American Pharmaceutical Partners Reports Record Net Sales of $98 Million in 2004 Second Quarter With Gross Margin of 54% Second Quarter 2004 Highlights:

* Net sales increased 8% to $97.7 million over second quarter 2003;

gross margin was 54.4%



* The company incurred expenses related to ABRAXANE(TM) of

$23.2 million, or $0.19 per diluted share, inclusive of a $10 million

milestone payment



* Net income, after incurring ABRAXANE(TM) related expenses, was

$9.2 million or $0.13 per diluted share



* Company received eight FDA approvals to date in 2004, including the

company's first NDA (Tobramycin Powder)



Conference call scheduled for 11:30 a.m. EDT, Thursday, July 22, 2004;

Simultaneous webcast available at www.appdrugs.com and

www.fulldisclosure.com



    SCHAUMBURG, Ill., July 22 /PRNewswire-FirstCall/ -- American
 Pharmaceutical Partners, Inc. (Nasdaq:   APPX) today reported the highest
 quarterly revenues in the company's history with net sales of $97.7 million
 for the second quarter ended June 30, 2004, an increase of 8% over net sales
 of $90.4 million in the 2003 second quarter.  Product launches in the second
 quarter contributed significantly to the sales increase, with the remaining
 growth driven primarily by strong sales of oncology and anti-infective
 products.  Second quarter 2004 gross margin was 54.4%, reflecting the launch
 of new, higher margin products.
     As anticipated, second quarter ABRAXANE(TM) expenses totaled
 $23.2 million, or $0.19 per diluted share, consisting of $13.2 million of
 pre-launch expenses and a $10.0 million milestone payment triggered by the
 FDA's May 8, 2004 acceptance of the ABRAXANE(TM) NDA filing.  Financial
 results for the 2004 second quarter benefited from a one-time investment tax
 credit of $1.7 million, or $0.02 per diluted share.  After incurring the
 ABRAXANE(TM) expenses and benefiting from the tax credit, net income was
 $9.2 million, or $0.13 per fully diluted share, versus net income for the 2003
 second quarter of $19.8 million, or $0.27 per diluted share, after incurring
 $1.6 million, or $0.02 per diluted share, of ABRAXANE(TM) pre-launch expenses.
     Net income for the core injectable business, which excludes ABRAXANE(TM)
 related expenses and the benefit of the one-time tax credit, was $0.30 per
 diluted share for the 2004 second quarter.  APP presents this financial
 metric, which excludes the impact of ABRAXANE and the tax credit, to clarify
 the operating results of the core injectable business.  Refer to the enclosed
 table for a reconciliation of pro forma net income to GAAP net income.
     "We are pleased with our accomplishments thus far in 2004, having received
 eight product approvals including Tobramycin Powder, the company's first New
 Drug Application, recorded the highest quarterly revenues in the company's
 history and raised our gross margin percentage in the second quarter to 54%
 from 50% in the preceding quarter," said Patrick Soon-Shiong, M.D., chairman,
 president and chief executive officer of American Pharmaceutical Partners.
 "The tentative approval for carboplatin, 16 ANDAs pending with the FDA and
 more than 50 products in development bode well for the balance of 2004 and
 beyond, and further solidify our position as a leader in our industry."
     Operating expenses totaled $41.5 million for the 2004 second quarter
 versus $17.8 million in the same period of 2003.  Excluding expenses related
 to ABRAXANE, operating expenses in 2004 were $18.3 million, or 18.8% of sales,
 compared with $16.2 million, or 17.9% of sales, in the second quarter of 2003.
     Cash and cash equivalents were $45.2 million at June 30, 2004 compared
 with $54.3 million at March 31, 2004.  The company currently has $77 million
 in cash on hand, no debt outstanding and $50.0 million available under its
 credit facility.
 
     2004 Outlook -- Forward Looking Information
     American Pharmaceutical Partners affirmed its earlier 2004 guidance as
 follows:
      *  Core injectable business sales are expected to increase in excess of
         20% over 2003, with the growth substantially driven by the anticipated
         fourth quarter launch of new products including Carboplatin, for which
         the company has obtained tentative FDA approval pending only
         expiration of the innovator patent;
      *  Core injectable business gross margin is expected to be in the low to
         mid 50% range;
      *  The FDA accepted the ABRAXANE(TM) NDA filing on May 8, 2004 and APP is
         preparing for the potential launch of ABRAXANE(TM).  Expenses related
         to ABRAXANE(TM), totaling $20.3 million in the first half of 2004, are
         expected to approximate $40 million for all of 2004.  In addition, APP
         expensed the $10 million milestone payment in the 2004 second quarter
         triggered upon the FDA's acceptance of the ABRAXANE(TM) NDA filing,
         and expects to pay a $15 million milestone payment 30 days following
         FDA approval of the NDA.  The FDA approval milestone would be
         capitalized and amortized over the estimated life of the product.
 
     Conference Call Information and Forward-Looking Statements
     On Thursday, July 22, 2004, the company will host a conference call with
 interested parties beginning at 11:30 a.m. (EDT) to review the results of
 operations for the second quarter ended June 30, 2004.  Discussion during the
 conference call may include forward-looking statements regarding such topics
 as, but not limited to, the company's revenues, margins, operating expenses,
 distribution arrangements and clinical or FDA developments, and any comments
 the company may make about its future in response to questions from
 participants on the conference call.  The conference call may be heard by any
 interested party through a live audio Internet broadcast at www.appdrugs.com
 and www.fulldisclosure.com.  For those unable to listen to the live broadcast,
 a playback of the webcast will be available at both websites for one year
 beginning at approximately 3:00 p.m. (EDT), July 22, 2004.
 
     About American Pharmaceutical Partners, Inc.
     American Pharmaceutical Partners, Inc. is a specialty drug company that
 develops, manufactures and markets injectable pharmaceutical products,
 focusing on the oncology, anti-infective and critical care markets.  APP has
 acquired the exclusive North American rights to manufacture and market
 ABRAXANE(TM), a proprietary nanoparticle injectable oncology product that has
 completed Phase III clinical trials for metastatic breast cancer.  The company
 believes that it has established the only commercial scale protein-engineered
 nanoparticle manufacturing capability in the United States.  For more
 information, visit APP's website at www.appdrugs.com.
 
     Statements contained in this press release, which are not historical
 facts, are forward-looking statements, as the term is defined in the Private
 Securities Litigation Reform Act of 1995. Such forward-looking statements,
 whether expressed or implied, 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, the impact
 of pharmaceutical industry regulation, the difficulty in predicting the timing
 or outcome of product development efforts and FDA or other regulatory
 approvals or actions including the approval of ABRAXANE(TM), the impact of
 competitive products and pricing, the availability and pricing of ingredients
 used in the manufacture of pharmaceutical products, the ability to
 successfully manufacture products in a time-sensitive and cost effective
 manner, the acceptance and demand of new pharmaceutical products, the impact
 of patents and other proprietary rights held by competitors and other third
 parties, actual results achieved in further Phase II and III trials for
 ABRAXANE(TM) may or may not be consistent with results achieved to date, the
 timing and completion of the ABRAXANE(TM) filing, the fact that the FDA has
 not reviewed the Phase III data and may not grant approval on the basis of
 such data, and other risk factors discussed in the Company's Form 10-K and
 other documents filed by the Company with the Securities and Exchange
 Commission from time to time. These forward-looking statements represent the
 Company's judgment as of the date of this press release. The Company disclaims
 any intent or obligation to update these forward-looking statements.
 
 
 
      AMERICAN PHARMACEUTICAL PARTNERS, INC.
 
      CONSOLIDATED STATEMENTS OF INCOME
      (in thousands, except per share amounts)
 
                           Three months ended          Six months ended
                               June 30,                   June 30,
                         2004     2003 % Change    2004     2003  % Change
 
     Net sales        $97,664  $90,416      8%  $186,842  $171,761      9%
 
     Cost of sales     44,523   39,790     12%    89,314    74,975     19%
     Gross profit      53,141   50,626      5%    97,528    96,786      1%
           Percent to
            sales       54.4%    56.0%             52.2%     56.3%
     Operating expenses:
       Research and
        development     6,889    5,067            13,940    11,143
       Selling, general
        and
        administrative 25,311   12,813            43,890    24,133
       Milestone
        payment        10,000       --            10,000        --
       Other             (694)     (83)             (763)      235
         Total
          operating
          expenses     41,506   17,797    133%    67,067    35,511     89%
           Percent to
            sales       42.5%    19.7%             35.9%     20.7%
     Income from
      operations       11,635   32,829    -65%    30,461    61,275    -50%
           Percent to
            sales       11.9%    36.3%             16.3%     35.7%
     Other income
      (expense), net      354      761               753     1,221
     Income before
      income taxes     11,989   33,590    -64%    31,214    62,496    -50%
           Percent to
            sales       12.3%    37.2%             16.7%     36.4%
     Income tax
      expense           2,744   13,772            10,200    25,623
 
     Net income        $9,245  $19,818    -53%   $21,014   $36,873    -43%
           Percent to
            sales        9.5%    21.9%             11.2%     21.5%
 
     Net income per
      share:
       Basic            $0.13    $0.29             $0.30     $0.53
       Diluted          $0.13    $0.27             $0.29     $0.51
     Weighted - average
      common shares
      outstanding:
       Basic           70,268   69,237            70,148    69,698
       Diluted         73,202   72,171            73,151    72,552
 
 
      AMERICAN PHARMACEUTICAL PARTNERS, INC.
 
      CONSOLIDATED BALANCE SHEETS
      (in thousands)
                                                     June 30,    December 31,
                                                      2004           2003
                                                   (Unaudited)     (Audited)
     ASSETS
     Current assets:
      Cash and cash equivalents                       $45,162        $58,625
      Accounts receivable, net                         38,143         31,402
      Inventory, net                                  132,453        110,384
      Prepaid expenses and other                        8,737          7,340
      Deferred income taxes                             7,948          7,948
       Total current assets                           232,443        215,699
 
      Property, plant and equipment, net               86,087         77,340
      Other assets                                     11,130         10,746
        Total assets                                 $329,660       $303,785
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Accounts payable                                $30,880        $26,560
      Accrued expenses                                 23,905         29,120
      Total current liabilities                        54,785         55,680
        Long-term deferred income tax liability         2,044          2,044
     Total liabilities                                 56,829         57,724
 
     Stockholders' Equity
      Common stock                                         77             77
      Additional paid-in capital                      207,229        201,009
      Amounts due from American BioScience, Inc.      (21,930)       (21,132)
      Deferred stock-based compensation                  (898)        (1,309)
      Retained earnings                               144,564        123,550
      Accumulated other comprehensive income               63            140
      Less treasury stock, at cost                   (56,274)       (56,274)
     Total stockholders' equity                       272,831        246,061
 
        Total liabilities and stockholders' equity   $329,660       $303,785
 
 
      AMERICAN PHARMACEUTICAL PARTNERS, INC.
 
      GAAP TO PRO FORMA NET INCOME RECONCILIATION
      (unaudited, in thousands, except per share amounts)
 
                              Three months ended June 30,
                                  2004          2003
 
     Reported net income          $9,245       $19,818
       Abraxane expenses (a)      13,182         1,625
       Abraxane milestone
        payment (b)               10,000           --
       Income tax benefit (c)     (8,995)         (666)
     Non-recurring investment
      tax credit (d)              (1,700)          --
 
     Pro forma net income        $21,732       $20,777
 
     Pro forma net income per
        diluted share              $0.30         $0.29
 
     Weighted - average common
       shares outstanding
        diluted                   73,202        72,171
 
      (a)  To eliminate direct ABRAXANE expenses that were not incurred on
           behalf of the core generic business.
      (b)  To eliminate the ABRAXANE milestone payment.
      (c)  To reverse the tax benefit related to ABRAXANE expenses and the
           milestone payment at the company's effective tax rate.
      (d)  To eliminate the non-recurring investment tax credit
 
 

SOURCE American Pharmaceutical Partners, Inc.

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