American Pharmaceutical Partners, American BioScience merge to create $7.5 billion company

By E. Janene Geiss

Philadelphia, Nov. 28 - American Pharmaceutical Partners, Inc. announced Monday that it will merge with privately held American BioScience, Inc. to create what the companies called a fully integrated, global biopharmaceutical company with an FDA-approved proprietary oncology drug, a validated technology platform, a deep product pipeline and a leading hospital-based injectables business with continuing positive operating cash flow.

The all-stock transaction, which will combine the two companies under a new name, Abraxis BioScience, is expected to close in the first half of 2006, according to a company news release.

American BioScience said it currently owns 64.4% of the outstanding fully diluted shares of American Pharmaceutical.

"We believe this merger is a unique opportunity to combine the strengths of a development-stage biotechnology company with those of a growing and profitable injectable pharmaceutical business to create a fully integrated, global biopharmaceutical leader," Patrick Soon-Shiong, executive chairman of American Pharmaceutical and chairman and chief executive officer of American BioScience, said in the release.

The agreement calls for the companies to merge in a tax-free transaction with American Pharmaceutical issuing to American BioScience shareholders about 86 million additional shares of American Pharmaceutical common stock, raising American BioScience shareholders' fully diluted ownership of the combined entity after the merger to about 83.5% from 64.4%.

Based on American Pharmaceutical's Nov. 25 closing stock price, the combined company would have a market value of $7.5 billion on a fully diluted basis, officials said.

Officials said that American BioScience immediately brings to the new company 50% of the profits from North American sales of Abraxane, along with marketing rights for the rest of the world. Abraxane is marketed in the United States for metastatic breast cancer and being developed for adjuvant breast, lung, ovarian, prostate, melanoma and head and neck cancers in more than 74 clinical trials, including seven phase 3 studies, officials said.

Regulatory filings for Abraxane in Canada have been filed, and filings in Europe and Mexico are anticipated in the first half of 2006 and early 2007, officials said.

Abraxane rights in China, Russia, Korea, Australia, New Zealand, Hong Kong and Taiwan were recently licensed for upfront and milestone payments in excess of $50 million in additional to royalties, officials said.

American BioScience also brings a deep pipeline for proprietary oncology and critical care products based on the company's novel Nanoparticle Albumin Bound technology platform, officials said.

Soon-Shiong has assumed the duties of chairman and chief executive officer of American Pharmaceutical, succeeding Al Heller as the company's chief executive officer. Heller stepped down from that position and from the company's board of directors, officials said.

Soon-Shiong will continue as chairman and chief executive officer of Abraxis BioScience once the merger is consummated.

Abraxis is expected to be organized along operating divisions with leadership positions in each division to be announced by the end of this year. One operating division will be American Pharmaceutical Partners. In addition, there will be a proprietary business division and research and development division, officials said.

The board will consist of a majority of independent directors, including current American Pharmaceutical board members David S. Chen, Stephen D. Nimer, Leonard Shapiro and Kirk K. Calhoun. Additional independent board members are expected to be announced prior to closing, officials said.

American BioScience is a Santa Monica, Calif., biotechnology company.

American Pharmaceutical is a Schaumburg, Ill., injectable pharmaceutical company.

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