Uncertain investors keep drug firm's stock on see-saw path. (Corporate Focus).

INVESTORS are seeing two sides to American Pharmaceutical Partners Inc.

There's the manufacturer of generic drugs that has introduced more than a half dozen new products this year and posted revenue and income numbers that have impressed Wall Street.

Then there's the company that still draws doubts over the business practices and checkered past of Dr. Patrick Soon-Shiong, its majority owner, as well as new questions that have arisen about a potential new blockbuster cancer drug.

Those contrasting views of the Los Angeles firm, which went public a year ago, have played out in its see-sawing stock, which hit a low of $7.75 in July and climbed to a high of nearly $25 last month, only to drop to under $16 a share last week.

"They deliver on their strategy. I don't know how else to really judge them," said Elliot Wilbur, an analyst for CIBC World Markets, which was an underwriter on the company's initial public offering last year. "But if I told you the investment community felt it could trust him 110 percent, the stock would be a lot higher."

But APP, which manufactures generic injectable drugs for use in cancer therapy, critical care and infection control, has posted impressive numbers this year, as it received Food and Drag Administration approval for a variety of new generics.

For the third quarter ended Sept. 30, the company reported net income of $10.6 million, compared with $2.7 million for the like period a year ago. Revenue was $70.6 million, up from $49.3 million.

That growth, analysts said, has helped pump up the stock since its low point in July. But there's also been a wild card at play--an attempt to bring to market a new patented formulation of paclitaxel called ABI-007.

Paclitaxel is the generic name for Taxol, a drug manufactured by Bristol-Myers Squibb Co. that is used to combat breast and others cancers and has been one of the most successful oncology drugs in the world.

APP is in the last stage of human trials for a new formulation of the drug it says will be even more effective because it can be used safely in higher dosages.

However, during a conference call in October questions arose over how the trial was proceeding. It was disclosed that some of those enrolled in the trial were cancer patients who had not been treated with any other chemotherapy.

This could be an issue because the FDA approved Taxol for treating breast cancer only after some other drag has failed. Using APP's drug as a first-line drug might show it to be more effective than it really is, said Steven Valiquette, an analyst with UBS Warburg, which also was an underwriter for the company's IPO.

The stock has been on the skids ever since, despite management's insistence that the patient mix has been approved.

Questions over the drag trial are only the latest bad news that management has had to fend off this year.

In late July, the company had to spend nearly $30 million to buy back 2.9 million of its shares from Premier Purchasing Partners, an original investor in the six-year-old company that is one of the nation's leading group purchasing organizations.

Group purchasing organizations are middlemen that sell hospital supplies at presumably favorable prices, but a New York Times article last March questioned whether Premier may have had a conflict of interest and steered business to APP.

In June, 29 states sued Bristol-Myers, alleging that it conspired with American BioScience Inc., APP's majority shareholder, to illegally delay generic competition for Taxol, costing states and patients billions of dollars.

American BioScience was not a defendant in the suit but was named as a co-conspirator. It also has been involved in longstanding litigation of its own against a Florida drug company called Ivax Corp. that manufactures a generic form of Taxol over the same issue.

Soon-Shiong has been involved in other litigation, including lawsuits brought against him by his brother and Mylan Laboratories Inc., a Pittsburgh-based generic and brand drug company that invested in another company Soon-Shiong ran. That litigation has since been settled.

American BioScience owns two-thirds of the stock of APP, and is itself controlled by Soon-Shiong, the chairman and chief executive of APP.

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American Pharmaceutical Partners Inc.

YEAR (Dec. 31)                  2001     2000

Revenue (millions)              $192   $165.5
Operating Expenses (millions)  166.6    177.7
Operating Income (millions)     25.4   (12.2)
Net Income (millions)           12.6    (8.8)
Earnings Per Share             $0.30  ($0.43)

* American Pharmaceutical Partners does not pay dividends.

SUMMARY

Business: Manufacturer of generic injectable drugs

Headquarters: Los Angeles

CEO: Patrick Soon-Shiong

Market Cap: $855 million

Dividend Yield: N/A *

Total Liabilities: $54.4 million

P/E Ratio: 28.54

Long-Term Debt: None