Cancer treatment developer Abraxis Bioscience, Inc. (Nasdaq: ABII) announced a $100 million share repurchase program on Monday– a clear sign that management believes the company’s shares are undervalued at current levels. The repurchase of shares will be funded by internal cash resources and made through open market purchases.
“We believe our shares are undervalued and that our strong financial position makes the purchase of our own shares a sound investment at this time,” said Abraxis’ chairman and CEO, Dr. Patrick Shoon-Shiong.
The Los Angeles-based company reported revenue of $345 million in 2008, up from $334 million in the prior year. Gross profit for the year was $306 million, compared with $299 million in 2007.
But the real story at Abraxis, is ABRAXANE, the company’s tumor-targeting cancer treatment that use a protein called albumin to deliver chemotherapy, and does not contain chemical solvents. This eliminates the need for pre-medication with steroids or antihistamines, and significantly reduces the amount of time it takes to administer the treatment.
Last year was a busy year for Abraxis. When the company began “2008, we were commercializing ABRAXANE in the United States and Canada and approval to do so in India,” said Dr. Shoon-Shiong. “By the end of the year, we had commercialization approval in 36 countries.”
The company has also stepped up its marketing efforts in China, and is pushing ahead with the commercialization of ABRAXANE in Japan and Russia.
The company has to restructure its sales force after it ended its two-year, co-promotion agreement for ABRAXANE with Astra Zeneca. However, in an earnings call, Dr. Shoon-Shiong stated that the company could start seeing the benefits of its restructuring in the second half of the year.
Abraxis’ EU sales force in the European Union is provided by Innovex, a unit of QuintilesTransnational Corp. The company currently has five sales representatives in the UK, eight in Germany and expects to add eight in Italy this year and an additional sales force in Spain.
ABRAXANE was launched in the UK in December 2008, and the company plans to “continue this roll-out to additional nations in Europe on a country-by-country basis,” said Dr. Shoon-Shiong.
Abraxis is in good shape financially. As of December 31, 2008, the company had $607 million in cash and no long-term debt.
“I think the second half of 2009 would be a very exciting time for us,” said Dr. Shoon-Shiong.