Abraxis BioScience (ABII)

Available-For-Sale Securities

We determine the appropriate classification of our investments in debt and equity securities at the time of purchase and re-evaluate 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 and the unrealized gains and losses are included in the determination of comprehensive income and reported in stockholders’ equity. As of September 30, 2008, we had $10.9 million included in “Other non-current assets” in marketable equity securities that were designated as available-for-sale securities. At December 31, 2007, we had $3.7 million in available-for-sale equity securities.

In May 2008, we purchased notes having an aggregate principal amount of $5.0 million from a privately held company. The notes are senior secured convertible notes due 2018 and earns interest at nine percent per annum. The notes are convertible into an ownership interest of up to 49% of the privately held company. In addition, at the option of the privately held company, subject to certain restrictions, we may be required to purchase additional notes having an aggregate principal amount of up to $5.0 million within six months from the closing date. This option was subsequently extended to May 2009 in the third quarter of 2008. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period.

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. For the three months ended September 30, 2008, we realized other than temporary losses of $4.2 million on available-for-sale securities whose values, based on market quotation, had declined significantly below their carrying value. The loss is included in “other expense” in the condensed consolidated and combined statements of operations.