents and those for which we have or will license rights, including for Abraxane®, may be challenged, invalidated, infringed or
circumvented, and the rights granted in those patents may not provide proprietary protection or competitive advantages to us. We and our licensors may not be able to develop patentable products. Even if patent claims are allowed, the claims may not
issue, or in the event of issuance, may not be sufficient to protect the technology owned by or licensed to us. Third-party patents could reduce the coverage of the patents licensed, or that may be license to or owned by us. If patents containing
competitive or conflicting claims are issued to third parties, we may be prevented from commercializing the products covered by such patents, or may be required to obtain or develop alternate technology. In addition, other parties may duplicate,
design around or independently develop similar or alternative technologies.

We may not be able to prevent third parties from infringing or
using our intellectual property. We generally control and limit access to, and the distribution of, our product documentation and other proprietary information. Despite our efforts to protect this proprietary information, however, unauthorized
parties may obtain and use information that we regard as proprietary. Other parties may independently develop similar know-how or may even obtain access to our technologies.

The laws of some foreign countries do not protect proprietary information to the same extent as the laws of the United States, and many companies have
encountered significant problems and costs in protecting their proprietary information in these foreign countries.

The U.S. Patent and
Trademark Office and the courts have not established a consistent policy regarding the breadth of claims allowed in pharmaceutical patents. The allowance of broader claims may increase the incidence and cost of patent interference proceedings and
the risk of infringement litigation. On the other hand, the allowance of narrower claims may limit the value of our proprietary rights.

We may become
subject to federal false claims or other similar litigation brought by private individuals and the government.

The Federal False Claims
Act allows persons meeting specified requirements to bring suit alleging false or fraudulent Medicare or Medicaid claims and to share in any amounts paid to the government in fines or settlement. These suits, known as qui tam actions, have increased
significantly in recent years and have increased the risk that a health care company will have to defend a false claim action, pay fines and/or be excluded from Medicare and Medicaid programs. Federal false claims litigation can lead to civil
monetary penalties, criminal fines and imprisonment and/or exclusion from participation in Medicare, Medicaid and other federally funded health programs. Other alternate theories of liability may also be available to private parties seeking redress
for such claims. A number of parties have brought claims against numerous pharmaceutical manufacturers, and we cannot be certain that such claims will not be brought against us, or if they are brought, that such claims might not be successful.

We may need to change our business practices to comply with changes to, or may be subject to charges under, the fraud and abuse laws.



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We are subject to various federal and state laws pertaining to health care fraud and abuse, including the
federal Anti-Kickback Statute and its various state analogues, the federal False Claims Act and marketing and pricing laws. Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, imprisonment and
exclusion from participation in federal and state health care programs such as Medicare and Medicaid. We may have to change our advertising and promotional business practices, or our existing business practices could be challenged as unlawful due to
changes in laws, regulations or rules or due to administrative or judicial findings, which could materially adversely affect our business.

We may be
required to defend lawsuits or pay damages for product liability claims.

Product liability is a major risk in testing and marketing
biotechnology and pharmaceutical products. We may face substantial product liability exposure in human clinical trials and for products that we sell after regulatory approval. Historically, we have carried product liability insurance and we expect
to continue to carry such policies. Product liability claims, regardless of their merits, could exceed policy limits, divert managements attention and adversely affect our reputation and the demand for our products.

Future sales of substantial amounts of our common stock may adversely affect our market price.

In connection with our merger with ABI, we issued a significant number of additional shares of our common stock to a small number of former ABI
shareholders. Although such shares are not immediately freely tradable, we have granted registration rights to the former ABI shareholders to permit the resale of the shares of our common stock that they have received in the merger. Future sales of
substantial amounts of our common stock into the public market, or perceptions in the market that such sales could occur, may adversely affect the prevailing market price of our common stock.

Our stock price has been volatile in response to market and other factors.

The market price for our common stock has been and may continue to be volatile and subject to price and volume fluctuations in response to market and other factors, including the following, some of which are beyond
our control:



| |  |  | the concentration of the ownership of our shares by a limited number of affiliated stockholders may limit interest in our securities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | variations in quarterly operating results from the expectations of securities analysts or investors;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | revisions in securities analysts estimates or reductions in security analysts coverage;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | announcements of technological innovations or new products or services by us or our competitors;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | reductions in the market share of our products;
| | - |  | -----------------------------------------------



| |  |  | the inability to increase the market share of Abraxane® at a sufficient rate;
| | - |  | -----------------------------------------------------------------------------



| |  |  | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | general technological, market or economic trends;
| | - |  | -------------------------------------------------



| |  |  | investor perception of our industry or prospects;
| | - |  | -------------------------------------------------



| |  |  | insider selling or buying;
| | - |  | --------------------------



| |  |  | investors entering into short sale contracts;
| | - |  | ---------------------------------------------



| |  |  | regulatory developments affecting our industry; and
| | - |  | ---------------------------------------------------



| |  |  | additions or departures of key personnel.
| | - |  | -----------------------------------------

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits are as set forth in the Exhibit Index.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.



ABRAXIS BIOSCIENCE, INC.By:

/s/    LISA GOPALAKRISHNANLisa Gopalakrishnan Executive Vice President
andChief Financial Officer (Principal Financial and Accounting Officer)


Date: May 10, 2007



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Exhibit Index



|              |  |                                                                                                                                                                                                                                                                                                                                                                                     
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                         
|              | 
|2.1           |  | Agreement and Plan of Merger, dated as of November 27, 2005, by and among American Pharmaceutical Partners, Inc., American BioScience, Inc. and, with respect to specified matters, Patrick
Soon-Shiong and certain other ABI shareholders (Incorporated by reference to the Registrants report on Form 8-K filed with the Securities and Exchange Commission on November 29, 2005)
|              | 
|3.1           |  | Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Registrants Registration Statement filed on Form S-1/A, file number 333-70900, filed with
the Securities and Exchange Commission on December 11, 2001)                                                                                                                           
|              | 
|3.2           |  | Amended Bylaws of the Registrant (Incorporated by reference to Registrants report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2007)                                                                                                                                                                                                                 
|              | 
|3.3           |  | Certificate of Merger of American BioScience, Inc. into American Pharmaceutical Partners, Inc., dated April 18, 2006 Bylaws of the Registrant (Incorporated by reference to Registrants
report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2006)                                                                                                     
|              | 
|4.1           |  | Reference is made to Exhibits 3.1, 3.2 and 3.3                                                                                                                                                                                                                                                                                                                                      
|              | 
|4.2           |  | Specimen Stock Certificate of the Registrant (Incorporated by reference to Registrants report on Form 10-Q filed with the Securities and Exchange Commission on May 10,
2006)                                                                                                                                                                                                      
|              | 
|4.3           |  | First Amended Registration Rights Agreement, dated as of June 1, 1998, between the Registrant and certain holders of the Registrants capital stock (Incorporated by reference to the
Registrants Registration Statement filed on Form S-1, file number 333-70900, filed with the Securities and Exchange Commission on October 3, 2001)                                           
|              | 
|4.4           |  | Registration Rights Agreement, dated April 18, 2006, by and among APP, Patrick Soon-Shiong and certain other ABI shareholders set forth therein (Incorporated by reference to Registrants
report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2006)                                                                                                   
|              | 
|4.5           |  | Corporate Governance and Voting Agreement, dated April 18, 2006, by and among APP, Patrick Soon-Shiong and certain other ABI shareholders set forth therein (Incorporated by reference to
Registrants report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2006)                                                                                       
|              | 
|10.1          |  | Form of Indemnification Agreement between the Registrant and each of its executive officers and directors (Incorporated by reference to Registrants Registration Statement filed on Form
S-1/A, file number 333-70900, filed with the Securities and Exchange Commission on November 20, 2001)                                                                                     
|              | 
|10.2          |  | 1997 Stock Option Plan (Incorporated by reference to the Registrants Registration Statement filed on Form S-1, file number 333-70900, filed with the Securities and Exchange Commission on
October 3, 2001)                                                                                                                                                                        
|              | 
|10.3          |  | 2001 Stock Incentive Plan, including forms of agreements thereunder (Incorporated by reference to the Registrants Definitive Proxy Statement on Form 14A filed with the Securities and
Exchange Commission on April 29, 2005)                                                                                                                                                      
|              | 
|10.4          |  | 2001 Employee Stock Purchase Plan, including forms of agreements thereunder (Incorporated by reference to the Registrants Registration Statement filed on Form S-1, file number 333-70900,
filed with the Securities and Exchange Commission on October 3, 2001)                                                                                                                   
|              | 
|10.5          |  | Lease Agreement dated December 4, 2000, between the Registrant and AMB Property II, L.P. (Incorporated by reference to the Registrants Registration Statement filed on Form S-1, file number
333-70900, filed with the Securities and Exchange Commission on October 3, 2001)                                                                                                      
|              | 
|10.6          |  | Lease Agreement between Manufacturers Life Insurance Company (U.S.A.) and the Registrant for 1501 E. Woodfield Road, Suite 300 East Schaumburg, Illinois, known as Schaumburg Corporate Center
(Incorporated by reference to the Registrants report on Form 8-K filed with the Securities and Exchange Commission on February 23, 2005)                                            
|              | 
|10.7          |  | Description of Non-Employee Director Cash Compensation Program (Incorporated by reference to the Registrants report on Form 8-K filed with the Securities and Exchange Commission on July
25, 2005)                                                                                                                                                                                



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|              |  |                                                                                                                                                                                                                                                                                                                                                                           
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                               
|              | 
|10.8          |  | Amended and Restated 2001 Non-Employee Director Option Program (Incorporated by reference to the Registrants report on Form 8-K filed with the Securities and Exchange Commission on July
25, 2005)                                                                                                                                                                      
|              | 
|10.9          |  | American BioScience, Inc. Restricted Stock Unit Plan I, including a form of agreement thereunder (Incorporated by reference to the Registrants Registration Statement file on Form S-8, file
number 333-133364, filed with the Securities and Exchange Commission on April 18, 2006)                                                                                     
|              | 
|10.10         |  | American BioScience, Inc. Restricted Stock Unit Plan II, including a form of agreement thereunder (Incorporated by reference to the Registrants Registration Statement file on Form S-8,
file number 333-133364, filed with the Securities and Exchange Commission on April 18, 2006)                                                                                    
|              | 
|10.11         |  | Escrow Agreement, dated April 18, 2006, by and among APP, Patrick Soon-Shiong and Fifth Third Bank (Incorporated by reference to Registrants report on Form 10-Q filed with the
Securities and Exchange Commission on May 10, 2006)                                                                                                                                      
|              | 
|10.12         |  | Credit Agreement, dated April 18, 2006, among the Registrant, Fifth Third Bank, Wachovia Bank and various lenders (Incorporated by reference to Registrants report on Form 10-Q filed with
the Securities and Exchange Commission on May 10, 2006)                                                                                                                       
|              | 
|10.13         |  | Purchase and Sale Agreement, dated April 24, 2006, between the Registrant and Pfizer, Inc. (Incorporated by reference to Registrants report on Form 10-Q filed with the Securities and
Exchange Commission on May 10, 2006)                                                                                                                                              
|              | 
|10.14         |  | Employment Agreement, dated January 25, 2006, between the Registrant and Carlo Montagner (Incorporated by reference to Registrants report on Form 10-Q/A filed with the Securities and
Exchange Commission on August 10, 2006)                                                                                                                                           
|              | 
|10.15*        |  | Co-Promotion Strategic Marketing Services Agreement, dated April 26, 2006, between the Registrant and AstraZeneca UK Limited (Incorporated by reference to Registrants report on Form 10-Q/A
filed with the Securities and Exchange Commission on August 10, 2006)                                                                                                       
|              | 
|10.16*        |  | Asset Purchase Agreement, dated April 26, 2006, between the Registrant and AstraZeneca UK Limited (Incorporated by reference to Registrants report on Form 10-Q/A filed with the Securities
and Exchange Commission on August 10, 2006)                                                                                                                                  
|              | 
|10.17*        |  | Amendment to the Asset Purchase Agreement, dated June 28, 2006, between the Registrant and AstraZeneca UK Limited (Incorporated by reference to Registrants report on Form 10-Q/A filed with
the Securities and Exchange Commission on August 10, 2006)                                                                                                                  
|              | 
|10.18         |  | Agreement, dated April 18, 2006, between the Registrant and RSU LLC (Incorporated by reference to Registrants report on Form 10-Q/A filed with the Securities and Exchange Commission on
August 10, 2006)                                                                                                                                                                
|              | 
|10.19*        |  | Manufacturing and Supply Agreement, dated June 28, 2006, between the Registrant and AstraZeneca LP. (Incorporated by reference to Registrants report on Form 10-Q/A filed with the
Securities and Exchange Commission on August 10, 2006)                                                                                                                                
|              | 
|10.20*        |  | Manufacturing and Supply Agreement, dated June 28, 2006, between the Registrant and AstraZeneca Pharmaceuticals LP. (Incorporated by reference to Registrants report on Form 10-Q/A filed
with the Securities and Exchange Commission on August 10, 2006)                                                                                                                
|              | 
|10.21         |  | Employment Agreement, dated July 3, 2006, between the Registrant and Lisa Gopalakrishnan (Incorporated by reference to Registrants report on Form 8-Q filed with the Securities and Exchange
Commission on August 7, 2006)                                                                                                                                               
|              | 
|10.22         |  | Standard Form Office Lease, dated March 24, 2006, between the Registrant and California State Teachers Retirement System, as amended on May 26, 2006, for the premises located at
11755 Wilshire Boulevard, Los Angeles, California (Incorporated by reference to Registrants report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006)
|              | 
|10.23*        |  | Aircraft Purchase and Sale Agreement (Incorporated by reference to Registrants report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006)                                                                                                                                                                                                



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|              |  |                                                                                                                                                                                                                                      
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                          
|              | 
|10.24         |  | Retention Agreement, dated as of November 20, 2006, between the Registration and Thomas H. Silberg (Incorporated by reference to Registrants report on Form 10-K filed with the Securities
and Exchange Commission on March 1, 2007)
|              | 
|10.25         |  | Retention Agreement, dated as of November 20, 2006, between the Registration and Frank Harmon (Incorporated by reference to Registrants report on Form 10-K filed with the Securities
and Exchange Commission on March 1, 2007)     
|              | 
|14.1          |  | Code of Business Conduct (Incorporated by reference to Registrants report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2007)                                                                          
|              | 
|31.1         |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                   
|              | 
|31.2         |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                   
|              | 
|32.1         |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002                                                                                             
|              | 
|32.2         |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002                                                                                             

---

|* | Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | Filed herewith.
|- | ---------------



40