Abraxis BioScience (ABII)

Our separation from Abraxis BioScience may present significant challenges.

There is a significant degree of difficulty and management distraction inherent in the process of our separating from Abraxis BioScience. These difficulties include:

Following the separation, our corporate offices will continue to be located in Los Angeles, California and New APP’s corporate offices will continue to be located in Schaumburg, Illinois. The following individuals are expected to serve as our executive officers following the separation: Dr. Patrick Soon-Shiong, Chief Executive Officer; Lisa Gopalakrishnan, Chief Financial Officer; Carlo Montagner, President of the Abraxis Oncology division; and Bruce Wendel, Executive Vice President of Corporate Operations and Development. The following individuals are expected to serve as executive officers of New APP following the separation: Dr. Soon-Shiong, Chief Executive Officer; Ms. Gopalakrishnan, Chief Financial Officer; Tom Silberg, President; Frank Harmon, Chief Operating Officer; and Richard Maroun, Chief Administrative Officer and General Counsel. In connection with the private letter ruling, Old Abraxis has represented to the Internal Revenue Service that no person will serve as an executive officer of both New Abraxis and New APP one year following the distribution. We anticipate that it generally will take up to 24 months to completely separate the two companies, with the exception of manufacturing activities which New APP LLC will undertake for us and certain lease arrangements, which will last for a period of four or five years. Our separation from Abraxis BioScience 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 will be subject following the transactions. 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 Abraxis BioScience. 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 will be directly subject to the reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley

19

Table of Contents

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.

To comply with these requirements, it is anticipated that 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:

Management of Old Abraxis identified a material weakness in its internal control over financial reporting relating to the accounting for income taxes and, as a result, concluded that its internal control over financial reporting was not effective as of December 31, 2006, March 31, 2007 and June 30, 2007. Specifically, there were ineffective controls relating to procedures to reconcile the income tax accounts to supporting detail. This control deficiency resulted in material errors in the accounting for income taxes, but the errors were corrected prior to the issuance of the annual financial statements. In response to the material weakness identified, Old Abraxis has taken steps to strengthen its internal control over financial reporting. In particular, Old Abraxis evaluated and continues to evaluate the roles and functions within the tax department and added permanent personnel to support internal control over financial reporting relative to income taxes. Management has contracted technical resources to enhance existing policies and procedures, and management continues to perform additional control procedures relative to financial reporting of income taxes. Additionally, Old Abraxis plans to provide additional training related to internal control over financial reporting and accounting for income taxes as well as implement additional controls. However, this material weakness has not yet been fully remediated. Because our financial statements are derived from the financial statements of Old Abraxis, we believe we will have to respond to similar issues in our internal control over financial reporting and accounting for income taxes. To the extent the material weakness is not remediated, the effectiveness of our internal control over financial reporting may be adversely affected, which is turn could result in a material misstatement in our financial statements not being prevented or detected and/or loss of investor confidence in the accuracy and completeness of our financial reports. Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial position and results of operations.

20

Table of Contents