Abraxis BioScience (ABII)

Marketable Securities

We determine the appropriate classification of our investments in marketable securities at the time of purchase and re-evaluate such determinations at each balance sheet date. We consider our marketable securities

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to be available-for-sale as defined in FASB ASC 320, Investments - Debt and Equity Securities. Accordingly, these investments are recorded at fair value and the unrealized gains and losses are included in accumulated other comprehensive loss in the statement of stockholders’ equity. As of December 31, 2009, we had $23.9 million of marketable securities that were classified as available-for-sale and included in “Other non-current assets”. As of December 31, 2008, total available-for-sale securities was $15.3 million, of which, $3.7 million is included in “Prepaid expenses and other current assets” and $11.6 million is included in “Other non-current assets”. Available for sale securities consisted of the following:

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 earn 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 during the third quarter of 2008 and to December 31, 2009 (or such earlier date after June 30, 2009 as we designate on 30 days notice) in the first quarter of 2009. The privately held company did not exercise that option. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period. For the year ended December 31, 2009, we recorded unrealized gains of $3.9 million based on valuation of the convertible notes.

In November 2008, we purchased notes having an aggregate principal amount of $5.0 million from a publicly-held company. The convertible notes are due in 2015 and bear interest at nine percent per annum. The notes are convertible into common shares at a conversion price of $1.25 per share. The notes have a further provision for warrants representing the right to purchase additional common stock of the company in two tranches. The first tranche is exercisable in whole or in part at $2 per share, which could result in our having a 40% ownership interest in the company. The second tranche is exercisable in whole or in part at $3 per share which could result in an increase of our ownership interest from 40% to 50%, assuming full conversion of the notes. The warrants are marked to market and are included in our earnings each period. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period. For the year ended December 31, 2009, we recorded unrealized losses of $0.9 million based on valuation of the convertible notes.

In September 2009, we acquired convertible notes having an aggregate principal balance of $5 million from a privately held company. The convertible notes mature in two parts: 50% of the notes are due in January 2011 and the remaining 50% are due in 2012. The convertible notes bear interest at ten percent per annum. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period.

We review quarterly, 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. This review includes an analysis of the facts and circumstances of each individual investment such as the severity of loss, the length of time the fair value has been below cost, the expectation for that security’s performance and the creditworthiness of the issuer. For the year ended December 31, 2009 and 2008, we recorded other than temporary losses of $3.4 and $4.7 million, respectively, on available-for-sale securities

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whose values, based on market quotation, had declined significantly below their carrying value and we assessed the decline as other-than-temporary. The loss is included in “Other expense” in the consolidated and combined statements of operations. We did not have any other-than-temporary loss in 2007.

Marketable Securities

We determine the appropriate classification of our investments in marketable securities at the time of purchase and re-evaluate such determinations at each balance sheet date. We consider our marketable securities to be available-for-sale as defined in Statement of Financial Accounting Standards 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 accumulated other comprehensive loss in the statement of stockholders’ equity. As of December 31, 2008, we had $15.3 million of marketable securities that were designated as available-for-sale securities, of which, $3.7 million is included in “Prepaid expenses and other

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current assets” and $11.6 million is included in “Other non-current assets”. At December 31, 2007, we had $3.7 million of marketable securities designated as available-for-sale included in “Other non-current assets”. Available for sale securities consisted of the following:

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 earn 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 during the third quarter of 2008 and to December 31, 2009 (or such earlier date after June 30, 2009 as we designate on 30 days notice) in the first quarter of 2009. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period.

In November 2008, we purchased notes having an aggregate principal amount of $5.0 million from a publicly-held company. The convertible notes are due in 2015 and bear interest at nine percent per annum. The notes are convertible into common shares at a conversion price of $1.25 per share. The notes have a further provision for warrants representing the right to purchase additional common stock of the company in two tranches. The first tranche is exercisable in whole or in part at $2 per share, which could result in our having a 40% ownership interest in the company. The second tranche is exercisable in whole or in part at $3 per share which could result in an increase of our ownership interest from 40% to 50%, assuming full conversion of the notes. The $5.0 million convertible notes are designated as available-for-sale securities and are measured at fair value each reporting period.

We review quarterly, 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. This review includes an analysis of the facts and circumstances of each individual investment such as the severity of loss, the length of time the fair value has been below cost, the expectation for that security’s performance and the creditworthiness of the issuer. For the year ended December 31, 2008, we realized other than temporary losses of $4.7 million on available-for-sale securities whose values, based on market quotation, had declined significantly below their carrying value and we assessed the decline as other-than-temporary. The loss is included in “Other expense” in the consolidated and combined statements of operations. There were no such losses in 2007 and 2006. As of December 31, 2008, we have one investment in a marketable equity security with an unrealized loss of $3.4 million. As of December 31, 2008, we concluded that the unrealized loss on this investment is temporary in nature. We believe that the change in the unrealized loss on the security was caused by general market conditions and an other-than-temporary impairment does not exist. Additionally, we have the intent and ability to hold this investment for the time necessary for fair value to recover above cost.