Abraxis BioScience (ABII)

In-process Research and Development

Approximately $83.4 million of the step up related to us was allocated to in-process research and development and represents the minority interests’ share of the estimated fair value of our in-process research and development assets for projects that, as of the acquisition date, had not yet reached technological or regulatory feasibility and had no alternative future uses in their current states. All of the $83.4 million assigned to in-process research and development projects were for unapproved indications of Abraxane^® in Phase I or Phase II clinical trials, including for metastatic breast cancer and non-small cell lung cancer. All of the $83.4 million of in-process research and development was expensed in connection with the 2006 Merger. The estimated fair values of these projects as of the acquisition date were determined based on a discounted cash flow model prepared by an independent third-party, KPMG LLP. The estimated cash flows for each project were probability adjusted to take into account the risks associated with the successful commercialization of the projects. The estimated after-tax cash flows were then discounted using discount rates of approximately 20%. We continue to pursue an aggressive and comprehensive clinical development plan to maximize the commercial potential and clinical knowledge of Abraxane^®. However, successful product development is highly uncertain. For example, product candidates that appear promising in the early phases of development may fail to be commercialized 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 necessary regulatory bodies, such as the FDA, did not approve a product candidate for an intended use; or the product candidate is not cost effective in light of

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existing therapeutics. Any delay in the introduction of new products could adversely impact our revenue growth and the amount and timing of sales to recoup the investments we made in developing such products, which could adversely affect future results of operations.

In-process Research and Development

Approximately $83.4 million of the step up was allocated to in-process research and development and represents the minority interests’ share of the estimated fair value of New Abraxis’ in-process research and development assets for projects that, as of the acquisition date, had not yet reached technological or regulatory feasibility and had no alternative future uses in their current states. All of the $83.4 million assigned to in-process research and development projects were for unapproved indications of Abraxane^® in Phase I or Phase II clinical trials, including for metastatic breast cancer and non-small cell lung cancer. All of the $83.4 million of in-process research and development was expensed in connection with the 2006 Merger. The estimated fair values of these projects as of the acquisition date were determined based on a discounted cash flow model prepared by an independent third-party, KPMG LLP. The estimated cash flows for each project were probability adjusted to take into account the risks associated with the successful commercialization of the projects. The estimated after-tax cash flows were then discounted using discount rates of approximately 20%. New Abraxis continues to pursue an aggressive and comprehensive clinical development plan to maximize the commercial potential and clinical knowledge of Abraxane^®. However, successful product development is highly uncertain. For example, product candidates that appear promising in the early phases of development may fail to be commercialized 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 necessary regulatory bodies, such as the FDA, did not approve a product candidate for an intended use; or the product candidate is not cost effective in light of existing therapeutics. Any delay in the introduction of new products could adversely impact our revenue growth and the amount and timing of sales to recoup the investments we made in developing such products, which could adversely affect future results of operations.