Item 1. BUSINESS

Unless the context otherwise requires, references to “New Abraxis,” “Abraxis BioScience,” “Abraxis,” “we,” “us” and “our” refer to Abraxis BioScience, Inc. (formerly New Abraxis, Inc.) and its subsidiaries, including our operating subsidiary Abraxis BioScience, LLC (which we sometimes refer to as New Abraxis, LLC); references to “Old Abraxis” refer to Abraxis BioScience, Inc. (formerly American Pharmaceuticals, Inc.) prior to the separation; references to “New APP” refer to APP Pharmaceuticals, Inc. and its subsidiaries, including its operating subsidiary APP Pharmaceuticals Partners, LLC (which we sometimes refer to as New APP LLC); and references to the “distribution,” “separation” or “spin-off” refer to the transactions in which we separated from Old Abraxis and became an independent publicly-traded company.

Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K and other materials filed or to be filed by us with the Securities and Exchange Commission, or the SEC, as well as information included in oral statements or other written statements made or to be made by us, contain forward-looking statements within the meaning of federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about our industry, our beliefs and assumptions. These risks and uncertainties include those described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Forward-looking statements, whether express or implied, are not guarantees of future performance and are subject to risks and uncertainties, which can cause actual results to differ materially from those currently anticipated, due to a number of factors, which include, but are not limited to:

3

Table of Contents

You should read this Annual Report on Form 10-K with the understanding that actual future results may be materially different from expectations. Readers should carefully review the factors described in “Item 1A: Risk Factors” below and other documents we file from time to time with the SEC for a more detailed description of these risks and other factors that may affect the forward-looking statements. All forward-looking statements made in this information statement are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this Annual Report on Form 10-K, and we do not undertake any obligation (and we expressly disclaim any such obligation), other than as may be required by law, to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events or changes in future operating results over time or otherwise. We use words such as “should,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate” and variations of these words and similar expressions to identify forward-looking statements, but these are not the exclusive means of identifying forward-looking statements.

Separation

On November 13, 2007, Old Abraxis was separated into two independent publicly-traded companies: one holding the former Abraxis Pharmaceutical Products business, or the hospital-based business; and our company, which holds the former Abraxis Oncology and Abraxis Research businesses, or the proprietary business. In connection with the separation, we changed our name from New Abraxis, Inc. to Abraxis BioScience, Inc. (and the hospital-based business is operated under the name APP Pharmaceuticals, Inc.).

In connection with the separation, stockholders of Old Abraxis as of November 13, 2007 received one share of our company for every four shares of Old Abraxis held as of that date. In addition, in connection with the separation, we entered into a separation and distribution agreement that provides for, among other things, the principal corporate transactions required to effect the separation and other specified terms governing our relationship with New APP after the spin-off. We also entered into various agreements with New APP, including (i) a transition services agreement pursuant to which we and New APP agreed to continue to provide each other with various services on an interim, transitional basis, for periods up to 24 months depending on the particular service; (ii) a manufacturing agreement whereby we and New APP agreed to manufacture Abraxane ^® and certain other products and to provide other manufacturing-related services for a period of four or five years; (iii) an employees matters agreement providing for each company’s respective obligations to employees and former employees who are or were associated with their respective businesses, and for other employment and employee benefit matters; (iv) various real estate leases; and (v) a tax allocation agreement.

Also, in connection with the separation, New APP contributed $700 million in cash to us. We intend to use this contribution primarily to establish our presence globally in connection with the worldwide commercialization of Abraxane ^® , to support clinical trial activity to expand indications for Abraxane ^® , to invest in research and development to commercialize our clinical and discovery pipelines and for potential strategic opportunities as well as for general corporate purposes, including working capital and capital expenditures.

4

Table of Contents

Overview

We are a Delaware corporation that was formed in June 2007. Our business was conducted as part of Old Abraxis prior to the separation. References in this Annual Report on Form 10-K to the historical assets, liabilities, products, businesses or activities of our company are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the business as it was conducted as part of Old Abraxis prior to the separation.

We are one of the few fully integrated biotechnology companies, with a breakthrough marketed product (Abraxane ^® ), global ownership of our proprietary technology platform and clinical pipeline, dedicated nanoparticle manufacturing capabilities for worldwide supply integrated with seasoned in-house capabilities, including discovery, clinical drug development, regulatory and sales and marketing.

We are dedicated to the discovery, development and delivery of next-generation therapeutics and core technologies that offer patients safer and more effective treatments for cancer and other critical illnesses. Our portfolio includes the world’s first and only protein-based nanoparticle chemotherapeutic compound (Abraxane ^® ) which is based on our proprietary tumor targeting technology known as the nab™ technology platform. This nab™ technology platform is the first to exploit the tumor’s biology against itself, taking advantage of an albumin-specific, receptor-mediated transport system and allowing the delivery of a drug from the vascular space across the blood vessel wall to the underlying tumor tissue. Abraxane ^® is the first clinical and commercial validation of our nab™ technology platform. From the discovery and research phase to development and commercialization, we are committed to rapidly enhancing our product pipeline and accelerating the delivery of breakthrough therapies that will transform the lives of patients who need them.

We own the worldwide rights to Abraxane ^® , a next-generation, nanometer-sized, solvent-free taxane that was approved by the U.S. Food and Drug Administration, or the FDA, in January 2005 for its initial indication in the treatment of metastatic breast cancer and launched in February 2005. We believe the successful launch of Abraxane ^® validates our nab™ tumor targeting technology, a novel biologically interactive (receptor-mediated) system to deliver chemotherapeutic agents in high concentrations preferentially to all tumors secreting a protein called SPARC, which attracts and binds to albumin. Abraxane ^® revenue for the year ended December 31, 2007 and 2006 was $324.7 million and $174.9 million, respectively, which included the recognition of previously deferred revenue related to our June 2006 co-promotion agreement with AstraZeneca UK Limited.

Our research and development approach is based on the integration of our nab™ tumor targeting technology, our natural product drug discovery platform, our multi-functional chemistry capabilities with our in-house clinical trial and regulatory strengths, combined with our unique nanoparticle manufacturing capabilities. Our product pipeline includes over five clinical oncology and cardiovascular product candidates in various stages of testing and development, including Abraxane ^® and Coroxane™ for various indications. We also have over 45 discovery product candidates and novel chemical entities for various diseases, including cancer, multiple sclerosis and Alzheimer’s. We believe the application of our nab™ technology will serve as the platform for the development of numerous drugs for the treatment of cancer and other critical illnesses. To leverage in-house manufacturing, clinical trial and regulatory expertise, we will continue to supplement our discovery efforts through technology acquisitions and external collaborations with academia and start-up biotechnology companies. We have begun executing this strategy through strategic alliances or licensing arrangements with Biocon Limited, the Buck Institute for Age Research, the California NanoSystems Institute at UCLA, Dana-Farber Cancer Institute and the University of Southern California, among others.

We own manufacturing facilities in Melrose Park, Illinois, Phoenix, Arizona and Barbengo, Switzerland and a research and development facility and pilot plant in Melrose Park, Illinois and will own a manufacturing facility in Barceloneta, Puerto Rico. We also operate research and development facilities in Auburn, California, Marina Del Rey, California and Westwood, California and a clinical trial management facility in Durham, North Carolina.

5

Table of Contents

In connection with the separation, for the length of the applicable lease, our manufacturing facility in Melrose Park has been leased to New APP and New APP has agreed to provide certain contract manufacturing services to us in accordance with the terms of the manufacturing agreement. In addition, we have leased from New APP a portion of New APP’s Grand Island, New York manufacturing facility to enable us to perform our responsibilities under the manufacturing agreement. In addition, following the separation, New APP’s Puerto Rico facility will be divided into two separate facilities and we will take ownership of the part of the facility comprising the active pharmaceutical ingredients manufacturing plant, which is currently being leased to Pfizer for a term expiring in February 2012.

Strategy

Our goal is to become the leading fully integrated global biotechnology company focused on the discovery, development, marketing and sale of next-generation therapeutics for cancer and other critical illnesses, including multiple sclerosis and Alzheimer’s. The key elements of our strategy include:

6

Table of Contents

Abraxane ^® , A Proprietary Injectable Oncology Product

Overview

Abraxane ^® is a next-generation, nanometer-sized, solvent-free taxane that was approved by the FDA in January 2005 for its initial indication in the treatment of metastatic breast cancer and launched in February 2005. Taxanes are one of the most widely used chemotherapy agents. We believe the successful launch of Abraxane ^®

7

Table of Contents

validates our nab™ tumor targeting technology described below. Effective January 1, 2006, we received a unique reimbursement “J” code for Abraxane ^® , which facilitates reimbursement from Medicare and Medicaid as well as private payors.

First clinical and commercial validation of our nab™ tumor targeting technology

Abraxane ^® represents the first in a new class of protein-bound taxane particles that takes advantage of albumin, a natural carrier of water insoluble molecules (e.g., various nutrients, vitamins and hormones) found in humans. Because tumors have an increased need for nutrients to support rapid malignant growth, albumin complexes accumulate preferentially in tumors. Recent molecular analyses have identified receptor-mediated pathways (gp60) facilitating active transport of albumin complexes from the blood into tissues and resulting in preferential accumulation in tumors by tumor-secreted proteins (SPARC), which attract albumin. Abraxane ^® consists only of paclitaxel nanometer-sized albumin-bound particles and, in a pivotal 460 patient Phase III clinical trial, demonstrated an almost doubling of the response rate, a longer time to tumor progression in metastatic breast cancer as well as an increased survival in patients previously treated for metastatic disease when compared to Taxol ^® . We believe that our nab™ tumor targeting technology and these albumin pathways allow more rapid delivery of paclitaxel to the cancer cells, with preferential accumulation while at the same time allowing less drug indiscriminately into normal, healthy cells. This is supported by the clinical findings demonstrated by Abraxane ^® .

Overcoming the obstacles and toxicity of solvents

Many oncology drugs are water insoluble and thus require solvents to formulate the drugs for injection. Taxol ^® contains the active ingredient paclitaxel dissolved in the solvent Cremophor. The toxicity of Cremophor limits the dose of Taxol ^® that can be administered, potentially limiting the efficacy of the drug. Furthermore, patients receiving Taxol ^® require pre-medication with steroids and antihistamines to prevent the toxic side effects associated with Cremophor and, in some cases, require a growth factor such as G-CSF to overcome low white blood cell levels resulting from chemotherapy.

Abraxane ^® utilizes our nab™ tumor targeting technology to encapsulate an amorphous form of paclitaxel in albumin, a human protein found in blood and avoids the need for Cremophor. Because it contains no Cremophor solvent, this next-generation taxane product enables the administration of 50% more chemotherapy with a well- tolerated safety profile, requires no routine premedication to prevent hypersensitivity reactions, can be given over a shorter infusion time using standard IV tubing and reduces the need for G-CSF support.

Abraxane ^® clinical development, label expansion and global commercialization plans

We will continue to pursue an aggressive and comprehensive clinical development plan to maximize the commercial potential and clinical knowledge of Abraxane ^® . As of December 31, 2007, approximately 30 company-sponsored Abraxane ^® clinical studies and approximately 90 investigator-initiated Abraxane ^® clinical studies were planned or underway for various indications, of which more than 40 had patient participation. The investigator-initiated studies generally are intended to advance the clinical knowledge of Abraxane ^® and support our clinical development program.

In June 2007, data was presented at the 43rd Annual Meeting of the American Society of Clinical Oncology (ASCO) updating results from an ongoing open-label, randomized head-to-head Phase II clinical trial comparing Abraxane ^® and Taxotere ^® in the first-line treatment of metastatic breast cancer. The updated analysis demonstrated that Abraxane ^® administered weekly (150 mg/m2) and every three weeks (300 mg/m2) resulted in longer progression-free survival and an overall improved toxicity profile compared to Taxotere ^® administered every three weeks (100 mg/m2). Abraxane ^® administered weekly (100 mg/m2) resulted in comparable progression-free survival and significantly less toxicity compared to the Taxotere ^® arm. Results from a planned independent radiology review were also presented, which demonstrated a strong correlation between investigator

8

Table of Contents

findings for response rate and progression-free survival and assessments made by independent radiology review. Radiologists were blinded to treatment assignment, investigator assessment of response, and target lesions selected by the investigator. Based on these data, we plan to initiate a global multi-center head-to-head Phase III registration trial comparing Abraxane ^® at the 150 mg/m2 dose administered weekly to Taxotere ^® at the 100 mg/m2 dose administered every three weeks for the first-line treatment of metastatic breast cancer. The trial is planned to begin in the second half of 2008 and will take place in multiple sites throughout North America, Eastern and Western Europe and Asia-Pacific.

We will continue to study the use of Abraxane ^® in a variety of oncology settings and intend to focus our Phase III trials in first-line metastatic breast cancer, first-line non-small cell lung cancer (NSCLC) and melanoma, all of which are expected to be superiority trials utilizing weekly dosing schedules of Abraxane ^® . Special Protocol Assessments (SPA) for the design of the NSCLC and melanoma Phase III trials were submitted to the FDA in the first quarter of 2007. In October 2007, we reached a definitive agreement with the FDA under the SPA process regarding the design of the Phase III NSCLC trial. In the agreement, the FDA determined that the design and planned analysis of the study addresses the objectives necessary to support a regulatory submission. The Phase III pivotal trial is a randomized, open-label trial comparing weekly 100 mg/m2 Abraxane ^® (days 1, 8 and 15 of each cycle) and 200 mg/m2 Taxol ^® (paclitaxel) injection every three weeks. Carboplatin will be administered at AUC=6 on day 1 of each cycle repeated every three weeks in both treatment arms. The study will enroll approximately 1,000 patients with Stage IIIb and IV non-small cell lung cancer. The primary endpoint of the study is overall response rate, and patient enrollment of this trial began in the fourth quarter of 2007. The Phase III melanoma trial is expected to begin in the second half of 2008. Based on encouraging Phase I clinical trial data of ABRAXANE in the treatment of metastatic pancreatic cancer, the company plans to initiate two randomized Phase III trials of ABRAXANE for use in both first and second line pancreatic cancer. A presentation of the Phase I study on use of ABRAXANE in treatment of pancreatic cancer has been accepted by the American Society of Clinical Oncology (ASCO) at the ASCO conference in May 2008. We also continue to expand our clinical experience with Abraxane ^® and its potential in treating multiple tumor types as a single agent and in combination.

With regard to the global commercialization of Abraxane ^® , in June 2006, we received regulatory approval from the Therapeutic Products Directorate of Health Canada to market Abraxane ^® for the treatment of metastatic breast cancer in Canada. In June 2006, we submitted our application to market Abraxane ^® in Russia for the treatment of breast, non-small cell lung and ovarian cancers. In January 2007, the Therapeutic Goods Administration (TGA) in Australia accepted for review our marketing application to use Abraxane ^® for the treatment of metastatic breast cancer. In July 2007, we filed for regulatory approval with the State Food and Drug Administration of the People’s Republic of China to market Abraxane ^® for the treatment of metastatic breast cancer in China. In October 2007, we received regulatory approval from India’s Drug Controller General to market Abraxane ^® for the treatment of metastatic breast cancer in India. Commercial introduction of Abraxane ^® in the Indian market is expected in 2008 following completion of the appropriate importation certifications. In August 2007, we filed for regulatory approval with the Korean FDA to market Abraxane ^® for the treatment of metastatic breast cancer in Korea. In January 2008, the European Commission granted marketing approval for Abraxane ^® for the treatment of metastatic breast cancer in women who have failed therapy in the first-line setting. In the first quarter of 2008, our partner, Taiho Pharmaceutical Co., Ltd., filed a Japanese New Drug Application (J-NDA) with the Ministry of Health, Labour and Welfare to market Abraxane ^® for the treatment of breast cancer in Japan. We plan to file for regulatory approval of Abraxane ^® for various indications in Taiwan and other countries.

nab™ Tumor Targeting Technology Platform

We have identified a biological pathway specific to tumors through which tumors preferentially accumulate albumin-bound complexes. This preferential accumulation of albumin appears to be facilitated through a tumor’s secretion of a protein called SPARC, which binds to and accumulates albumin. A body of research has suggested that the secretion of SPARC occurs in most solid tumors that are difficult to treat, including in breast, lung,

9

Table of Contents

ovarian, head and neck, melanoma, gastric, esophageal, glioma and cervical tumors. Exploiting these tumors’ attraction for albumin, we have developed a novel mechanism to deliver chemotherapy agents in high concentrations preferentially to all tumors secreting SPARC. This is accomplished through our nab™ tumor targeting technology, which encapsulates chemotherapy agents in nanometer-sized particles of albumin that is approximately 1/100th the size of a single red blood cell. Millions of these particles can be injected in a single dose of medication. This albumin-bound medication enters the bloodstream where it is transported across the blood vessel wall through a specific albumin receptor (gp60) on the blood vessel wall and targeted by SPARC secreted from the tumor cell.

The following diagram depicts our nab™ tumor targeting technology and the proposed mechanism by which high concentrations of chemotherapy agents are delivered preferentially to tumors through the biological gp60 receptor pathway and through albumin binding to SPARC.

In April 2007, at 98th Annual Meeting of the American Association for Cancer Research (AACR), we announced results from various pre-clinical studies that support the role of SPARC and our nab™ tumor targeting technology. The results from one pre-clinical study demonstrated that SPARC is an albumin-binding protein and that the level of the SPARC expression could be correlated with the response of tumors to Abraxane ^® . This provides concrete support for the earlier hypothesis that higher levels of SPARC protein may lead to enhanced anti-tumor effect of Abraxane ^® . The pre-clinical study results also provided evidence for chemotherapy induced angiogenesis and a rationale for combining Abraxane ^® with VEGF inhibitor drugs like Avastin ^® . We continue to explore the role of our nab™ technology for targeting SPARC and other biological pathways, as well as for the development of new therapeutic candidates, including our clinical product candidates described below.

We believe we can apply our nab™ tumor targeting technology to numerous chemotherapy agents. By exploiting the abnormal vascular growth (angiogenesis) and the overexpression of albumin-binding proteins (gp60 and SPARC) in advanced tumor cells and by overcoming water insolubility of many active chemotherapy agents, we believe that our technology may revolutionize the delivery of chemotherapy agents to cancer patients. As shown below, Abraxane ^® represents the first clinical and commercial validation of our nab™ technology that takes advantage of albumin, a natural carrier of water insoluble molecules (e.g., various nutrients, vitamins and hormones) found in humans. Because tumors have an increased need for nutrients to support rapid malignant growth, albumin complexes accumulate preferentially in tumors.

10

Table of Contents

We believe that our nab™ tumor targeting technology will serve as the platform for the development of numerous other drugs for the treatment of cancer and other critical illnesses. We are committed to maximizing the potential application of our technology.

ABI-008 (nab™-docetaxel). ABI-008 is a solvent-free, Tween ^® -free nanometer-sized form of docetaxel. Docetaxel is the active ingredient in the currently largest selling taxane, Taxotere ^® . An investigational new drug

11

Table of Contents

application, or IND, was filed for ABI-008 in the fourth quarter of 2006. In the second quarter of 2007, we initiated two of four planned Phase I/II trials with ABI-008, the second drug based on our nab™ technology to enter clinical development. These two Phase I/II trials will evaluate the safety, tolerability and anti-tumor activity of nab™ -docetaxel given every three weeks for the treatment of hormone refractory prostate cancer and metastatic breast cancer.

ABI-009 (nab™-rapamycin). Rapamycin, a protein kinase inhibitor, inhibits downstream signals from mTOR, a pathway that promotes tumor growth. Currently, it is marketed as an orally bioavailable immunosuppresive drug and no intravenous form is available because of the water insolubility of this molecule. The anti-cancer effects of rapamycin are limited by the immunosuppression associated with chronic oral administration. ABI-009 is a nanometer-sized, albumin-bound form of rapamycin able to be administered intravenously or by inhalation. At the 98th Annual Meeting of the AACR in April 2007, first-time data were presented from a pre-clinical study evaluating the toxicity and anti-tumor effect of ABI-009. These results demonstrated that ABI-009 was well-tolerated, showed linear pharmacokinetics, and was highly effective against a number of tumor models in vivo. An IND for ABI-009 was filed in December 2006. Clinical studies began in the fourth quarter of 2007.

ABI-010 (nab™-17AAG). 17AAG is a polyketide inhibitor of Hsp90 (heat shock protein 90) and interrupts several biological processes implicated in cancer cell growth and survival. Hsp90 is a protein chaperone that binds to several sets of signaling proteins, known as “client proteins.” 17AAG binds to Hsp90 and causes its dissociation from, and consequent degradation of, the client proteins. Because the Hsp90 client proteins are so important in signal transduction and in transcription (processes critical to the growth and survival of cancer cells), 17AAG may serve as a chemotherapy agent in the treatment of multiple cancers. Current formulations of 17AAG require solvents such as Cremophor and DMSO. ABI-010 is a solvent-free albumin-bound form of this drug. We have confirmed with the FDA our clinical development plan for nab™ -17AAG and plan to submit an IND for nab™ -17AAG in the first half of 2008.

ABI-011 (nab™-thiocolchicine dimer). Thiocolchicine dimers are novel thiocolchicines with dual mechanisms of action showing both microtubule destabilization and the disruption of topoisomerase-1 activity. nab™ -thiocolchicine dimer is a nanoparticle, albumin-bound form of the water insoluble dimer. ABI-011 was selected for its cytotoxic activity in nanomole range concentrations on several human tumor cell lines and, in particular, on a tumor cell line resistant to cisplatin and topotecan. This particular behavior was related to a dual mechanism of action. ABI-011 has the additional oncotherapeutic property of inhibiting topoisomerase-1 nuclear enzymes in a different manner than the classic topo-1 inhibitors, camptothecins. Pre-clinical studies of ABI-011 have shown that it also possesses anti-angiogenic and vascular targeting activity. We anticipate that an IND for nab™ -thiocolchicine dimer will be filed in 2008.

Coroxane™ (nanometer-sized paclitaxel, Abraxane ^® , under the trade name Coroxane™). Coroxane™ is currently in Phase II clinical studies for coronary restenosis as well as peripheral artery (superficial femoral artery) restenosis. The SNAPIST series of studies examines the use of Coroxane™ in the treatment of coronary artery restenosis, including the use of Coroxane™ in patients receiving bare metal stents. Coroxane™ administered with bare metal stents may address the issue of incomplete re-endothelialization and acute thrombosis associated with drug-eluting stents. Coroxane™ administered following balloon angioplasty in the superficial femoral artery may help reduce the incidence of restenosis in these patients. We currently intend to seek a strategic partner for the further development and marketing of Coraxane™.

Research and Development

Our research and development efforts are based on the tight integration and rapid translation of discovery from the bench to the clinic among its chemistry, biology, pharmaceutical, regulatory and clinical development groups. We have recruited seasoned discovery scientists, medicinal chemists, formulation scientists and

12

Table of Contents

integrated these talents with a team of clinical development and regulatory experts. Our approach is based on the integration of various capabilities and resources, including:

Natural Product Drug Discovery Platform

Almost half of today’s best-selling drugs originate from natural products or their derivatives. A key feature of natural products is their enormous structural and chemical diversity that is not represented in combinatorial libraries of synthetic compounds. This makes natural products a fertile resource for finding novel compounds that interact with new targets for drug discovery. In addition, our nab™ tumor targeting technology platform is ideally suited to the formulation and delivery of natural products, which tend to be more water insoluble, larger and more complex than typical synthetic drugs.

We have established a proprietary natural product library of large chemical diversity for drug discovery. The library currently represents approximately 100,000 semi-purified screening samples derived from microorganisms (over 65,000 strains of actinomycetes, fungi and bacteria) retrieved from over 30,000 soil samples representing geographic, habitat and genetic diversity from all over the world. New strains of microorganisms are continuously being added from our soil sample collection, and we believe the millions of microorganisms in each soil sample provide us with an almost limitless resource for continuing to create new and targeted libraries of natural product chemical diversity for drug discovery. For example, nab™ -17AAG was developed based on extracts from our natural product library.

Natural products are an important component of our drug discovery strategy and, with the capability to overcoming water insolubility through the use of our nab™ technology, we believe we have the unique opportunity to translate water insoluble compounds discovered from our natural product libraries into clinical applications.

Multi-functional Chemistry Capabilities. We possess a full range of chemistry capabilities, including organic and medicinal chemistry, analytical chemistry, formulation, process development and natural product isolation chemistry. Our approach, which involves chemistry-driven discovery combined with biology-driven validation and integration with our nab™ technology, has been applied successfully on many drug discovery programs.

Internal Clinical Trial and Regulatory Competencies. We have established key internal clinical development and regulatory competencies to execute rapid clinical translation of our technology in the most cost-efficient manner. Clinical Operations, Safety Reporting, Data Management and Biostatistics are located in our Durham, North Carolina office and consisted of approximately 55 employees at December 31, 2007. Clinical Operations manages all of our company-sponsored clinical trials by overseeing the study conduct at each site and verifying data integrity. Data Management enters all clinical trial data into an in-house Oracle ^® Clinical database, which is then analyzed by our biostatistics team who produce reports for FDA submissions. Safety reporting and post-marketing safety surveillance are carried out using the ArisGlobal ^® Drug Safety Reporting System. The regulatory operations team is responsible for making submissions to the FDA and global regulatory authorities. This seasoned team accomplished the first electronic submission of an NDA with the FDA of an oncology product, resulting in FDA approval of Abraxane ^® . An important strategy underway is the development of an informatics and electronic systems to streamline our clinical trial management processes, including establishing alliances to enhance patient accrual and provide efficient methods of data capture.

13

Table of Contents

Drug Discovery Strategies

Our drug discovery strategies are based upon the following:

SPARC

SPARC (Secreted Protein Acidic Rich in Cysteine) appears to be the intratumoral target of our nab™ technology platform due to its secretion by a variety of tumors and the affinity of albumin for SPARC. In addition, it has been discovered that the SPARC protein, when administered systemically in combination with chemotherapy, can greatly sensitize a chemotherapy resistant tumor in xenograft tumor models. Our scientists, in collaboration with university scientists, are exploring the therapeutic potential of SPARC in the treatment of chemo-resistant tumors. We will continue to explore the role of our nab™ technology for targeting SPARC and other biological pathways, as well as for the development of new therapeutic candidates.

Cancer Drug Discovery Targeting the Tumor Suppressor p53

In July 2007, we entered into a license agreement with the Buck Institute for Age Research under which we exclusively licensed the worldwide intellectual property rights for technologies designed to generate novel therapeutics and identify new drug discovery targets. There are no up-front or milestone payments required by us under the license agreement. If products are successfully developed incorporating any of the licensed technologies, we will pay the Buck Institute royalties based on a percentage of net sales. The term of the agreement will continue until the last patent claiming a licensed product under the agreement expires. However, the license agreement may be terminated earlier by either party upon the other party’s failure to timely cure a material breach under the agreement or upon the other party’s bankruptcy or insolvency.

Through this license agreement, we own the rights to a proprietary discovery platform designed to discover new chemical entities that remediate the signaling activities of the tumor suppressor p53 in p53-dysfunctional cancer cells. Loss of p53 activity is associated with one-half of all human tumors, often rendering these cancer cells resistant to conventional therapies. The licensed technologies have made the discovery of reactivators of appropriate p53 signaling behavior possible. Inherent in the design of the technologies is a strategy to develop therapeutics that selectively stimulate programmed cell death in p53-dysfunctional cancer cells and that would leave healthy cells expressing normal p53 unaffected.

The therapies developed in this program will target a specific population of aberrant (tumor) cells and forge a novel class of chemotherapeutics which have the potential to be much more potent than general inhibitors of cell proliferation or inducers of cell death. In the era of personalized medicine, and in combination with our emerging diagnostic methodologies, we believe this program will generate a novel pipeline of drugs that promise cancer patients greater proficiency with fewer side effects.

Immunotherapeutics and Related Assay Systems

The technologies licensed from the Buck Institute also included a novel immunotherapeutic/anti-cancer compound (T9) and highly sensitive cell-based assay systems for the discovery of additional immune-modulating drugs. Immune-modulating drugs represent an emerging class of therapies with broad clinical application in the treatment of cancer, allergies, inflammation, autoimmunity and tissue transplantation. T9 is a highly potent bi-functional molecule with the ability to kill cancer cells and to activate the immune response to recognize cancer cells in a manner analogous to childhood vaccination.

14

Table of Contents

T9 was originally discovered using robust ultra-sensitive cell-based assay systems which respond to minute amounts of potential immune-modulating drugs. Over time, these systems were further modified to allow for their use in high throughput screens for the identification of compounds that can control the magnitude and quality of the immune response. The immune-modulating high throughput screening systems (IMHTSS) technologies are important tools for the discovery of novel agents which modulate the immune response through controlling the type and degree of inflammation. “Hits” resulting from the screening of synthetic and natural product libraries using the IMHTSS technologies are anticipated to be further developed to act as immune adjuvants in improving existing vaccination platforms or to inhibit the immune response in the context of allergies (such as asthma) or autoimmune diseases (such as type I diabetes, multiple sclerosis and lupus erythematosus).

Abraxis Translational Molecular Bioscience at CNSI

The California NanoSystems Institute (CNSI) is a multidisciplinary research center at UCLA whose mission is to encourage university-industry collaboration and to enable the rapid commercialization of discoveries in nanosystems. CNSI members include some of the world’s preeminent scientists, and the work conducted at the institute represents world-class expertise in five targeted ar