Abraxis BioScience (ABII)

Risks Relating to Our Separation from Old Abraxis

We have limited 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. 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.

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

The historical financial information 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:

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.

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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:

We anticipate that it generally will take up to 24 months from the separation date to completely separate from Old Abraxis, with the exception of manufacturing activities which 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.

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

Under the terms of the separation and distribution agreement, we have agreed to indemnify 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 APP of any trademarks or other source identifiers owned by us. Similarly, 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 APP.

Under the terms of the tax allocation agreement, we agreed to indemnify APP against all tax liabilities to the extent they relate to the proprietary products business, and APP agreed to indemnify us against all tax liabilities to the extent they relate to the hospital-based products business. The tax allocation agreement also generally allocates between us and APP any liability for taxes that may arise in connection with the distribution. In September, 2008, APP entered into a merger agreement with Fresenius Kabi, a subsidiary of Fresenius SE. Pursuant to the merger agreement, Fresenius acquired all of the outstanding common stock of APP. Pursuant to the tax allocation agreement and the merger agreement, APP received a tax opinion, in form and substance reasonably acceptable to us, that the acquisition should not affect the qualification of the distribution under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code and the nonrecognition of gain to APP in the distribution. Under the terms of the tax allocation agreement, we are generally liable for, and are required to indemnify APP against, any tax liability arising as a result of the distribution failing to qualify for tax-free treatment unless, notwithstanding such tax opinion, such tax liability is imposed as a result of an acquisition of APP, including the acquisition of APP by Fresenius, or certain other specified acts of APP.

Under the terms of the manufacturing agreement, we have agreed to indemnify 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 APP, by reason of the $100 million limitation of liability described below. We have also agreed to indemnify 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. APP has agreed to indemnify us from any damages resulting from a third-party claim caused by or alleged to be caused by (i) 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 APP. APP generally will not have any liability for monetary damages to us 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 APP for any substantial obligations. We also cannot assure you that, if APP becomes obligated to indemnify us for any substantial obligations, APP will have the ability to satisfy those obligations. Any indemnification payment by us, or any failure by APP to satisfy its indemnification obligations, could have a material adverse effect on our business.

We will be dependent upon APP to manufacture Abraxane^® for a remaining term of three or four 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 APP for the manufacture of Abraxane^® and our pipeline products whereby 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 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 APP’s Grand Island manufacturing facility. Accordingly, we will be dependent upon APP to manufacture our products. The amount and timing of resources that 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 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 APP additional fees under the manufacturing agreement. If we are forced to pay APP additional fees to retain our capacity rights under the manufacturing agreement, it could be detrimental to our operating results.

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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 APP’s gross negligence, bad faith, intentional misconduct or intentional breach, in which case 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 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 Relating to Our Separation from Old Abraxis

We have limited 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. 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 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:

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.

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:

We anticipate that it generally will take up to 24 months from the separation date to completely separate from Old Abraxis, with the exception of manufacturing activities which 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.

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

Under the terms of the separation and distribution agreement, we have agreed to indemnify 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 APP of any trademarks or other source identifiers owned by us. Similarly, 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 APP.

Under the terms of the tax allocation agreement, we agreed to indemnify APP against all tax liabilities to the extent they relate to the proprietary products business, and APP agreed to indemnify us against all tax liabilities

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to the extent they relate to the hospital-based products business. The tax allocation agreement also generally allocates between us and APP any liability for taxes that may arise in connection with the distribution. In September, 2008, APP entered into a merger agreement with Fresenius Kabi, a subsidiary of Fresenius SE. Pursuant to the merger agreement, Fresenius acquired all of the outstanding common stock of APP. Pursuant to the tax allocation agreement and the merger agreement, APP received a tax opinion, in form and substance reasonably acceptable to us, that the acquisition should not affect the qualification of the distribution under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code and the nonrecognition of gain to APP in the distribution. Under the terms of the tax allocation agreement, we are generally liable for, and are required to indemnify APP against, any tax liability arising as a result of the distribution failing to qualify for tax-free treatment unless, notwithstanding such tax opinion, such tax liability is imposed as a result of an acquisition of APP, including the acquisition of APP by Fresenius, or certain other specified acts of APP.

Under the terms of the manufacturing agreement, we have agreed to indemnify 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 APP, by reason of the $100 million limitation of liability described below. We have also agreed to indemnify 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. APP has agreed to indemnify us from any damages resulting from a third-party claim caused by or alleged to be caused by (i) 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 APP. APP generally will not have any liability for monetary damages to us 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 APP for any substantial obligations. We also cannot assure you that, if APP becomes obligated to indemnify us for any substantial obligations, APP will have the ability to satisfy those obligations. Any indemnification payment by us, or any failure by APP to satisfy its indemnification obligations, could have a material adverse effect on our business.

We will be dependent upon APP to manufacture Abraxane^® for a remaining term of three or four 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 APP for the manufacture of Abraxane^® and our pipeline products whereby 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 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 APP’s Grand Island manufacturing facility. Accordingly, we will be dependent upon APP to manufacture our products. The amount and timing of resources that 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 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

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agreement allows us to override these proration provisions, we may only do so by paying APP additional fees under the manufacturing agreement. If we are forced to pay 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 APP’s gross negligence, bad faith, intentional misconduct or intentional breach, in which case 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 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 Relating to Our Separation
from Old Abraxis

We have limited 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. 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.