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Abraxis BioScience (ABII) is a global biotech company headquartered in Los Angeles, California, formed on November 14, 2007, as a spin-off from APP Pharmaceuticals. The split gave APP the hospital and healthcare supply business, while Abraxis BioScience got the drug development business.

Abraxane

The company's primary drug is Abraxane which is built upon the nab platform wherein existing chemotherapy drugs, such as paclitaxel, are loaded into albumen, a natural protein that carries water-insoluble molecules such as various nutrients, vitamins, and hormones naturally found in humans. Abraxane has four advantages over traditional chemotherapy delivery methods. First, because many large tumor cells have albumen receptors, Abraxane finds its way more easily into the target tumor by attaching itself to albumen receptors. After attachment, the drug is allowed into the tumor cell where it binds to SPARC which is a tumor specific protein that recruits nutrients. Thus, instead of delivering nutrients to the tumor, SPARC delivers chemotherapy, killing cancer cells and halting tumor growth. Second, Abraxane does not contain chemical solvents, like Cremophor (en.wikipedia.org/wiki/...), which was the standard method of paclitaxel delivery. This eliminates the need for premedication with steroids or antihistamines that treat hypersensitivity reactions caused by these solvents. Third, Abraxane, due to its non-toxicity, is administered in just 30 minutes (compared to 3 hours for solvent-based paclitaxel). Lastly, and probably most importantly, because of its nontoxicity and ability to deliver paclitaxel into the target tumor more effectively, Abraxane delivers 50% more paclitaxel. Currently, Abraxane is approved in the U.S., U.K., China, Canada, Korea, Spain, Italy, Australia, Germany and India, and soon to be approved in Japan, for first and second line treatment of metastatic breast cancer, and has captured 34.5% of this market.

Pipeline

Abraxane phase 3 trials for the following cancers are either completed or near completion: advanced lung cancer (NSCLC), ovarian (advanced), melanoma (stage 4), prostate (hormone refractory), pancreatic (in combination with  Gemcitabine), and head and neck. The pancreatic results are most promising

Sales

Abraxane revenue in 2005 was $133.7, 2006 $174.9, 2007 $324.7, 2008 $336 (millions).  Most of those revenues are derived from the U.S. which was split with marketing partner, Astrazeneca. Abraxis BioScience ended the partnership by buying out Astrazeneca's 50% share for $268 million. So U.S. revenue should increase dramatically in 2009. Worldwide sales of Abraxis are just commencing, and by the second half of 2009, should increase dramatically, significantly impacting the bottom line.

Major Stock Holders

Of the 40 million shares outstanding, 83% is held by management and 15% is held by financial institions, including D. E. Shaw & Co., Inc., leaving roughly a 6 million share float. Furthermore, on 4/20/2009, the company announced a $100 million share open market repurchase program that, at the latest price ($46) will reduce the float by 2 million shares. Given this and revenue and cash flow projections for second half 2009, it is reasonable to assume that the stock price will appreciate from multi-year lows where it currently trades.

Caveat: Patent Issue

Elan Pharmaceutical sued Abraxis BioScience for patent infringement in its albumen attached particle technology and received a favorable lower court ruling to the tune of $55 million on previous sales of Abraxane. Abraxis intends to appeal.

Disclosure: Author bought ABII at $46.21. Author has no position in any other stock mentioned.