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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





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, 2008



| ̈ | 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 001-33657

Abraxis BioScience, Inc.

(Exact name of registrant as specified in its charter)



|                                                     |  |                                     
|---------------------------------------------------- |  | ------------------------------------
|Delaware                                             |  | 30-0431735                          
|(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, a non-accelerated filer, or a smaller company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ̈            Accelerated filer   ̈            Non-accelerated filer  þ            Smaller reporting company   ̈

(Do not check if a smaller reporting company)

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 April 30, 2008, the registrant had 40,014,891 shares of $0.001 par value common stock outstanding.









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Abraxis BioScience, Inc.

INDEX



|                              |  |                                                                                                           |  |     
|----------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                           |  | Page
|PART I. Financial Information |  |                                                                                                          
|                              |  |                                                                                                          
|Item 1.                       |  | Financial Statements (Unaudited)                                                                          |  | 3   
|                              |  |                                                                                                          
|                              |  | Condensed consolidated and combined balance sheets  March 31, 2008 and December 31, 2007                 |  | 3   
|                              |  |                                                                                                          
|                              |  | Condensed consolidated and combined statements of operations  Three months ended March 31, 2008 and 2007 |  | 4   
|                              |  |                                                                                                          
|                              |  | Condensed consolidated and combined statements of cash flows  Three months ended March 31, 2008 and 2007 |  | 5   
|                              |  |                                                                                                          
|                              |  | Notes to unaudited condensed consolidated and combined financial statements  March 31, 2008              |  | 6   
|                              |  |                                                                                                          
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  | 13  
|                              |  |                                                                                                          
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                |  | 23  
|                              |  |                                                                                                          
|Item 4.                       |  | Controls and Procedures                                                                                   |  | 24  
|                              | 
|PART II. Other Information    |  |                                                                                                          
|                              |  |                                                                                                          
|Item 1.                       |  | Legal Proceedings                                                                                         |  | 25  
|                              |  |                                                                                                          
|Item 1A.                      |  | Risk Factors                                                                                              |  | 25  
|                              |  |                                                                                                          
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                               |  | 39  
|                              |  |                                                                                                          
|Item 3.                       |  | Defaults Upon Senior Securities                                                                           |  | 39  
|                              |  |                                                                                                          
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                       |  | 39  
|                              |  |                                                                                                          
|Item 5.                       |  | Other Information                                                                                         |  | 39  
|                              |  |                                                                                                          
|Item 6.                       |  | Exhibits                                                                                                  |  | 39  
|                              | 
|Signatures                    |  | 40                                                                                                       



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PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

Abraxis BioScience, Inc.

Condensed Consolidated and Combined Balance Sheets

(in thousands, except share data)



|                                                                                                                                                                            |  |               |           |                  |   |          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                                                                                                                                                                            |  | March 31,2008 |           | December 31,2007
|                                                                                                                                                                            |  | (unaudited)   |           |                 
|Assets                                                                                                                                                                      |  |               |           |                  |   |          
|Current assets:                                                                                                                                                             |  |               |           |                  |   |          
|Cash and cash equivalents                                                                                                                                                   |  | $             | 698,244   |                  | $ | 705,125  
|Accounts receivable, net of chargebacks of $1,061 in 2008 and $1,172 in 2007 and credit returns of $170 in 2008 and $414 in
2007                                            |  |               | 41,359    |                  |   | 43,944   
|Related party receivable                                                                                                                                                    |  |               | 5,033     |                  |   | 1,958    
|Inventories                                                                                                                                                                 |  |               | 71,204    |                  |   | 73,677   
|Prepaid expenses and other current assets                                                                                                                                   |  |               | 15,583    |                  |   | 18,572   
|Deferred income taxes                                                                                                                                                       |  |               | 34,499    |                  |   | 33,696   
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total current assets                                                                                                                                                        |  |               | 865,922   |                  |   | 876,972  
|Property, plant and equipment, net                                                                                                                                          |  |               | 144,952   |                  |   | 145,120  
|Investment in Drug Source Company, LLC                                                                                                                                      |  |               | 9,027     |                  |   | 9,275    
|Intangible assets, net of accumulated amortization of $76,806 in 2008 and $67,136 in 2007                                                                                   |  |               | 195,561   |                  |   | 205,231  
|Goodwill                                                                                                                                                                    |  |               | 241,361   |                  |   | 241,361  
|Other non-current assets                                                                                                                                                    |  |               | 26,682    |                  |   | 24,296   
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total assets                                                                                                                                                                |  | $             | 1,483,505 |                  | $ | 1,502,255
|                                                                                                                                                                            |  |               |           |                  |   |          
|Liabilities and stockholders equity                                                                                                                                        |  |               |           |                  |   |          
|Current liabilities:                                                                                                                                                        |  |               |           |                  |   |          
|Accounts payable                                                                                                                                                            |  | $             | 27,032    |                  | $ | 33,579   
|Accrued liabilities                                                                                                                                                         |  |               | 58,078    |                  |   | 54,927   
|Accounts payable to related parties                                                                                                                                         |  |               |          |                  |   | 6,986    
|Income taxes payable                                                                                                                                                        |  |               | 95        |                  |   | 5,010    
|Deferred revenue                                                                                                                                                            |  |               | 41,289    |                  |   | 41,289   
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total current liabilities                                                                                                                                                   |  |               | 126,494   |                  |   | 141,791  
|Deferred income taxes, non-current                                                                                                                                          |  |               | 33,199    |                  |   | 32,396   
|Long-term portion of deferred revenue                                                                                                                                       |  |               | 110,829   |                  |   | 121,138  
|Other non-current liabilities                                                                                                                                               |  |               | 9,490     |                  |   | 9,543    
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total liabilities                                                                                                                                                           |  |               | 280,012   |                  |   | 304,868  
|Stockholders equity:                                                                                                                                                       |  |               |           |                  |   |          
|Common stock$0.001 par value; 100,000,000 shares authorized; 40,014,706 and 39,993,684 shares issued and outstanding at March 31,
2008 and December 31, 2007, respectively |  |               | 40        |                  |   | 40       
|Additional paid-in capital                                                                                                                                                  |  |               | 1,194,327 |                  |   | 1,192,461
|Retained earnings                                                                                                                                                           |  |               | 8,391     |                  |   | 4,082    
|Accumulated other comprehensive income                                                                                                                                      |  |               | 735       |                  |   | 804      
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total stockholders equity                                                                                                                                                  |  |               | 1,203,493 |                  |   | 1,197,387
|                                                                                                                                                                            |  |               |           |                  |   |          
|Total liabilities and stockholders equity                                                                                                                                  |  | $             | 1,483,505 |                  | $ | 1,502,255
|                                                                                                                                                                            |  |               |           |                  |   |          

See notes to condensed consolidated and combined financial statements.



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Abraxis BioScience, Inc.

Condensed Consolidated and Combined Statements of Operations



|                                                                          |  |                                      |        |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                          |  | Three Months Ended March 31,         |       
|                                                                          |  | 2008                                 |        |   | 2007 |  
|                                                                          |  | (unaudited)                          |       
|                                                                          |  | (in thousands, except per sharedata) |       
|Abraxane revenue                                                          |  | $                                    | 79,932 |   |      | $ | 70,883 |  
|Other revenue                                                             |  |                                      | 2,210  |   |      |   | 1,010  |  
|                                                                          |  |                                      |        |   |      |   |        |  
|Net revenue                                                               |  |                                      | 82,142 |   |      |   | 71,893 |  
|Cost of sales                                                             |  |                                      | 8,607  |   |      |   | 7,659  |  
|                                                                          |  |                                      |        |   |      |   |        |  
|Gross profit                                                              |  |                                      | 73,535 |   |      |   | 64,234 |  
|Operating expenses:                                                       |  |                                      |        |   |      |   |        |  
|Research and development                                                  |  |                                      | 20,822 |   |      |   | 15,713 |  
|Selling, general and administrative                                       |  |                                      | 45,300 |   |      |   | 49,037 |  
|Amortization of merger related intangibles                                |  |                                      | 9,653  |   |      |   | 9,653  |  
|Equity in net loss (income) of Drug Source Company, LLC                   |  |                                      | 248    |   |      |   | (718   | )
|                                                                          |  |                                      |        |   |      |   |        |  
|Total operating expense                                                   |  |                                      | 76,023 |   |      |   | 73,685 |  
|                                                                          |  |                                      |        |   |      |   |        |  
|Loss from operations                                                      |  |                                      | (2,488 | ) |      |   | (9,451 | )
|Interest income and other                                                 |  |                                      | 6,822  |   |      |   | 296    |  
|                                                                          |  |                                      |        |   |      |   |        |  
|Income (loss) before income taxes                                         |  |                                      | 4,334  |   |      |   | (9,155 | )
|Provision (benefit) for income taxes                                      |  |                                      | 25     |   |      |   | (3,484 | )
|                                                                          |  |                                      |        |   |      |   |        |  
|Net income (loss)                                                         |  | $                                    | 4,309  |   |      | $ | (5,671 | )
|                                                                          |  |                                      |        |   |      |   |        |  
|Basic and diluted net income (loss) per common share                      |  | $                                    | 0.11   |   |      | $ | (0.14  | )
|                                                                          |  |                                      |        |   |      |   |        |  
|The composition of stock-based compensation included above is as follows: |  |                                      |        |   |      |   |        |  
|Cost of sales                                                             |  | $                                    | 51     |   |      | $ | 515    |  
|Research and development                                                  |  |                                      | 1,190  |   |      |   | 2,394  |  
|Selling, general and administrative                                       |  |                                      | 1,753  |   |      |   | 3,594  |  
|                                                                          |  |                                      |        |   |      |   |        |  
|                                                                          |  | $                                    | 2,994  |   |      | $ | 6,503  |  
|                                                                          |  |                                      |        |   |      |   |        |  

See notes to condensed consolidated and combined financial statements.



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Abraxis BioScience, Inc.

Condensed Consolidated and Combined Statements of Cash Flows



|                                                                                          |  |                             |         |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                          |  | Three Months EndedMarch 31, |        
|                                                                                          |  | 2008                        |         |   | 2007 |  
|                                                                                          |  | (unaudited)                 |        
|                                                                                          |  | (in thousands)              |        
|Cash flows from operating activities:                                                     |  |                             |         |   |      |   |         |  
|Net income (loss)                                                                         |  | $                           | 4,309   |   |      | $ | (5,671  | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                                             |  |                             | 3,404   |   |      |   | 2,109   |  
|Amortization of merger related intangibles                                                |  |                             | 9,653   |   |      |   | 9,653   |  
|Stock-based compensation                                                                  |  |                             | 2,994   |   |      |   | 6,503   |  
|Equity in net loss (income) of Drug Source Company, LLC, net of dividends received        |  |                             | 248     |   |      |   | (718    | )
|Changes in operating assets and liabilities:                                              |  |                             |         |   |      |   |         |  
|Accounts receivable, net                                                                  |  |                             | 2,598   |   |      |   | (10,538 | )
|Related party receivable                                                                  |  |                             | (3,075  | ) |      |   | (1      | )
|Inventories                                                                               |  |                             | 2,564   |   |      |   | 1,967   |  
|Prepaid expenses and other current assets                                                 |  |                             | 3,006   |   |      |   | (1,687  | )
|Accounts payable and accrued expenses                                                     |  |                             | (9,570  | ) |      |   | (27,772 | )
|Deferred revenue                                                                          |  |                             | (10,309 | ) |      |   | (9,844  | )
|Related party payables                                                                    |  |                             | (6,986  | ) |      |   |        |  
|Other non-current assets and liabilities                                                  |  |                             | 581     |   |      |   | 3,327   |  
|                                                                                          |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                                     |  |                             | (583    | ) |      |   | (32,672 | )
|Cash flows from investing activities:                                                     |  |                             |         |   |      |   |         |  
|Purchases of property, plant and equipment                                                |  |                             | (1,859  | ) |      |   | (11,268 | )
|Purchases of investments and marketable securities                                        |  |                             | (4,492  | ) |      |   | (539    | )
|                                                                                          |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                     |  |                             | (6,351  | ) |      |   | (11,807 | )
|Cash flows from financing activities:                                                     |  |                             |         |   |      |   |         |  
|Net proceeds from the exercise of stock options                                           |  |                             | 28      |   |      |   |        |  
|Net transactions with parent company                                                      |  |                             |        |   |      |   | 44,601  |  
|                                                                                          |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                 |  |                             | 28      |   |      |   | 44,601  |  
|Effect of exchange rates on cash                                                          |  |                             | 25      |   |      |   | (72     | )
|                                                                                          |  |                             |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                      |  |                             | (6,881  | ) |      |   | 50      |  
|Cash and cash equivalents, beginning of period                                            |  |                             | 705,125 |   |      |   | 525     |  
|                                                                                          |  |                             |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                                  |  | $                           | 698,244 |   |      | $ | 575     |  
|                                                                                          |  |                             |         |   |      |   |         |  

See notes to condensed consolidated financial statements



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ABRAXIS BIOSCIENCE, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation

Abraxis BioScience, Inc. (formerly known as
New Abraxis, Inc.) is a Delaware corporation that was formed in June 2007. We are one of the few fully integrated biotechnology companies, with a breakthrough marketed product (Abraxane®),
global ownership of our proprietary technology platform and clinical pipeline, dedicated nanoparticle manufacturing capabilities for worldwide supply integrated with seasoned in-house capabilities, including discovery, clinical drug development,
regulatory and sales and marketing.

We are dedicated to the discovery, development
and delivery of next-generation therapeutics and core technologies that offer patients safer and more effective treatments for cancer and other critical illnesses. Our portfolio includes the worlds first and only protein-based nanometer-sized
chemotherapeutic compound (Abraxane®) which is based on our proprietary tumor targeting technology known as the nab technology platform. This nab technology
platform is the first to exploit the tumors biology against itself, taking advantage of an albumin-specific, receptor-mediated transport system and allowing the delivery of a drug from the vascular space across the blood vessel wall to the
underlying tumor tissue. Abraxane® is the first clinical and commercial validation of this nab technology platform. From the discovery and research phase to development and
commercialization, we are committed to rapidly enriching its product pipeline and accelerating the delivery of breakthrough therapies that will transform the lives of patients who need them.

We own the worldwide rights to Abraxane®, a next-generation, nanometer-sized, solvent-free taxane that was approved by the U.S. Food and Drug Administration, or the FDA, in January 2005 for its initial indication in the treatment of metastatic breast cancer
and launched in February 2005. We believe the successful launch of Abraxane® validates our nab tumor targeting technology, a novel biologically interactive (receptor-mediated)
system to deliver chemotherapeutic agents in high concentrations preferentially to all tumors secreting a protein called SPARC, which attracts and binds to albumin.

The accompanying unaudited condensed consolidated and combined 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, 2008 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2008 or other future periods. The balance sheet information at December 31, 2007 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 combination and certain balances in
prior periods have been reclassified to conform to the presentation adopted in the current period.

Separation

On November 13, 2007, Abraxis BioScience, Inc. (Old Abraxis) was separated into two independent publicly-traded companies: one holding
the former Abraxis Pharmaceutical Products business (which is referred to as the hospital-based business); and the other holding the former Abraxis Oncology and Abraxis Research businesses (which is referred to as the proprietary
business). Following the separation, the proprietary business changed its name from New Abraxis, Inc. to Abraxis BioScience, Inc. and the hospital-based business is operated under the name APP Pharmaceuticals, Inc. Unless the context requires
otherwise, references to Abraxis, New Abraxis, we, us or our refer to Abraxis BioScience, Inc. (formerly New Abraxis, Inc.) and its subsidiaries, including its operating subsidiary Abraxis
BioScience, LLC; references to APP, New APP or New APP LLC refer to APP Pharmaceuticals, Inc. and its subsidiaries, including its operating subsidiary APP Pharmaceuticals, LLC ; references to Old
Abraxis refer to Abraxis BioScience, Inc. prior to the separation; and references to the separation or spin-off refer to the transactions in which the proprietary business and hospital-based business of



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Old Abraxis were separated into two independent public companies. References to the historical assets, liabilities, products, businesses or activities of our
company are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the business as it was conducted as part of Old Abraxis prior to the separation.

In connection with the separation, stockholders of Old Abraxis as of November 13, 2007
received one share of our company for every four shares of Old Abraxis held as of that date. In addition, in connection with the separation, we entered into a separation and distribution agreement that provided for, among other things, the principal
corporate transactions required to effect the separation and other specified terms governing our relationship with APP after the spin-off. We also entered into various agreements with APP, including (i) a transition services agreement pursuant
to which we and APP agreed to continue to provide each other with various services on an interim, transitional basis, for periods up to 24 months depending on the particular service; (ii) a manufacturing agreement whereby we and APP agreed to
manufacture Abraxane® and certain other products and to provide other manufacturing-related services for a period of four or five years; (iii) an employees matters agreement providing
for each companys respective obligations to employees and former employees who are or were associated with their respective businesses, and for other employment and employee benefit matters; (iv) various real estate leases; and (v) a
tax allocation agreement.

Basis of Consolidation and Combination

The accompanying condensed consolidated and combined financial statements reflect the consolidated operations of Abraxis BioScience, Inc. and its
subsidiaries as an independent, publicly-traded company as of and subsequent to November 13, 2007 and a combined reporting entity comprising the assets and liabilities that constituted the proprietary business of Old Abraxis for periods prior
to November 13, 2007. The condensed consolidated and combined financial statements include the assets, liabilities and results of operations of our wholly-owned operating subsidiary, Abraxis BioScience, LLC; wholly-owned subsidiaries of Abraxis
BioScience, LLC, Abraxis BioScience Switzerland GmbH, Abraxis BioScience Canada, Inc., VivoRx AutoImmune, Inc., Jefferson XIII, LLC and Chicago BioScience, LLC; as well as majority-owned subsidiaries of Abraxis BioScience, LLC, Resuscitation
Technologies, LLC and Cenomed BioSciences, LLC. Additionally, the condensed consolidated and combined statements include our investment in Drug Source Company, LLC, which is accounted for using the equity method. All material intercompany balances
and transactions were eliminated in consolidation and combination.

The consolidated and combined financial statements for periods prior to
and including November 13, 2007 may not be indicative of our future performance and do not necessarily reflect what our condensed consolidated and combined results of operations, financial position, and cash flows would have been had we
operated as an independent, publicly-traded company during the periods presented, including changes in our capitalization as a result of the separation and related transactions. To the extent that an asset, liability, revenue, or expense is directly
associated with us, it is reflected in the accompanying consolidated and combined financial statements. Certain general corporate overhead and other expenses for periods prior to the separation have been allocated to us. Management believes such
allocations were reasonable; however, they may not be indicative of our actual results had we been operating as an independent, publicly traded company for the periods presented. See Note 4Related Party Transactionsfor
further information regarding allocated expenses.

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.

Available For Sale Securities

We determine the appropriate classification of our investments in debt and equity securities at the time of purchase and reevaluate
such determinations at each balance-sheet date. We consider our marketable equity investments available-for-sale as defined in Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Accordingly, these investments are recorded at fair value, which is based on quoted market prices (Level 1 valuation) and the unrealized gains and losses, net of tax, are included in the determination of comprehensive
income and reported in stockholders equity. As of March 31, 2008, we had $5.6 million in marketable equity securities that are designated as available-for-sale securities. At December 31, 2007, we had $3.7 million in available for
sale equity securities. For the three months ended March 31, 2008 and 2007, we had no realized loss on available for sale securities.



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We review periodically our available-for-sale securities for other than temporary declines in fair value
and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of March 31, 2008, we believe that the cost basis of our available-for-sale securities was recoverable in all material
respects.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement No. 141(R), Business Combination (SFAS 141R) and Statement No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated
Financial Statements, an Amendment of ARB No. 51 (SFAS 160). These new standards will significantly change the accounting for and reporting of business combination transactions and noncontrolling (minority) interests consolidated
financial statements. SFAS 141R and SFAS 160 are required to be adopted simultaneously and are effective for the first annual reporting period beginning on or after December 15, 2008. Earlier application is not permitted. SFAS 141R and SFAS 160
could have a significant impact on our accounting for future business combinations and other business arrangements after the implementation of these statements.

In June 2007, the FASB ratified the consensus reached by the Emerging Issues Task Force on EITF Issue No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in
Future Research and Development Activities(or EITF 07-3). EITF 07-3 states that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be
deferred or capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the related services performed. If an entity does not expect the goods to be delivered or services to be rendered, the capitalized advance
payment should be charged to expense. EITF 07-3 was effective for us on January 1, 2008. The adoption of EITF 07-3 did not have a material effect on our results of operations and 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 was effective for our company on January 1, 2008. The adoption of SFAS No. 159 did not have a material effect on our results of operations and
financial position.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, 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 was effective for us on January 1, 2008. The adoption of SFAS 157 did not have a material effect on our results of operations and financial position.



8



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(2) Earnings Per Share Information

Basic income (loss) per common share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the reporting period. Diluted income (loss) per common share is
computed by dividing net income or loss by the weighted-average number of common shares used for the basic calculations plus any potentially dilutive shares for the portion of the year that the shares were outstanding, unless the impact is
anti-dilutive. For the three months ended March 31, 2007, basic and diluted income (loss) per share were computed using the number of shares of our common stock outstanding after the separation on November 13, 2007. Any potentially
dilutive employee stock awards were excluded from the computation of diluted loss per common share for March 31, 2007, as the effect on net loss per share was anti-dilutive. Calculations of basic and diluted income per common share information
are based on the following:



|                                                                 |  |                                      |        |      |   |        |  
|---------------------------------------------------------------- |  | ------------------------------------ | ------ | ---- | - | ------ | -
|                                                                 |  | Three Months EndedMarch 31,          |       
|                                                                 |  | 2008                                 |        | 2007 |  
|                                                                 |  | (in thousands, except pershare data) |       
|Basic and dilutive numerator:                                    |  |                                      |        |      |   |        |  
|Net income (loss)                                                |  | $                                    | 4,309  |      | $ | (5,671 | )
|                                                                 |  |                                      |        |      |   |        |  
|Denominator:                                                     |  |                                      |        |      |   |        |  
|Weighted average common shares outstandingbasic                 |  |                                      | 39,997 |      |   | 39,990 |  
|Net effect of dilutive stock options and restricted stock awards |  |                                      | 199    |      |   |       |  
|                                                                 |  |                                      |        |      |   |        |  
|Weighted average common shares outstandingdiluted               |  |                                      | 40,196 |      |   | 39,990 |  
|                                                                 |  |                                      |        |      |   |        |  
|Net income (loss) per common sharebasic                         |  | $                                    | 0.11   |      | $ | (0.14  | )
|                                                                 |  |                                      |        |      |   |        |  
|Net income (loss) per common sharediluted                       |  | $                                    | 0.11   |      | $ | (0.14  | )
|                                                                 |  |                                      |        |      |   |        |  

(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 31,2008  |        |   | December 31,2007 |  
|                |  | (in thousands) |       
|Finished goods  |  | $              | 3,192  |   |                  | $ | 1,072  |  
|Work in process |  |                | 17,598 |   |                  |   | 9,274  |  
|Raw materials   |  |                | 51,828 |   |                  |   | 64,553 |  
|                |  |                |        |   |                  |   |        |  
|                |  |                | 72,618 |   |                  |   | 74,899 |  
|Reserve         |  |                | (1,414 | ) |                  |   | (1,222 | )
|                |  |                |        |   |                  |   |        |  
|                |  | $              | 71,204 |   |                  | $ | 73,677 |  
|                |  |                |        |   |                  |   |        |  

Inventories consist of products currently approved for marketing. 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. 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, its anticipated selling price for the product and the position of the product in the regulatory
review process. If final regulatory approval for such products is denied or delayed, we may need to provide for and expense such inventory. As of March 31, 2008 and December 31, 2007, we had no capitalized inventory products pending regulatory
approval.

We routinely review our inventory and establish reserves when the cost of the inventory is not expected to be recovered or its
product cost exceeds realizable market value. In instances where inventory is at or approaching expiry, is not expected to be saleable based on 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. Provisions for inventory reserves are reflected in the financial statements as an element of cost of sales with inventories presented net of related reserves.

(4) Related Party Transactions

Receivables from
related parties totaled $5.0 million at March 31, 2008 and $2.0 million at December 31, 2007 and payables to related parties totaled $7.0 million at December 31, 2007. Receivables from related parties at March 31, 2008, included
$4.4 receivable from APP and $0.6 million receivable from Drug Source Company. At December 31, 2007, we had receivables of $2.0 million from Drug Source Company and a $7.0 million payable to APP.



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Transactions with APP Pharmaceuticals, Inc.

In connection with the separation on November 13, 2007, we entered into a number of agreements that govern the relationship between APP and us for a
period of time after the separation. The agreements were entered into while we were still a wholly owned subsidiary of Old Abraxis. These agreements include (i) a tax allocation agreement, (ii) a dual officer agreement, (iii) an
employee matters agreement, (iv) a transition services agreement, (v) a manufacturing agreement, and (vi) various real estate leases. Transactions relating to these agreements recorded in our condensed consolidated and combined
statement of operations are summarized in the following table:



|                                     |  |                             |      |   |      |   |  
|------------------------------------ |  | --------------------------- | ---- | - | ---- | - | -
|                                     |  | Three Months EndedMarch 31,
|                                     |  | 2008                        |      |   | 2007
|                                     |  | (in thousands)             
|Other revenue:                       |  |                             |      |   |      |   |  
|Net rental income                    |  | $                           | 647  |   |      | $ | 
|Cost of sales:                       |  |                             |      |   |      |   |  
|Manufacturing and distribution costs |  |                             | 307  |   |      |   | 
|Facility management fees             |  |                             | 750  |   |      |   | 
|Selling, general and administrative  |  |                             |      |   |      |   |  
|Net general and administrative costs |  |                             | (375 | ) |      |   | 

Allocated Expenses

Prior to the separation, our product development and general and administrative functions were fully integrated with Old Abraxis, including accounting,
treasury, payroll, internal audit, information technology, corporate income tax, legal services and investor relations. In addition, Old Abraxis provided manufacturing services to us at cost. After the separation, certain of these arrangements (see
above) continue on a temporary basis for a period generally not to exceed 24 months, or four or five years in the case of manufacturing-related activities and lease arrangements. The unaudited consolidated and combined financial statements for the
three months ended March 31, 2007 reflect the application of certain estimates and allocations and management believes the methods used to allocate these operating expenses are reasonable. The allocation methods include relative head count,
sales, square footage and management knowledge. These allocated operating expenses totaled of $15.9 million for the three months ended March 31, 2007.

(5) Accrued Liabilities

Accrued liabilities consisted of the following at:



|                                    |  |                |        |                  |   |       
|----------------------------------- |  | -------------- | ------ | ---------------- | - | ------
|                                    |  | March 31,2008  |        | December 31,2007
|                                    |  | (in thousands)
|Sales and marketing                 |  | $              | 14,424 |                  | $ | 15,466
|Payroll and employee benefits       |  |                | 15,400 |                  |   | 12,249
|Legal and insurance                 |  |                | 12,767 |                  |   | 12,234
|Restricted stock units  short-term |  |                | 13,094 |                  |   | 12,614
|Other                               |  |                | 2,393  |                  |   | 2,364 
|                                    |  |                |        |                  |   |       
|                                    |  | $              | 58,078 |                  | $ | 54,927
|                                    |  |                |        |                  |   |       



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##### Table of Contents

(6) Income Taxes

Our effective tax rate as of March 31, 2008 is 0.02%. The rate is computed based on special state tax rules that were used to compute our taxable base on our gross receipts. We also took into consideration
minimum taxes requirement as part of our state tax expense computation. The effective tax rate for the three months ended March 31, 2008 is different from the statutory rate primarily as a result of the application of a valuation allowance
against the net income tax benefit for the year.

We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes (FIN 48), on January 1, 2007. This interpretation clarifies what criteria must be met prior to the recognition of the financial statement benefit of a position taken in a tax return in accordance with FASB Statement No.
109, Accounting for Income Taxes. As of March 31, 2008 we had $5.2 million of gross unrecognized tax benefits, which remained unchanged from the same amount at December 31, 2007. Of the total unrecognized tax benefits, less than $0.1 million,
if and when recognized, would affect our provision (benefit) for income taxes and the remainder, if and when recognized, would be credited to additional paid-in capital. We do not anticipate that any of the total tax benefits of $5.2
million will reverse in the next twelve months.

We recognize interest and penalties related to unrecognized tax benefits in our income tax
expense. At March 31, 2008, we had no accruable interest or penalties. We are a new entity and we have yet to file any tax returns; therefore, we do not have any returns currently subject to examination by tax authorities or any open audits.

(7) Comprehensive Income

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



|                                                       |  |                             |        |   |      |   |        |  
|------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                       |  | Three MonthsEnded March 31, |       
|                                                       |  | 2008                        |        |   | 2007 |  
|                                                       |  | (in thousands)              |       
|Foreign currency translation adjustments               |  | $                           | 2,425  |   |      | $ | (73    | )
|Unrealized gain (loss) on marketable equity securities |  |                             | (2,494 | ) |      |   | 499    |  
|                                                       |  |                             |        |   |      |   |        |  
|Other comprehensive income                             |  |                             | (69    | ) |      |   | 426    |  
|Net income (loss)                                      |  |                             | 4,309  |   |      |   | (5,671 | )
|                                                       |  |                             |        |   |      |   |        |  
|Comprehensive income (loss)                            |  | $                           | 4,240  |   |      | $ | (5,245 | )
|                                                       |  |                             |        |   |      |   |        |  

At March 31, 2008 and 2007, we had cumulative foreign currency translation gain adjustments
of $2.6 million and $0.2 million, respectively. In addition, at March 31, 2008, we had cumulative unrealized losses on marketable equity securities of $1.9 million. At March 31, 2007, we had cumulative unrealized gain on marketable
securities of $1.0 million.

(8) Segment Information

We operate in one business segment. Therefore, the results of operations are reported on a combined basis for purpose of segment reporting.

(9) Contingencies

On or about December 7, 2005, several stockholder derivative and class action
lawsuits were filed against Old Abraxis, its directors and ABI in the Delaware Court of Chancery relating to the 2006 merger between Old Abraxis (then known as American Pharmaceutical Partners) and ABI. Old Abraxis was a nominal defendant in the
stockholder derivative actions. The lawsuits allege that Old Abraxis directors breached their fiduciary duties to stockholders by causing Old Abraxis to enter into the merger agreement, which, it is alleged unjustly enriched ABIs
stockholders and caused the value of the shares held by Old Abraxis public stockholders to be significantly diminished. The lawsuits seek, among other things, an unspecified amount of damages and the rescission of the merger. In May 2007, the
plaintiffs voluntarily dismissed the derivative and unjust enrichment claims, and the action is proceeding as a putative class action solely against the individual defendants. We are no longer a party to this action, but we assumed any liability of
Old Abraxis relating to this litigation in connection with the separation.



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On July 19, 2006, Élan Pharmaceutical
Intl Ltd. filed a lawsuit against Old Abraxis in the U.S. District Court for the District of Delaware alleging that Old Abraxis 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, Old Abraxis filed a response to
Élans complaint contending that it did not infringe on the Élan patents and that the Élan patents are invalid. The trial has been set to begin in June 2008. We assumed any liability of Old Abraxis relating to this
litigation in connection with the separation.

We are from time to time subject to claims and litigation arising in the ordinary course of
business. 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,
would not have a material adverse effect on our consolidated financial position or results of operations.

We record accruals for
contingencies to the extent that we conclude their occurrence is probable and the related damages are estimable. As of March 31, 2008, for the matters described above, we could not reasonably estimate the maximum potential exposure or the range
of possible loss in excess of amounts accrued for litigation matters, nor is it possible to accurately predict or determine the eventual outcome of these matters. As a result, no amounts were accrued for outstanding litigation matters described
above as of March 31, 2008. These assessments involve complex judgments about future events and rely on estimates and assumptions. Although we believe we have substantial defenses in these matters, litigation is inherently unpredictable and we
could in the future incur judgments or enter into settlements that could have a material adverse effect on our results of operations.

(10) Subsequent Event

In April 2008, we completed the acquisition of Shimoda Biotech (Pty) Ltd (Shimoda
Biotech) and its subsidiary, Platco Technologies (Pty) Ltd (Platco Technologies), located in Plettenberg Bay, South Africa. Shimoda Biotech focuses on the development of new pharmaceutical products by combining successful
off-patent molecules with a novel cyclodextrin drug delivery

platform, seeking to exploit the faster onset and improved bioavailability characteristics of
that platform. Platco Technologies focuses on the development of novel platinum-based anti-cancer drugs. Under the terms of the agreement, Abraxis acquired 100% of the equity of both Shimoda Biotech and Platco Technologies for an initial upfront
payment at closing of $15.1 million, plus potential additional payments upon the achievement of specified milestones.



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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 materials filed or to be filed by us with the Securities and
Exchange Commission, or the SEC, as well as information included in oral statements or other written statements made or to be made by us, contain forward-looking statements within the meaning of federal securities laws. We intend these
forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. These forward-looking statements are not historical facts but rather are based on current expectations, estimates
and projections about our industry, our beliefs and assumptions. These risks and uncertainties include those described in Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Forward-looking statements, whether
express or implied, are not guarantees of future performance and 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 amount and timing of costs associated with the continuing launch of Abraxane®;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | our ability to maintain and/or improve sales and earnings performance;
| | - |  | ----------------------------------------------------------------------



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



| |  |  | the market adoption of any new pharmaceutical products;
| | - |  | -------------------------------------------------------



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



| |  |  | 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 their products;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | any adverse outcome in litigation;
| | - |  | ----------------------------------



| |  |  | general economic, political and business conditions that adversely affect our company or our suppliers, distributors or customers;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in costs, including changes in labor costs, raw material prices or advertising and marketing expenses;
| | - |  | --------------------------------------------------------------------------------------------------------------



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



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



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



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



| |  |  | risks inherent in acquisitions, divestitures and spin-offs, including the capital resources required for acquisitions, business risks, legal risks and risks
associated with the tax and accounting treatment of such transactions;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the risk that the benefits from the separation may not be fully realized or may take longer to realize than expected; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | the risks of operating as a stand-alone company and loss of certain benefits associated with common ownership.
| | - |  | --------------------------------------------------------------------------------------------------------------

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.



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##### Table of Contents

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 Part II of this Form 10-Q 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.

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 for the year ended December 31, 2007, as amended, including Item 1: Business; Item 1A: Risk Factors; Item 6: Selected Financial Data; and Item 8: Financial Statements and Supplemental Data.

Background

We are one of the few fully integrated global biotechnology companies, with a breakthrough marketed product (Abraxane®), global ownership of our proprietary
technology platform and clinical pipeline, dedicated nanoparticle manufacturing capabilities for worldwide supply integrated with seasoned in-house capabilities, including discovery, clinical drug development, regulatory and sales and marketing.

We are dedicated to the discovery, development and delivery of next-generation
therapeutics and core technologies that offer patients safer and more effective treatments for cancer and other critical illnesses. Our portfolio includes the worlds first and only protein-based nanometer-sized chemotherapeutic compound
(Abraxane®) which is based on our proprietary tumor targeting technology known as the nabtechnology platform. This nabtechnology platform is the first to exploit
the tumors biology against itself, taking advantage of an albumin-specific, receptor-mediated transport system and allowing the delivery of a drug from the vascular space across the blood vessel wall to the underlying tumor tissue. Abraxane®is the first clinical and commercial validation of our nabtechnology platform. From the discovery and research phase to
development and commercialization, we are committed to rapidly enhancing our product pipeline and accelerating the delivery of breakthrough therapies that will transform the lives of patients who need them.

We own the worldwide rights to Abraxane®, a next generation, nanometer-sized, solvent-free taxane that was approved by the U.S. Food and Drug Administration, or the FDA, in January 2005 for its initial indication in the treatment of
metastatic breast cancer and launched in February 2005. We believe the successful launch of Abraxane®validates our nabtumor
targeting technology, a novel biologically interactive (receptor-mediated) system to deliver chemotherapeutic agents in high concentrations preferentially to all tumors secreting a protein called SPARC, which attracts and binds to albumin.

Separation

On November 13, 2007,
Old Abraxis was separated into two independent publicly-traded companies: one holding the former Abraxis Pharmaceutical Products business, or the hospital-based business; and our company, which holds the former Abraxis Oncology and Abraxis Research
businesses, or the proprietary business. In connection with the separation, we changed our name from New Abraxis, Inc. to Abraxis BioScience, Inc. (and the hospital-based business is operated under the name APP Pharmaceuticals, Inc.).

In connection with the separation, stockholders of Old Abraxis as of November 13, 2007
received one share of our company for every four shares of Old Abraxis held as of that date. Additionally, in connection with the separation, we entered into a separation and distribution agreement that provided for, among other things, the
principal corporate transactions required to effect the separation and other specified terms governing our relationship with APP after the spin-off. We also entered into various agreements with APP, including (i) a transition services agreement
pursuant to which we and APP agreed to continue to provide each other with various services on an interim, transitional basis, for periods up to 24 months depending on the particular service; (ii) a manufacturing agreement whereby we and APP
agreed to manufacture Abraxane®and certain other products and to provide other manufacturing-related services for a period of four or five
years; (iii) an employees matters agreement providing for each companys respective obligations to employees and former employees who are or were associated with their respective businesses, and for other employment and employee benefit
matters; (iv) various real estate leases; and (v) a tax allocation agreement.



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##### Table of Contents

Also, in connection with the separation, APP
contributed $700 million in cash to us. We intend to use this contribution primarily to establish our presence globally in connection with the worldwide commercialization of Abraxane®, to
support clinical trial activity to expand indications for Abraxane®, to invest in research and development to commercialize our clinical and discovery pipelines and for potential strategic
opportunities as well as for general corporate purposes, including working capital and capital expenditures.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2008 and March 31, 2007

The following table sets forth the results of our operations for each of the three months ended March 31, 2008 and 2007, and forms the basis for the following discussion of our operating activities:



|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|-------------------------------------------------------- |  | ------------------------------------------------ | ------ | - | ------------------------------------------ | - | ------ | - |  | - | ------ | - |  | ----- | --
|                                                         |  | Three Months Ended March 31,                     |        |   | Change Favorable(Unfavorable)2008 vs. 2007 |  
|                                                         |  | 2008                                             |        |   | 2007                                       |   |        | $ |  |   | %      |  
|                                                         |  | (unaudited, in thousands, except per share data) |       
|Consolidated and combined statements of operations data: |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Revenue:                                                 |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Abraxane                                                 |  | $                                                | 79,932 |   |                                            | $ | 70,883 |   |  | $ | 9,049  |   |  | 13    | % 
|Other                                                    |  |                                                  | 2,210  |   |                                            |   | 1,010  |   |  |   | 1,200  |   |  | 119   | % 
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Net revenue                                              |  |                                                  | 82,142 |   |                                            |   | 71,893 |   |  |   | 10,249 |   |  | 14    | % 
|Cost of sales                                            |  |                                                  | 8,607  |   |                                            |   | 7,659  |   |  |   | (948   | ) |  | (12   | )%
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Gross profit                                             |  |                                                  | 73,535 |   |                                            |   | 64,234 |   |  |   | 9,301  |   |  | 14    | % 
|Operating expenses:                                      |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Research and development                                 |  |                                                  | 20,822 |   |                                            |   | 15,713 |   |  |   | (5,109 | ) |  | (33   | )%
|Selling, general and administrative                      |  |                                                  | 45,300 |   |                                            |   | 49,037 |   |  |   | 3,737  |   |  | 8     | % 
|Amortization of merger related intangibles               |  |                                                  | 9,653  |   |                                            |   | 9,653  |   |  |   |       |   |  |      |   
|Equity in net (income) loss of Drug Source Co., LLC      |  |                                                  | 248    |   |                                            |   | (718   | ) |  |   | (966   | ) |  | (135  | )%
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Total operating expenses                                 |  |                                                  | 76,023 |   |                                            |   | 73,685 |   |  |   | (2,338 | ) |  | (3    | )%
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Loss from operations                                     |  |                                                  | (2,488 | ) |                                            |   | (9,451 | ) |  |   | 6,963  |   |  | 74    | % 
|Interest income and other                                |  |                                                  | 6,822  |   |                                            |   | 296    |   |  |   | 6,526  |   |  | 2,205 | % 
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Income (loss) before income taxes                        |  |                                                  | 4,334  |   |                                            |   | (9,155 | ) |  |   | 13,489 |   |  | 147   | % 
|Provision (benefit) for income taxes                     |  |                                                  | 25     |   |                                            |   | (3,484 | ) |  |   | (3,509 | ) |  | (101  | )%
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Net income (loss)                                        |  | $                                                | 4,309  |   |                                            | $ | (5,671 | ) |  | $ | 9,980  |   |  | 176   | % 
|                                                         |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Basic and diluted net income (loss) per common share     |  | $                                                | 0.11   |   |                                            | $ | (0.14  | ) |  |   |        |   |  |       |   
|Weighted-average common shares outstanding:              |  |                                                  |        |   |                                            |   |        |   |  |   |        |   |  |       |   
|Basic                                                    |  |                                                  | 39,997 |   |                                            |   | 39,990 |   |  |   |        |   |  |       |   
|Diluted                                                  |  |                                                  | 40,196 |   |                                            |   | 39,990 |   |  |   |        |   |  |       |   

Net Revenue

Net revenue for the three months ended March 31, 2008 increased $10.2 million, or 14.3%, to $82.1 million as compared to $71.9 million for the same period in 2007. Included in net revenue for the three months
ended March 31, 2008 was $10.2 million of recognized deferred revenue primarily relating to the co-promotion agreement with AstraZeneca and the license agreements with Taiho as compared to $9.8 million in the prior year period.

Abraxane®revenue for the three months ended March 31, 2008 increased $9.0 million to $79.9 compared to $70.9 million in the same period of 2007. The increase was primarily due to increased market penetration of Abraxane
® and a price increase which took effect in January 2008. Excluding the recognition of deferred revenue, total Abraxane®revenue for the three months ended March 31, 2008 increased to $70.8 million or 14.6% from the previous years comparable period.



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Gross Profit

Gross profit for the three months ended March 31, 2008 was $73.5 million, or 89.5% of net
revenue as compared to $64.2 million, or 89.3% of net revenue, for the same period of 2007. Excluding the recognized deferred revenue, gross profit as a percentage of net revenue for the three months ended March 31, 2008 was 88.2%, as compared
to 87.8% for the same period in 2007. The increase was primarily due to manufacturing efficiencies as a result of higher volume of Abraxane® sales and production. Abraxane®revenue represented 97.3% of net revenue during the first three months of 2008 as compared to 98.6% for the first quarter of 2007.

Research and Development

Research
and development expense for the three months ended March 31, 2008 increased $5.1 million, or 32.5%, to $20.8 million as compared to $15.7 million for the same period in 2007. The increase was primarily due to costs related to the Phoenix plant
acquired from Watson Laboratories in July 2007.

Selling, General and Administrative

Selling, general and administrative expense for the three months ended March 31, 2008 decreased $3.7 million to $45.3 million, or 55.1% of net
revenue, from $49.0 million, or 68.2% of net revenue, for the same period in 2007. The decrease was due primarily to lower Abraxane marketing expenses and lower compensation costs. The decrease in selling, general and administrative expense was
partially offset by higher legal and administrative costs related to the build-out of our administrative departments following the separation from Old Abraxis and additional commission expense relating to the co-promotion agreement with AstraZeneca

Merger Amortization and 2006 Merger Costs

The three months ended March 31, 2008 included $9.7 million of amortization related to intangible assets associated with the 2006 merger between American Pharmaceuticals Partners, Inc and American BioScience,
Inc., the same amount as in the prior year period.

Equity Income in Drug Source Company, LLC

Drug Source Company, LLC is 50% owned by us and is a selling agent of raw material to the pharmaceutical industry. Our investment in Drug Source Company
is intended to both generate a return on our investment and to strengthen our future 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 in Drug Source Company for the three months ended March 31, 2008 was a loss of $0.2 million versus income of $0.7 million for the
corresponding period in 2007. For the three months ended March 31, 2008, Drug Source Company results were negatively impacted by higher than anticipated product returns. Product returns are expected to return to normal levels in the second
quarter of 2008.

Other Non-Operating Items

Interest income and other consisted primarily of interest earned on invested cash and other miscellaneous items. The increase in interest income and other in the three months ended March 31, 2008 of $6.5 million
was primarily related to interest earned on the $700 million of cash contributed to us in connection with the separation. For the three months ended March 31, 2008, the average yield on cash investments was 3.9%.

Provision for Income Taxes

Our
effective tax rate for the three months ended March 31, 2008 was approximately 0.02%. The rate is computed based on special state tax rules that were used to computed our taxable base on our gross receipts. We also took into consideration
minimum tax requirements as part of our state tax expense computation. The effective tax rate for the three months ended March 31, 2008 is different from the statutory rate primarily as a result of the application of a valuation allowance
against the net income tax benefit for the year.



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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 31,2008                |           |   | December 31,2007 |  
|                                                            |  | (unaudited, in thousands)    |          
|Summary Financial Position                                  |  |                              |           |   |                  |   |           |  
|Cash, cash equivalents and short-term investments           |  | $                            | 698,244   |   |                  | $ | 705,125   |  
|Working capital                                             |  |                              | 739,428   |   |                  |   | 735,181   |  
|Total assets                                                |  |                              | 1,483,505 |   |                  |   | 1,502,255 |  
|Total stockholders equity                                  |  |                              | 1,203,493 |   |                  |   | 1,197,387 |  
|                                                            | 
|                                                            |  | Three Months Ended March 31, |          
|                                                            |  | 2008                         |           |   | 2007             |  
|                                                            |  | (unaudited, in thousands)    |          
|Summary of Sources and (Uses) of Cash and Cash Equivalents: |  |                              |           |   |                  |   |           |  
|Operating activities                                        |  | $                            | (583      | ) |                  | $ | (32,672   | )
|Purchases of property, plant and equipment                  |  |                              | (1,859    | ) |                  |   | (11,268   | )
|Purchases of investments and other marketable securities    |  |                              | (4,492    | ) |                  |   | (539      | )
|Financing activities                                        |  |                              | 28        |   |                  |   | 44,601    |  

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities was $0.6 million for the three
months ended March 31, 2008 compared to cash used in operating activities of $32.7 million for the same period in 2007. The $32.1 million decrease in cash used in operating activities for the three months ended March 31, 2008 from the
prior period was due to an increase in accounts payable and a decrease in accounts receivable. Additionally higher interest income earned on our cash balance in 2008 also decreased cash used in operating activities from the prior year.

Investing Activities

Our
investing activities have included capital expenditures necessary to expand and maintain our manufacturing capabilities and infrastructure and to acquire various intellectual property rights. Additionally, we purchase investments and marketable
securities, which we intend to own long-term and are classified as available for sale securities.

Net cash used for the acquisition of
property, plant and equipment for the three-month periods ended March 31, 2008 and 2007, totaled $1.9 million and $11.3 million, respectively. This decrease was primarily due to the acquisition of our Puerto Rico manufacturing facility in 2007.
For the three months ended March 31, 2008, we purchased $4.5 million in marketable securities and other investments compared to $0.5 million for the same period in 2007.

Financing Activities

Net cash
provided by financing activities for the three months ended March 31, 2008 represent cash received upon the exercise of options. Net cash provided in financing activities for the three months ended March 31, 2007 included $44.6 million in
net transactions with parent company. For periods prior to November 13, 2007, net transactions with parent company were presented in lieu of stockholders equity as the assets and liabilities that comprised our company was a part of Old
Abraxis.

Sources of Financing and Capital Requirements

We have historically funded our research and development activities through product licenses fees, including milestones, and borrowings, whereas our primary sources of liquidity have been cash flow from operations and
funding from Old Abraxis with which we had inter-company transactions prior to the separation.



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We received a $700 million cash contribution from
APP in connection with the separation. We intend to use this cash contribution primarily to establish our presence globally in connection with the worldwide commercialization of Abraxane®, to support clinical trial activity to expand indications for Abraxane®, to invest in research
and development to commercialize our clinical and discovery pipelines and for potential strategic opportunities as well as for general corporate purposes, including working capital and capital expenditures. Pending any specific use of the $700
million contributed to us, we generally intend to invest these funds in short-term, investment grade, interest-bearing securities.

Capital Requirements

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



| |  |  | expansion of product sales into international markets;
| | - |  | ------------------------------------------------------



| |  |  | working capital requirements and production, sales, marketing and development costs required to support
Abraxane®;
| | - |  | ------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | the requirements of any potential future acquisitions, asset purchases or equity investments; and
| | - |  | -------------------------------------------------------------------------------------------------



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

We believe the $700 million contributed to us, together with any cash generated from operations, will be sufficient to finance our operations for at
least the next twelve months. In the event we engage in future acquisitions or significant capital projects, we may have to raise additional capital through additional borrowings or the issuance of debt or equity securities.

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 revenue and expense during the reporting period. The most significant estimates in our combined financial statements are discussed below. Actual
results could vary from those estimates.

Revenue Recognition

Abraxane ®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 consolidated and combined 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. Due to the nature of our product and its 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.

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



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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 because the earnings process relating to such payments is complete upon attainment and because the payments are non-refundable and are not dependent upon future activities or the achievement of future objectives.
These milestone payments are at risk and require substantive activity to achieve. 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.

Other Deferred Revenue

Other
deferred revenue primarily consists of upfront payments earned from our co-promotion and license agreements. Such deferred revenue is recognized as earned ratably over the life of each agreement.

Sales Provisions

Our sales provisions totaled $7.9 million and $5.1 million for the three months ended
March 31, 2008 and 2007, respectively, and related reserves totaled $8.2 million and $7.9 million at March 31, 2008 and December 31, 2007, respectively. The increase in reserves relates primarily to contractual allowance reserves
associated with increased sales of Abraxane®, as well as the timing of the related payments.

Chargebacks

Following industry practice, we typically sell our product to independent
pharmaceutical wholesalers at wholesale list price. The wholesaler in turn sells our product 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. 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 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 $1.1 million and $1.2 million at March 31, 2008 and
December 31, 2007, respectively. 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. Information constraints within the distribution channel primarily relate to our inability to track product through the channel on a unit or specific lot basis. In addition, for the most part, we do not receive information from
our customers with respect to what level of their sales are subject to chargeback. The lack of information on a specific lot basis precludes us from tracking actual chargeback activity to the period of our initial sale. As a result, we rely on
internal data, external IMS data and management estimates in order to estimate the amount of inventory in the channel subject to future chargeback. The amount of inventory in the channel is comprised of physical inventory at the distributor and end
user sales that the distributor has yet to report. Physical inventory in the channel is determined by the difference between our sales less end user sales as reported by IMS. As IMS data is reported approximately one month after end user sales, the
last month of end user sales is determined by a mathematical trend incorporating IMS data for prior months. We estimate yet to be reported end user sales based on a historical average number of days to process charge back activities from the date of
the end user sale. We also review current year chargeback activity to determine whether material changes in the provision relate to prior period sales; such changes have not been material to our statements of operations. As a proprietary product,
Abraxane®does not require significant chargeback reserves. A one percent increase in wholesale units pending chargeback at March 31, 2008
would decrease total revenue in the three months ended March 31, 2008 by less than $0.1 million.



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Contractual Allowances, Returns and Credits 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 $6.2 million at both March 31, 2008 and December 31, 2007. A one percent increase in contractual allowances for the three months ended March 31, 2008 would decrease net sales
by $0.1 million. Contractual allowances are reflected in the condensed consolidated and combined financial statements as a reduction of net revenue and as a current accrued liability.

Consistent with industry practice, our return policy permits our customers to return product 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 $0.2 million and $0.4 million at March 31, 2008 and December 31, 2007, respectively. At March 31,
2008, a one percent increase in the estimated reserve requirements for customer credits and product returns would have decreased net revenue for the three months ended March 31, 2008 by less than $0.1 million.

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 product prior to approval. 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, its anticipated selling price for the product and the position of the product in the regulatory review process. If final regulatory approval for such products is denied or delayed, we
may need to provide for and expense such inventory.

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 a reserve is established. 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 combined 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.

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.

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 commission to AstraZeneca, facilities, risk management, legal and professional fees.



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Up to the date of the separation on November 13, 2007, our product development and general and
administrative functions were fully integrated with Old Abraxis, including accounting, treasury, payroll, internal audit, information technology, corporate income tax, legal services and investor relations. In addition, Old Abraxis provided
manufacturing services to us at cost. After the distribution, certain of these arrangements will continue on a temporary basis for a period generally not to exceed 24 months (or four or five years with respect to the manufacturing arrangement and
real estate leases). The accompanying condensed consolidated and combined financial statements reflect the application of certain estimates and allocations and management believes the methods used to allocate these operating expenses are reasonable.
The allocation methods include relative head count, sales, square footage and management knowledge. These allocated operating expenses totaled $15.9 million for the three months ended March 31, 2007. The financial information in the
consolidated and combined financial statements does not include all the expenses that would have been incurred had we been a separate, stand-alone entity for the periods prior to November 13, 2007. As such, the financial information for the
three months ended March 31, 2007 does not reflect the combined financial position, results of operations and cash flows of us in the future or what they would have been, had we been a separate, stand-alone entity for the periods prior to
November 13, 2007.

Stock-Based Compensation

We account for stock based compensation in accordance with FAS 123R, which requires the recognition of compensation cost for all share-based payments
(including employee stock options) at fair value. 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. Restricted stock units (RSUs) granted under the 2001 Stock Incentive Plan generally vest ratably over a four-year period, while awards under the RSU plan II generally vested
with respect to one half of the units on April 18, 2008 and will vest with respect to the remaining one half of the units on April 18, 2010.

To determine stock-based compensation, we use the Black-Scholes option pricing model to estimate the fair value of options granted under equity incentive plans and rights to acquire stock granted under our stock
participation plan. Compensation expense associated with RSU awards under the 2001 Stock Incentive Plan is accounted for under the equity method in accordance with FAS 123(R).

Awards under RSU Plan I and RSU Plan II entitle the holders on each vesting date to convert the vested portion of their awards into that number of shares
of our common stock equal to the value of the vested portion of the award divided by the lower of (i) the average closing price of our common stock over the three consecutive trading days ending on and including the second full trading day
preceding the vesting date and (ii) $66.63 (which is the adjusted price following the separation). Accordingly, compensation expense related to these RSU plans is based on the lower of the market price or $66.63 and is expensed under the
liability method in accordance with FAS 123(R) on a straight-line basis over the applicable vesting period.

We assumed an agreement
between Old Abraxis and RSU Plan LLC (RSU LLC), of which our chief executive officer and chairman is a member. Under the terms of this agreement, RSU LLC has agreed that prior to the date on which restricted stock units issued pursuant
to RSU Plan II become vested, RSU LLC will deliver, or cause to be delivered, to us the number of our shares of common stock or cash (or a combination thereof) in an amount sufficient to satisfy the obligations to participants under RSU Plan II of
the vested restricted units. We are required to satisfy our obligations under the RSU Plan II by paying to the participants in RSU Plan II cash and/or shares of our common stock in the same proportion as was delivered by the RSU LLC. The intention
of this agreement is to have RSU LLC satisfy our obligations under American BioScience Restricted Unit Plan II so that there would not be any further dilution to our stockholders as a result of our assumption of RSU Plan II.

Income Taxes

Deferred tax
assets and liabilities are recognized for future tax consequences attributable to differences between the consolidated and combined 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.

Acquisitions

We account for
acquired businesses using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated
fair values of the net assets acquired is recorded as goodwill. Amounts allocated to acquired in-process research and development are expensed at the date of acquisition. When we acquire net assets that do not constitute a business under generally
accepted accounting principles in the U.S. (GAAP), no goodwill is recognized.



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The judgments made in determining the estimated fair value assigned to each class of assets acquired and
liabilities assumed, as well as asset lives, can materially impact our results of operations. Accordingly, for significant items, we typically obtain assistance from third-party valuation specialists. The valuations are based on information
available near the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management.

Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives. For example, the
useful life of the right associated with a pharmaceutical products exclusive patent will be finite and will result in amortization expense being recorded in our results of operations over a determinable period. However, the useful life
associated with a brand that has no patent protection but that retains, and is expected to retain, a distinct market identity could be considered to be indefinite and the asset would not be amortized.

Impairment of long-lived assets

We review all of our long-lived assets, including goodwill and other intangible assets, for impairment indicators at least annually and we perform detailed impairment testing for goodwill annually and for all other long-lived assets
whenever impairment indicators are present. Examples of those events or circumstances that may be indicative of impairment include:



| |  |  | A significant adverse change in legal factors or in the business climate that could affect the value of the asset, including, by way of example, a successful
challenge of our patent rights that could result in generic competition earlier than expected.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A significant adverse change in the extent or manner in which an asset is used, including, by way of example, restrictions imposed by the FDA or other regulatory
authorities that could affect our ability to manufacture or sell a product.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A projection or forecast that demonstrates losses associated with an asset, including, by way of example, a change in a government reimbursement program that could
result in an inability to sustain projected product revenues or profitability or the introduction of a competitors product that could result in a significant loss of market share.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The value of intangible assets is determined primarily using the income method, which starts with a forecast of all expected future net cash
flows. Accordingly, the potential for impairment for intangible assets may exist if actual revenues are significantly less than those initially forecasted or actual expenses are significantly more than those initially forecasted. Some of the more
significant estimates and assumptions inherent in the intangible asset impairment estimation process include: the amount and timing of projected future cash flows; the discount rate selected to measure the risks inherent in the future cash flows;
and the assessment of the assets life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry as well as expected changes in standards of practice for
indications addressed by the asset.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued Statement No. 141(R), Business Combination (SFAS 141R) and Statement No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated Financial
Statements, an Amendment of ARB No. 51 (SFAS 160). These new standards will significantly change the accounting for and reporting of business combination transactions and noncontrolling (minority) interests consolidated financial
statements. SFAS 141R and SFAS 160 are required to be adopted simultaneously and are effective for the first annual reporting period beginning on or after December 15, 2008. Earlier application is not permitted. SFAS 141R and SFAS 160 could
have a significant impact on our accounting for future business combinations and other business arrangements after the implementation of these statements.

In June 2007, the FASB ratified the consensus reached by the EITF on EITF Issue No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development
Activities(EITF 07-3). EITF 07-3 states that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred or capitalized. Such amounts should be recognized
as an expense as the related goods are delivered or the related services performed. If an entity does not expect the goods to be delivered or services to be rendered, the capitalized advance payment should be charged to expense. EITF 07-3 was
effective for us on January 1, 2008. The adoption of EITF 07-3 did not have a material effect on our results of operations and financial position.



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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 159).SFAS 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 159 was effective for our company on January 1, 2008. The adoption of SFAS 159 did not have a material effect on our
results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS
157), which redefines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 applies where other accounting pronouncements require or permit fair value
measurements. SFAS 157 was effective for us on January 1, 2008. The adoption of SFAS 157 did not have a material effect on our results of operations and financial position.



|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, providing a partial hedge. Nonetheless, these foreign operations are
presented in our combined 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 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, 2008, there
were no outstanding hedge arrangements.

Investment Risk: The primary objectives of our investment program are the safety and
preservation of principal, maintaining liquidity to meet operating and projected cash flow requirements, and maximizing return on invested funds, while diversifying 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.

To minimize this risk, we maintain an
investment portfolio of cash equivalents and short-term investments consisting of high credit quality securities, including money market funds, commercial paper, government and non-government debt securities. 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: As of March 31, 2008, we had no debt obligations outstanding. Consequently, we have minimal current exposure to changes in interest rates on borrowings.



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|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Under the rules and
regulations of the Securities and Exchange Commission, we are not required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we file our Annual Report on Form 10-K for our fiscal year ending
December 31, 2008. In our Annual Report on Form 10-K for the fiscal year ending December 31, 2008, management and our independent registered public accounting firm will be required to provide an assessment as to the effectiveness of
our internal control over financial reporting.

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. Our 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 quarterly period covered by this report. Based on their evaluation and subject to the foregoing, management has concluded that our disclosure
controls and procedures were effective as of March 31, 2008.



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PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

On or about December 7,
2005, several stockholder derivative and class action lawsuits were filed against Old Abraxis, its directors and ABI in the Delaware Court of Chancery relating to the 2006 merger between Old Abraxis (then known as American Pharmaceutical Partners)
and ABI. Old Abraxis was a nominal defendant in the stockholder derivative actions. The lawsuits allege that Old Abraxis directors breached their fiduciary duties to stockholders by causing Old Abraxis (then known as American Pharmaceutical
Partners) to enter into the merger agreement, which, it is alleged unjustly enriched ABIs stockholders and caused the value of the shares held by Old Abraxis public stockholders to be significantly diminished. The lawsuits seek, among
other things, an unspecified amount of damages and the rescission of the merger. In May 2007, the plaintiffs voluntarily dismissed the derivative and unjust enrichment claims, and the action is proceeding as a putative class action solely against
the individual defendants. We are no longer a party to this action, but we assumed any liability of Old Abraxis relating to this litigation in connection with the separation.

On July 19, 2006, Élan Pharmaceutical Intl Ltd. filed a lawsuit against Old
Abraxis in the U.S. District Court for the District of Delaware alleging that Old Abraxis 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, Old Abraxis filed a response to Élans complaint contending that it did not infringe on the Élan patents and that the
Élan patents are invalid. The trial has been set to begin in June 2008. We assumed any liability of Old Abraxis relating to this litigation in connection with the separation.

We are from time to time subject to claims and litigation arising in the ordinary course of business. 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, would not have a material adverse effect on our consolidated
financial position or results of operations.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

You should carefully consider the risks described
below before investing in our publicly traded securities. The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as competition and, general economic conditions.
Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and our liquidity.

Risks Related to our Business and Industry

We are highly dependent upon the
strong market acceptance of Abraxane®.

Our future profitability is highly dependent on the strong market acceptance of Abraxane®. For the three months ended March 31, 2008, total
Abraxane® revenue was $79.9 million, including $9.1 million of recognized deferred revenue relating to the co-promotion agreement with AstraZeneca. For the three months ended March 31,
2007, total Abraxane® revenue was $70.9 million, including $9.1 million of recognized deferred revenue relating to the co-promotion agreement with AstraZeneca. Because Abraxane® is our only approved product, Abraxane® revenue represented approximately 97% and 99% of our revenues for the three months ended
March 31, 2008 and 2007, respectively. We anticipate that sales of Abraxane® will remain a substantial 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®.

Abraxane® 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 Abraxane®;
| | - |  | ----------------------------------------------------------------------------------------------------------



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



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



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



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



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

In addition, we 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, expansion of manufacturing facilities 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 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.
| | - |  | ----------------------------------------------------

Proprietary product development efforts may not result in commercial products.

We intend to maintain an aggressive research
and development program for 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.
| | - |  | ------------------------------------------------------------------------------

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 our 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
product recalls, 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 products are approved for commercial use, we or regulatory
bodies could decide that changes to the 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 recall products, reformulate those products, to
conduct additional clinical trials, to make changes to the manufacturing processes, or to seek re-approval of the manufacturing facilities. Significant concerns about the safety and effectiveness of a product could ultimately lead to the revocation
of our 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.



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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. 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.

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 Abraxane® requires,
and our product candidates will require, 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. We have entered into
agreements with Indena SpA and ScinoPharm Taiwan, Ltd. to supply us with paclitaxel, the active pharmaceutical ingredient in Abraxane®. One of the suppliers is currently in the process of
being qualified by the appropriate regulatory authorities. We believe there currently are more than 15 potential commercial suppliers of paclitaxel raw material. We have not historically experienced any paclitaxel supply shortages. Additionally, we
maintain a safety stock supply of paclitaxel to mitigate any supply disruption. We believe our current paclitaxel inventory is sufficient to meet our needs for at least the next 18 months. 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.



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The injectable pharmaceutical products 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. 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.

Other companies may claim that we infringe on 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 and sale of new products with conflicting patent rights have been subject to substantial litigation in the pharmaceutical industry. These lawsuits relate to the validity and infringement of patents or proprietary
rights of third parties. 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 may be subject to infringement claims from time to time in the ordinary course of our business, and third parties could assert infringement claims
against us in the future with respect to Abraxane®, products that we may develop or products that we may license. We currently are involved in a patent infringement lawsuit against
Élan Pharmaceutical Intl Ltd. See Item 1Legal Proceedings above. Litigation or interference 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.

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 licensed 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 licensed 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 these 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.



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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 have potential conflicts of interest with New APP.

Conflicts of interest may arise between New APP and us in a number of areas relating to our past and ongoing relationships, including:



| |  |  | business opportunities that may be attractive to both New APP and us;
| | - |  | ---------------------------------------------------------------------



| |  |  | manufacturing and transitional service arrangements we have entered into with New APP;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | lease agreements we have entered into with New APP; and
| | - |  | -------------------------------------------------------



| |  |  | employee retention and recruiting.
| | - |  | ----------------------------------

Our Chief Executive Officer and Chairman of our board of directors, Patrick Soon-Shiong, M.D., owns approximately 80% of the outstanding capital stock of New APP and us. Accordingly, he may experience conflicts of interest with respect to
decisions involving business opportunities and similar matters that may arise in the ordinary course of our business, on the one hand, and the business of New APP, on the other hand.

Resolutions of some potential conflicts of interest are subject to review and approval by the audit committee of our board of directors or approval by
another independent committee of our board of directors. We still may be unable, however, to resolve some potential conflicts of interest with New APP and Dr. Soon-Shiong and, even if we do, the resolution may be less favorable than if we were
dealing with an unaffiliated party.

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 products.

We may
license rights to or acquire products or technologies from third parties. 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
and technologies. 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 Abraxane®, and we may not be able to compete favorably in any new product category.

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.



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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.

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 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. Effective January 1, 2006, we received a unique reimbursement J code for Abraxane® from the Centers for Medicare and Medicaid Services.
That code allows providers to bill Medicare for the use of Abraxane®. We believe that most major insurers reimburse providers for Abraxane® use consistent with the FDA-approved indication, which we believe is consistent with the reimbursement practices of major insurers for other drugs containing paclitaxel for the same indication. However, 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. For Abraxane® and any other 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 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.

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.



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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. We maintain insurance coverage for product liability claims in the aggregate amount of $100 million, including primary and excess coverages, which we believe is
reasonably adequate coverage. Product liability claims, regardless of their merits, could exceed policy limits, divert managements attention and adversely affect our reputation and the demand for these products.

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, including Dr. Patrick Soon-Shiong, Chief Executive
Officer, Lisa Gopala, Chief Financial Officer, Bruce Wendel, Executive Vice President of Corporate Operations and Development, Neil P. Desai, Vice President of Research and Development, and Nicholas Everett, Chief Scientist, Drug Discovery. Each of
the members of the executive management team is employed at will. 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 business and 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.

If we are unable to integrate successfully potential future acquisitions, our business may be harmed.

As part of our business strategy and growth plan, we may acquire businesses, technologies or products that we believe will complement our business. The
process of integrating an acquired business, technology or product may result in unforeseen operating difficulties and expenditures and may require significant management attention that would otherwise be available for ongoing development of our
existing business. In addition, we may not be able to maintain the levels of operating efficiency that any acquired company achieved or might have achieved separately. Successful integration of the companies that we may acquire will depend upon our
ability to, among other things, eliminate redundancies and excess costs. As a result of difficulties associated with combining operations, we may not be able to achieve cost savings and other benefits that the company might hope to achieve with
acquisitions. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities or have an undesirable impact on our financial statements.

Risks Relating to Our Separation

We have no history operating as
an independent company, and we may be unable to make the changes necessary to operate successfully as an independent company.

Prior to
the separation, our business was operated by Old Abraxis as part of its broader corporate organization rather than as a stand-alone company. Old Abraxis assisted us by providing financing and corporate functions such as human resources, information
technology, internal audit, tax and accounting functions. New APP has no obligation to provide assistance to us other than certain interim services. These interim services include, among other things, manufacturing services, information technology
services, accounting and finance services and human resources support. Because our business has not recently been operated as an independent company, we cannot assure you that we will be able to successfully implement the changes necessary to
operate independently or that we will not incur additional costs operating independently that would have a negative effect on our business, results of operations and financial condition.

In addition, prior to the separation, our business was able to leverage Old Abraxis size, relationships and purchasing power in procuring goods,
services and technology (including office supplies, computer software licenses and equipment), travel and all employee benefits plans for which per employee cost was based on number of lives covered. Our separation from Old Abraxis has had a
significant impact on the per employee cost for certain coverage such as health care and disability.

We are in the process of creating our
own, or engaging third parties to provide, systems and business functions to replace many of the systems and business functions Old Abraxis provided to us. We will also need to make significant investments to develop our independent ability to
operate without Old Abraxis existing operational and administrative infrastructure. These initiatives will be costly to implement, and we may not be successful in implementing these systems and business functions.



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Our historical financial information may not be representative of our future results as an independent company.

The historical financial information we have included in this Quarterly Report on Form 10-Q for periods prior to our separation on
November 13, 2007 may not reflect what our results of operations, financial position and cash flows would have been had we been an independent company for those periods. This is primarily because:



| |  |  | our historical and financial information reflects allocations for services historically provided to us by Old Abraxis, which allocations may not reflect the costs
we would have incur for similar services as an independent company; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our historical and financial information does not reflect changes that we incurred or expect to incur as a result of our separation from Old Abraxis, including
changes in the cost structure, personnel needs, financing and operations of the contributed business as a result of the separation from Old Abraxis and from reduced economies of scale.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, we are now responsible for the additional costs associated with being an independent public company, including costs related to corporate
governance and listed and registered securities. Therefore, our historical financial statements before the separation on November 13, 2007 may not be indicative of our current or future performance as an independent company. For additional
information about our past financial performance in relation to our current and future financial performance, please see Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in
this Quarterly Report on Form 10-Q.

Our separation from Old Abraxis may present significant challenges.

There is a significant degree of difficulty and management distraction inherent in having separated from Old Abraxis. These difficulties include:



| |  |  | preserving customer, supplier and other important relationships;
| | - |  | ----------------------------------------------------------------



| |  |  | the potential difficulty in retaining key officers and personnel; and
| | - |  | ---------------------------------------------------------------------



| |  |  | separating corporate infrastructure, including systems, insurance, accounting, legal, finance, tax and human resources.
| | - |  | -----------------------------------------------------------------------------------------------------------------------

We anticipate that it generally will take up to 24 months to completely separate from Old Abraxis, with the exception of manufacturing activities which
New APP will undertake for us and certain lease arrangements, which will last for a period of four or five years. Our separation from Old Abraxis may not be successfully or cost-effectively completed. The failure to do so could have an adverse
effect on our business, financial condition and results of operations.

The process of separating operations could cause an interruption
of, or loss of momentum in, the activities of one or more of our businesses. Members of our senior management may be required to devote considerable amounts of time to this separation process, which will decrease the time they will have to manage
our business, service existing customers, attract new customers and develop new products or strategies. If our senior management is not able to manage effectively the separation process, or if any significant business activities are interrupted as a
result of the separation process, our business could suffer.

Our accounting and other management systems and resources may not be adequately prepared
to meet the financial reporting and other requirements to which we are now subject. If we are unable to achieve and maintain effective internal controls, our business, financial position and results of operations could be adversely affected.

Our financial results previously were included within the consolidated results of Old Abraxis. However, we were not directly subject to the
reporting and other requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result of the separation, we are now directly subject to the reporting and other obligations under the Exchange Act, including the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting
firm addressing such assessments. These reporting and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources.



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To comply with these requirements, we will need to upgrade our systems, including information technology,
implement additional financial and management controls, reporting systems and procedures and hire additional legal, accounting and finance staff. If we are unable to upgrade our financial and management controls, reporting systems, information
technology and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired. In addition, if we are unable to conclude that our
internal control over financial reporting is effective (or if the auditors are unable to attest that our managements report is fairly stated or they are unable to express an opinion on our managements assessment or on the effectiveness
of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports.

Our management
will be responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over
financial reporting includes those written policies and procedures that:



| |  |  | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles
generally accepted in the United States;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on
our financial statements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Any failure to achieve and maintain effective internal controls could have an adverse effect
on our business, financial position and results of operations.

We may be required to indemnify New APP and may not be able to collect on
indemnification rights from New APP.

Under the terms of the separation and
distribution agreement, we have agreed to indemnify New APP from and after the distribution with respect to all liabilities of Old Abraxis not related to its hospital-based products business and the use by New APP of any trademarks or other source
identifiers owned by us. Similarly, New APP has agreed to indemnify us from and after the distribution with respect to all liabilities of Old Abraxis related to its hospital-based products business and the use by us of any trademarks or other source
identifiers owned by New APP. Under the terms of the tax allocation agreement, we have agreed to indemnify New APP against all tax liabilities to the extent they relate to the proprietary products business, and New APP has agreed to indemnify us
against all liabilities to the extent they relate to the hospital-based products business. In addition, we have agreed to indemnify New APP for any taxes resulting from a failure of the distribution to qualify as a tax-free distribution under
Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code, unless such failure results solely from specified acts of New APP after the distribution. Under the terms of the manufacturing agreement, we have agreed to indemnify New
APP from any damages resulting from a third-party claim caused by or alleged to be caused by (i) our failure to perform our obligations under the manufacturing agreement; (ii) any product liability claim arising from the negligence, fraud
or intentional misconduct of us or any of our affiliates or any product liability claim arising from our manufacturing obligations (or any failure or deficiency in our manufacturing obligations) under the manufacturing agreement; (iii) any
claim that the manufacture, use or sale of Abraxane® or our pipeline products infringes a patent or any other proprietary right of a third party; or (iv) any recall, product liability
claim or other third-party claim not arising from the gross negligence or bad faith of, or intentional misconduct or intentional breach of the manufacturing agreement by New APP, by reason of the $100 million limitation of liability described below.
We have also agreed to indemnify New APP for liabilities that it becomes subject to as a result of its activities under the manufacturing agreement and for which it is not responsible under the terms of the manufacturing agreement. New APP has
agreed to indemnify us from any damages resulting from a third-party claim caused by or alleged to be caused by (i) New APPs gross negligence, bad faith, intentional misconduct or intentional failure to perform its obligations under the
manufacturing agreement; or (ii) any product liability claim arising from the gross negligence or bad faith of, or intentional misconduct or intentional breach of the manufacturing agreement by New APP. New APP generally will not have any
liability for monetary damages to us



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or third parties in connection with the manufacturing agreement for damages in excess of $100 million in the aggregate. There are no time limits on when an
indemnification claim must be brought and no other monetary limits on the amount of indemnification that may be provided. These indemnification obligations could be significant. Our ability to satisfy any of these indemnification obligations will
depend upon the future financial strength of our company. We cannot determine whether we will have to indemnify New APP for any substantial obligations. We also cannot assure you that, if New APP becomes obligated to indemnify us for any substantial
obligations, New APP will have the ability to satisfy those obligations. Any indemnification payment by us, or any failure by New APP to satisfy its indemnification obligations, could have a material adverse effect on our business.

We will be dependent upon New APP to manufacture Abraxane® for a term of four or five years, and the manufacture of pharmaceutical products is highly regulated.

In connection with the separation and distribution agreement, we entered into a manufacturing agreement with New APP for the manufacture of Abraxane® and our
pipeline products whereby New APP agreed to undertake certain of the tasks necessary to manufacture Abraxane® and our pipeline products until December 31, 2011, with this agreement
automatically extended by one year if either New APP elects to exercise its option to extend the lease on our Melrose Park manufacturing facility or we elect to exercise our option to extend the lease on New APPs Grand Island manufacturing
facility. Accordingly, we will be dependent upon New APP to manufacture our products. The amount and timing of resources that New APP devotes to the manufacture of our products is not within our direct control. Further, in the event of capacity
constraints at the manufacturing facilities, the manufacturing agreement provides that the available capacity will be prorated between us and New APP according to the parties then current use of manufacturing capacity at the relevant
facilities. Any loss in manufacturing capacity pursuant to these proration provisions could be detrimental to our business and operating results. While the manufacturing agreement allows us to override these proration provisions, we may only do so
by paying New APP additional fees under the manufacturing agreement. If we are forced to pay New APP additional fees to retain our capacity rights under the manufacturing agreement, it could be detrimental to our operating results.

The manufacture of pharmaceutical 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 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 and lost revenue. If such problems are not discovered before the product is released to the market, recall costs may also be incurred. Under the terms of the manufacturing agreement, we have the final
responsibility for release of the products manufactured pursuant to the manufacturing agreement and will bear all expenses in connection with any recall of products, unless the recall is a result of New APPs gross negligence, bad faith,
intentional misconduct or intentional breach, in which case New APP would bear all costs and expenses related to such product recall, subject to the $100 million limit on liability under the manufacturing agreement. To the extent New APP encounters
difficulties or problems with respect to the manufacture of our pharmaceutical products, including Abraxane®, this may be detrimental to our business, operating results and reputation.

Risks Related To An Investment In Our Common Stock

Our Chief Executive Officer and entities affiliated with him collectively 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.

Our Chief Executive Officer and entities affiliated with him collectively own approximately 80% of our outstanding
common stock. 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. 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.



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Substantial sales of our common stock could depress the market price of our common stock.

All of the shares of our common stock issued in connection with the separation and distribution, other than shares issued to our affiliates, are eligible
for immediate resale in the public market. Although shares issued to our affiliates are not immediately freely tradable, we have granted registration rights to the former ABI shareholders, including our Chief Executive Officer. Under the
registration rights agreement, the former ABI shareholders will have the right to require us to register all or a portion of the shares of our common stock they received in connection with the separation. In addition, the former ABI shareholders may
require us to include their shares in future registration statements that we file and our Chief Executive Officer may require us to register shares for resale on a Form S-3 registration statement. Upon registration, the registered shares generally
will be freely tradeable in the public market without restriction. However, in connection with any underwritten offering, the holders of registrable securities will agree to lock up any other shares for up to 90 days and will agree to a limit on the
maximum number of shares that can be registered for the account of the holders of registrable securities under so-called shelf registration statements.

Substantial sales of our shares, or the perception that such sales might occur, could depress the market price for our shares. Our Chief Executive Officer and entities affiliated with him own over 80% of our
outstanding common stock. In connection with Old Abraxis requesting from the Internal Revenue Service a private letter ruling regarding the U.S. federal income tax consequences of the transactions, our Chief Executive Officer, his wife and certain
entities affiliated with him have represented to the Internal Revenue Service that they have no current plan or intention to sell their shares after the separation.

Our stock price may be volatile in response to market and other factors.

The market price for our
common stock may 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:



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



| |  |  | revisions in securities analysts estimates;
| | - |  | --------------------------------------------



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



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



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



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



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



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



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



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

We are
not subject to the provisions of Section 203 of the Delaware General Corporation Law, which could negatively affect your investment.

We elected in our certificate of incorporation to not be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a
business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a
prescribed manner. A business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates
and associates, owns (or, in certain cases, within three years prior, did own) 15% or more of the corporations voting stock. Our decision not to be subject to Section 203 will allow, for example, our Chief Executive Officer (who with
members of his immediate family and entities affiliated with him own approximately 83% of our common stock) to transfer shares in excess of 15% of our voting stock to a third-party free of the restrictions imposed by Section 203. This may make
us more vulnerable to takeovers that are completed without the approval of our board of directors and/or without giving us the ability to prohibit or delay such takeovers as effectively. These provisions could also limit the price that investors
would be willing to pay in the future for shares of our common stock.



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Under U.S. federal bankruptcy laws or comparable provisions of state fraudulent transfer laws, you could be required
to return all or a portion of the shares received in the distribution.

In connection with the separation and distribution, Old Abraxis
incurred $1 billion in indebtedness and contributed $700 million of those proceeds to us prior to the separation. If Old Abraxis is insolvent or rendered insolvent as a result of the distribution of our common stock to the holders of Old
Abraxis common stock, or if any of Old Abraxis and/or one or more of its subsidiaries that incurs a portion of the indebtedness is insolvent or rendered insolvent either as a result of the incurrence of the indebtedness or the ultimate
dividend/transfer of the proceeds of such indebtedness to us, there is a risk that a creditor (or a creditor representative) of Old Abraxis could bring fraudulent transfer claims to recover all or a portion of our common stock received in the
separation and distribution and that the persons receiving such distributions would be required to return all or a portion of such distributions if such claims were successful. It was a condition to the completion of the transactions that Old
Abraxis received opinions of a valuation firm with respect to Old Abraxis and its subsidiaries solvency at the time it declared the distributions and at the time the distributions were made.

If the holding company merger that was completed in connection with the separation does not qualify as a reorganization under Section 368(a)(1) of the Internal
Revenue Code, then Old Abraxis and Old Abraxis stockholders may be responsible for payment of significant U.S. federal income taxes, and if the distribution does not constitute a tax-free distribution under Section 355 of the Internal Revenue
Code, then New APP and New APP stockholders may be responsible for payment of significant U.S. federal income taxes.

The obligations of
the parties to effect the separation was conditioned upon the receipt of a private letter ruling from the Internal Revenue Service to the effect that (i) the holding company merger that was completed in connection with the separation qualified
as a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code and (ii) the contribution of New Abraxis, LLC to us, which we refer to as the proprietary contribution, the cash contribution and the distribution
qualified as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code and the distribution qualified for nonrecognition treatment under Sections 355(a) and 361(c) of the Internal Revenue Code. Old Abraxis received the private
letter ruling on October 5, 2007. The private letter ruling, however, did not address two requirements under Section 355 of the Internal Revenue Code on which the Internal Revenue Service will not rule (namely, that the distribution
(a) was motivated, in whole or substantial part, by one or more corporate business purposes and (b) was not being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both). Thus, the
obligations of the parties to effect the proprietary contribution, the cash contribution and the distribution also was conditioned upon the receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to Old Abraxis, to
the effect that these two requirements should be satisfied.

The private letter ruling the opinion of counsel was based, in part, on
assumptions and representations as to factual matters made by, among others, Old Abraxis, Dr. Soon-Shiong, his wife, and certain Old Abraxis stockholders, as requested by the Internal Revenue Service or counsel, which, if incorrect, could
jeopardize the conclusions reached by the Internal Revenue Service and counsel. The private letter ruling did not address certain material legal issues that could affect its conclusions (including whether the distribution was motivated, in whole or
substantial part, by one or more corporate business purposes, whether the distribution was being used principally as a device for the distribution of the earnings and profits of New APP, New Abraxis or both, and whether the distribution and any
acquisition or acquisitions are part of a plan or series of related transactions under Section 355(e) of the Internal Revenue Code), and reserved the right of the Internal Revenue Service to raise such issues upon a subsequent audit. Opinions
of counsel neither bind the Internal Revenue Service or any court, nor preclude the Internal Revenue Service from adopting a contrary position.

On the distribution date, Old Abraxis and New Abraxis, LLC effected a holding company merger. In the holding company merger, Old Abraxis merged with and into New Abraxis, LLC. If the holding company merger does not qualify as a
reorganization under Section 368(a)(1) of the Internal Revenue Code, each Old Abraxis stockholder who received New APP common stock in exchange for Old Abraxis common stock will recognize taxable gain or loss equal to the difference between the
fair market value of the New APP common stock received and such stockholders basis in the Old Abraxis common stock exchanged therefor, and Old Abraxis will recognize taxable gain equal to the fair market value of its assets over their
aggregate adjusted basis.

If the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code, New APP would recognize taxable gain equal to the excess of the fair market value of the New Abraxis common stock distributed to the Old Abraxis stockholders over New APPs tax basis in the New Abraxis common stock. In addition, each Old
Abraxis stockholder who received New Abraxis common stock in the distribution would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of the New Abraxis common stock received.



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In the event that New APP recognizes a taxable gain in connection with the distribution because the
distribution did not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, the taxable gain recognized by New APP would result in significant U.S. federal income tax liabilities to New APP. Under the Internal
Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation agreement among New APP, New APP LLC, New Abraxis and New Abraxis, LLC, New Abraxis will generally be
required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates, subject to specified exceptions. New Abraxis or New APPs respective obligations to indemnify
the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no assurance that New APP would be able to fulfill its obligations under the tax allocation agreement if New APP was
determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party from making a proposal to acquire either party.

The distribution may be taxable to New APP and New Abraxis if there is an acquisition of 50% or more of the outstanding common stock of New APP or New Abraxis.

Even if the distribution otherwise qualifies as a tax-free distribution under Section 355 of the Internal Revenue Code, under Section 355(e) of
the Internal Revenue Code, the distribution of New Abraxis common stock to Old Abraxis stockholders would result in significant U.S. federal income tax liabilities to New APP (but not New APP stockholders) if there is an acquisition of stock of New
Abraxis or New APP as part of a plan or series of related transactions that includes the distribution and that results in an acquisition of 50% or more of the outstanding common stock of New Abraxis or New APP.

The process for determining whether a prohibited 50% or greater change in control has occurred under these rules is complex, inherently factual and
subject to interpretation of the facts and circumstances of a particular case. If New Abraxis or New APP engages in a transaction involving the issuance or disposition or shares, or that otherwise creates a significant change in ownership, New APP
would recognize taxable gain if such issuance, disposition or other change in ownership results in an acquisition of 50% or more of the outstanding common stock of New Abraxis or New APP. Furthermore, because a substantial portion of our stock and
the stock of New APP will be held by or on behalf of a single stockholder, that stockholder will have the ability to cause or permit a prohibited change in the ownership of New APP or of New Abraxis to occur, which would also cause New APP to
recognize a taxable gain under these rules. The private letter ruling did not address whether the distribution and any acquisition or acquisitions are part of a plan or series of related transactions under Section 355(e) of the Internal Revenue
Code.

In the event that New APP recognizes a taxable gain in connection with the distribution because of an acquisition of 50% or more of
the outstanding common stock of New Abraxis or New APP as part of a plan or series of related transactions that includes the distribution, the taxable gain recognized by New APP would result in significant U.S. federal income tax liabilities to New
APP. Under the Internal Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation agreement among New APP, New APP LLC, New Abraxis and New Abraxis LLC, New
Abraxis will generally be required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates, subject to specified exceptions. New Abraxis or New APPs respective
obligations to indemnify the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no assurance that New APP would be able to fulfill its obligations under the tax allocation
agreement if New APP was determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party from making a proposal to acquire either party.

Actions taken by our Chief Executive Officer (or entities affiliated with him) could adversely affect the tax-free nature of the distribution.

Sales of New Abraxis common stock or New APP common stock by Dr. Soon-Shiong, his wife, or entities affiliated with Dr. Soon-Shiong or one or
more members of his family after completion of the distribution may adversely affect the tax-free nature of the distribution. Sales of New Abraxis common stock or New APP common stock by Dr. Soon-Shiong, his wife, or entities affiliated with
Dr. Soon-Shiong or one or more members of his



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family after completion of the distribution might be considered evidence that the distribution was used principally as a device for the distribution of
earnings and profits of New APP, New Abraxis or both, particularly if it were determined that the selling stockholder had an intent to effect such sale at the time of the distribution. The obligation of the parties to effect the separation and
related transactions were conditioned upon the receipt of an opinion of Fried, Frank, Harris, Shriver & Jacobson LLP to the effect that, among other requirements, the distribution is not being used principally as a device for the
distribution of earnings and profits of New APP, New Abraxis or both. If sales of New Abraxis common stock or New APP common stock by Dr. Soon-Shiong, his wife, or entities affiliated with Dr. Soon-Shiong or one or more members of his
family occur after completion of the distribution, the conclusions reached in the opinion may not apply. Dr. Soon-Shiong, his wife and the entities that hold shares of Old Abraxis common stock on behalf of Dr. Soon-Shiong or one or more
members of his immediate family have provided a representation to the Internal Revenue Service in connection with the private letter ruling that they have no plan or intention to sell, transfer or otherwise dispose of any of the shares of New
Abraxis common stock and New APP common stock they will hold after the distribution. Dr. Soon-Shiong, his wife and such entities provided similar representations to counsel in connection with counsels opinion. If the Internal Revenue
Service successfully asserted that the distribution was used principally as a device for the distribution of earnings and profits of New APP, New Abraxis or both, the distribution would not qualify as a tax-free distribution, and thus would be
taxable to both New APP and the New APP stockholders (as a result of which New Abraxis would be required to indemnify New APP to the extent required under the tax allocation agreement). Furthermore, sales of New Abraxis common stock or New APP
common stock by Dr. Soon-Shiong, his wife, or entities affiliated with Dr. Soon-Shiong or one or more members of his family after completion of the distribution could cause a prohibited change in the ownership of New Abraxis or New APP to
occur within the meaning of Section 355(e) of the Internal Revenue Code, which would cause New APP to recognize a taxable gain.

In
the event that New APP recognizes a taxable gain in connection with the distribution because the distribution does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code or because of an acquisition of 50% or more
of the outstanding common stock of New Abraxis or New APP as part of a plan or series of related transactions that includes the distribution within the meaning of Section 355(e) of the Internal Revenue Code, the taxable gain recognized by New
APP would result in significant U.S. federal income tax liabilities to New APP. Under the Internal Revenue Code, New APP would be primarily liable for these taxes and New Abraxis would be secondarily liable. Under the terms of the tax allocation
agreement among New APP, New APP LLC, New Abraxis and New Abraxis LLC, New Abraxis will generally be required to indemnify New APP against any such taxes unless such taxes would not have been imposed but for an act of New APP or its affiliates,
subject to specified exceptions. New Abraxiss or New APPs respective obligations to indemnify the other pursuant to the tax allocation agreement could have a material adverse effect on New APP and/or New Abraxis. There can be no
assurance that New APP would be able to fulfill its obligations under the tax allocation agreement if New APP was determined to be responsible for these taxes. In addition, these mutual indemnity obligations could discourage or prevent a third party
from making a proposal to acquire either party.



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|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
and Chief Financial Officer (Principal Financial and
Accounting Officer)


Date: May 15, 2008



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EXHIBIT INDEX



|               |  |                                                                                                                                                                                                                                                                                                                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                    
|               | 
|2.1            |  | Separation and Distribution Agreement among APP Pharmaceuticals, Inc., Abraxis BioScience, LLC, APP Pharmaceuticals, LLC and the Registrant (incorporated by reference to Exhibit 2.1 to the
Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)
|               | 
|3.1            |  | Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrants Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on December 20, 2007)                                                                        
|               | 
|3.2            |  | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission
on December 20, 2007)                                                                                              
|               | 
|3.3            |  | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrants Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on December 20, 2007)                                            
|               | 
|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 Exhibit 4.2 to the Registrants Amendment #2 to Form 10 Registration Statement with the Securities and
Exchange Commission on October 24, 2007)                                                                                     
|               | 
|4.3            |  | Registration Rights Agreement by and among the Registrant and certain stockholders of the Registrant as set forth therein (incorporated by reference to Exhibit 4.3 to the Registrants
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)                  
|               | 
|10.1           |  | Separation and Distribution Agreement among APP Pharmaceuticals, Inc., Abraxis BioScience, LLC, APP Pharmaceuticals, LLC and the Registrant (Reference is made to Exhibit 2.1
hereto)                                                                                                                          
|               | 
|10.2           |  | Tax Allocation Agreement among APP Pharmaceuticals, Inc., Abraxis BioScience, LLC, APP Pharmaceuticals, LLC and the Registrant (incorporated by reference to Exhibit 10.2 to the Registrants
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)            
|               | 
|10.3           |  | Transition Services Agreement between APP Pharmaceuticals, Inc. and the Registrant (incorporated by reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on December 20, 2007)                                                        
|               | 
|10.4           |  | Employee Matters Agreement among APP Pharmaceuticals, Inc., APP Pharmaceuticals, LLC, Abraxis BioScience, LLC and the Registrant (incorporated by reference to Exhibit 10.4 to the
Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)          



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                         
|               | 
|10.5*          |  | Manufacturing Agreement between APP Pharmaceuticals, LLC and the Registrant (incorporated by reference to Exhibit 10.5 to the Registrants Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on December 20, 2007)                                                                                                                                    
|               | 
|10.6           |  | Lease Agreement between APP Pharmaceuticals, LLC and Abraxis BioScience, LLC for the premises located at 2020 Ruby Street, Melrose Park, Illinois (incorporated by reference to Exhibit 10.6 to
the Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)                                                              
|               | 
|10.7           |  | Lease Agreement between APP Pharmaceuticals, LLC and Abraxis BioScience, LLC for the warehouse facilities located at 2045 N. Cornell Avenue, Melrose Park, Illinois (incorporated by reference to
Exhibit 10.7 to the Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)                                            
|               | 
|10.8           |  | Lease Agreement between APP Pharmaceuticals, LLC and Abraxis BioScience, LLC for the research and development facility located at 2045 N. Cornell Avenue, Melrose Park, Illinois (incorporated by
reference to Exhibit 10.8 to the Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)                               
|               | 
|10.9           |  | Lease Agreement between Abraxis BioScience, LLC and APP Pharmaceuticals, LLC for the premises located at 3159 Staley Road, Grand Island, New York (incorporated by reference to Exhibit 10.9 to
the Registrants Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 20, 2007)                                                              
|               | 
|10.10          |  | Form of Indemnification Agreement between the Registrant and each of its executive officers and directors (incorporated by reference to Exhibit 10.10 to the Registrants Amendment #1
to Form 10 Registration Statement with the Securities and Exchange Commission on October 5, 2007)                                                                                            
|               | 
|10.11          |  | Employment Agreement, dated January 25, 2006, between the Registrant and Carlo Montagner (incorporated by reference to Old Abraxis Quarterly Report on Form 10-Q/A filed with the Securities
and Exchange Commission on August 10, 2006)                                                                                                                                           
|               | 
|10.12          |  | Employment Agreement, dated July 3, 2006, between the Registrant and Lisa Gopalakrishnan (incorporated by reference to Old Abraxis Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on August 7, 2006)                                                                                                                                              
|               | 
|10.13          |  | 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 Old Abraxis Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006)
|               | 
|10.14          |  | Co-Promotion Strategic Marketing Services Agreement, dated April 26, 2006, between the Registrant and AstraZeneca UK Limited (incorporated by reference to Old Abraxis Quarterly Report
on Form 10-Q/A filed with the Securities and Exchange Commission on August 10, 2006)                                                                                                       
|               | 
|10.15          |  | Abraxis BioScience, Inc. 2007 Stock Incentive Plan, including forms of agreement thereunder (incorporated by reference to Exhibit 10.15 to the Registrants Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on December 20, 2007)                                                                                                                   



42



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##### Table of Contents

|               |  |                                                                                                                                                                                                                                                                                       
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                           
|               | 
|10.16          |  | American BioScience, Inc. Restricted Stock Unit Plan I, including a form of agreement thereunder (incorporated by reference to Old Abraxis Registration Statement on Form S-8
(File No. 333-133364) filed with the Securities and Exchange Commission on April 18, 2006)             
|               | 
|10.17          |  | American BioScience, Inc. Restricted Stock Unit Plan II, including a form of agreement thereunder (incorporated by reference to Old Abraxis Registration Statement on Form S-8
(File No. 333-133364) filed with the Securities and Exchange Commission on April 18, 2006)            
|               | 
|10.18          |  | Agreement, dated April 18, 2006, between the Registrant and RSU LLC (incorporated by reference to Old Abraxis Quarterly Report on Form 10-Q/A filed with the Securities and Exchange
Commission on August 10, 2006)                                                                  
|               | 
|10.19*         |  | Aircraft Purchase and Sale Agreement (incorporated by reference to Old Abraxis Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9,
2006)                                                                                                  
|               | 
|10.20          |  | Escrow Agreement, dated April 18, 2006, by and among Abraxis BioScience, our chief executive officer and Fifth Third Bank (Incorporated by reference to Old Abraxis Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission on May 10, 2006).                
|               | 
|10.21*         |  | License Agreement, dated as of May 27, 2005, between the Registrant and Taiho Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit 10.10 to the Registrants Amendment #3 to
Form 10 Registration Statement with the Securities and Exchange Commission on November 2, 2007)
|               | 
|10.22          |  | Agreement between APP Pharmaceuticals, Inc. and the Registrant (incorporated by reference to Exhibit 10.22 to the Registrants Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on December 20, 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.
|- | ---------------



43