APPX App Pharmaceuticals (MM)

APP Pharmaceuticals, Inc. (Nasdaq: APPX) is communicating in a letter to its customers that the company continues to work closely with the U.S. Food and Drug Administration (FDA) to ensure that an uninterrupted and safe supply of heparin of the highest quality is available for U.S. patients. APP is currently the sole supplier of therapeutic heparin vials to the U.S. market, because drug impurities have forced the other U.S. supplier of heparin vials to withdraw its product from the market. Heparin, a widely used anti-coagulant, is derived from the intestines of pigs. Most of the U.S. supply of heparin comes from China, where tainted raw heparin material has resulted in more than 80 patient deaths in the U.S. and hundreds of severe allergic reactions, according to the FDA. Concerns regarding reports of severe allergic reactions resulting in death have been linked to the contaminant, oversulfated chondroitin sulfate, in heparin raw material. APP has completed testing on all lots of heparin raw material dating back to January 2006. All product has been found to be contaminant-free. The FDA has also tested select material from APP samples and has completed review of APP�s analytical results confirming the purity of APP�s heparin. From the outset in 2005 when APP received FDA approval for its heparin supplier from China, the company instituted rigorous quality testing procedures on its heparin raw materials which exceeded the United States Pharmacopeia (USP) requirements. The company and its scientists are working closely with FDA, USP and government officials to provide the processes and methods associated with these high standards. �Because of the steps that we have been taking since early 2000 to ensure a safe, traceable supply chain and are continuing to take with regard to the production of heparin, we have been able to provide a product of the highest quality standards,� said Patrick Soon-Shiong, M.D., chairman of APP Pharmaceuticals. In the Company�s letter to customers, APP details the steps that the Company has taken to assure drug purity. �With our partner in China, we developed manufacturing standards of heparin raw material production with the most modern equipment and trained staff available to ensure that the material met and exceeded current USP standards, and received FDA approval in 2005. We also established supply chain controls to guarantee that the product is inspected at each stage of the extraction and purification process, enabling us to certify the quality of the finished product.� APP has worked with the FDA to increase production and ensure the availability of heparin for patients. Significant investments have been made internally through the addition of new fill lines and full packaging lines as well as additional staff, including manufacturing, customer service, distribution and quality analytical personnel. APP continues to manage the distribution of heparin to prevent an imbalance of supply of this critical product needed for life-saving and life-sustaining procedures. In addition, the Company continues its direct shipment program to control the distribution and expedite delivery of the products to physicians and patients in need of therapeutic heparin. The tainted heparin supply has resulted in skyrocketing crude heparin prices and a tight supply of the starting material. The decrease in the supply of raw heparin has been compounded by an increase in demand for heparin which also serves as starting material for low-molecular weight heparin in global markets. In light of the dramatic increase in raw material costs, the need to secure an uninterrupted delivery of API and the increased costs associated with the additional required testing, as well as the hiring of additional employees, APP has communicated to its customers the need to adjust its heparin price. In dialysis patients this price adjustment translates to about 6 cents per 1000 units of heparin. This increase represents approximately 48 cents per dialysis treatment. According to the Stanford and Fresenius Research report of May 2, 2008, the reimbursement for managed care dialysis treatment is approximately $614, with an average reimbursement per dialysis treatment of $325, taking into consideration the Medicare reimbursement rate of $237 per dialysis treatment. Thus, the impact of the total cost of heparin at its adjusted price represents less than one half of one percent of the total cost of the dialysis treatment. Responding to APP�s price adjustment, Richard Norling, President and CEO of Premier Inc., one of the largest group purchasing organizations in the United States, stated, �We recognize the difficulties associated with this heparin crisis. Our primary goal is to ensure the uninterrupted supply of the highest quality safe material for our patients. We appreciate APP�s efforts in averting a shortage of this life sustaining product.� Heparin is indicated for anticoagulant therapy for patients undergoing surgery, blood transfusions, extracorporeal circulation, dialysis procedures and other settings that require a blood-clotting inhibitor. About APP Pharmaceuticals APP is a specialty drug company that develops, manufactures and markets injectable pharmaceutical products, focusing on oncology, anti-infective, anesthetic/analgesic and critical care markets. The company is one of the largest producers of injectables, with more than 100 generic products in more than 400 dosage formulations. APP, headquartered in Schaumburg, Illinois, has offices in Canada and manufacturing operations in Illinois, New York and Puerto Rico and is traded on the Nasdaq Global Market under the symbol APPX. For more information about APP and the products it provides, please visit www.APPpharma.com. Forward-Looking Statement The statements contained in this news release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this news release include statements regarding our expectations, beliefs, hopes, goals, intentions, initiatives or strategies, including statements regarding the demand, supply and distribution of heparin. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the availability and pricing of ingredients used in the manufacture of pharmaceutical products and the ability to successfully manufacture products in a time-sensitive and cost effective manner. Additional relevant information concerning risks can be found in APP Pharmaceuticals Form 10-K for the year ended December 31, 2007 filed under the company name Abraxis BioScience, Inc. and other documents it has filed with the Securities and Exchange Commission. The information contained in this news release is as of the date of this release. APP assumes no obligations to update any forward-looking statements contained in this press release as the result of new information or future events or developments.