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Jul 2, 2007

Abraxis BioScience to Separate into Two Independent Public Companies

  • Abraxis BioScience plans to separate its hospital-based product business, Abraxis Pharmaceutical Products (APP), from Abraxis Oncology and Abraxis Research (the new Abraxis BioScience), which will result in two independent public companies.

    "Strategic initiatives executed over the past few years, including the acquisition of global rights to Abraxane and the nab technology platform, the acquisition of the AstraZeneca anesthesia/analgesic portfolio, and the acquisition of the Pfizer manufacturing facility in Puerto Rico, have accelerated the growth of two robust businesses with more than 1,900 employees and combined revenues that are expected to approach $1 billion by the end of 2007,” pointed out Patrick Soon-Shiong, M.D., chairman and CEO of Abraxis BioScience.

    "By separating these unique business units into two entities, we believe we will be able to unlock the intrinsic value of both companies by allowing each company to pursue its unique long-term strategic initiatives and address their diverse operational and capital needs,” Dr. Soon-Shiong explained. “Furthermore, the separation will permit each company to focus on their respective pipelines and business development opportunities and compete more effectively in their individual marketplaces.

    "APP, with one of the most comprehensive injectable product portfolios in the U.S. and one of the only companies that mirrors the overall market demand for injectable products, will be positioned to maximize its core strength to enhance current product offerings and pursue new opportunities, including biosimilars.”

    Abraxis BioScience has received commitments for $1.45 billion of senior credit facilities, including a funded $1.3-billion term loan and an unfunded $150-million revolving credit facility. The funded financing is anticipated to represent approximately 4.8 to 5.2 times of APP's estimated adjusted EBITDA for the previous four quarters prior to the close. APP will be responsible for servicing the debt following the separation. A portion of the proceeds raised through the debt financing will be used to repay the current company's existing indebtedness, and approximately $1 billion will be transferred to the new Abraxis BioScience immediately prior to the separation.

    "The proceeds provided to the new Abraxis BioScience in this transaction will permit this entity to become a highly focused biotechnology company, strategically concentrating on its nab technology platform to deliver progressive therapeutics, such as Abraxane, and develop core technologies that offer new and personalized treatments to patients with life-threatening diseases," said Dr. Soon-Shiong.

    "With a capital infusion of approximately $1.0 billion and 2007 net sales expected in the range of $285 million to $305 million from Abraxane, the new Abraxis BioScience will have the financial resources to maximize its pipeline potential and capture opportunities that enhance commercialization depth and establish Abraxis as a leader in biotechnology," noted Lisa Gopala, CFO of Abraxis BioScience.

    The transaction is expected to be completed in the fourth quarter of 2007, subject to the IRS decision that the separation will be tax-free to Abraxis BioScience and its shareholders.



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