But in response to questions, Carter also acknowledged that the FDA may simply view Abraxane as a reformulation of Taxol, which would make approval more likely because the regulatory requirements would be less stringent. Furthermore, Carter conceded that the FDA would have likely rejected the Abraxane application already if the agency viewed the drug as something more complex than a simple Taxol reformulation.

One manager of a $400 million mutual fund who is long American Pharmaceuticals seized on this last point. "If the FDA had wanted a full-fledged NDA new drug application , they would have asked for one by now," he said. The source requested anonymity because his firm doesn't allow money managers to discuss individual stocks in their portfolio.

It should be noted, too, that the FDA didn't bring Abraxane in front of an advisory panel meeting. Such a venue is often used by the agency to vet drugs with which it has issues or problems.

Abraxane bears, on the other hand, were making hay with Carter's initial negative comments to press their case on why the FDA will turn the drug away. Generally speaking, short-sellers of American Pharmaceutical shares have long believed that the Abraxane data sent to the FDA are flawed, including problems with patient enrollment in the phase III clinical trial, Abraxane's dose levels, and surprisingly poor Taxol response rates in the study.

Skeptics also point to past comments made by American Pharmaceutical executives, who at various public forums have described Abraxane as a new delivery mechanism for Taxol.

A hedge fund manager, also asking for anonymity, isn't covering his American Pharmaceuticals short, despite the stock's recent strength. "Nothing I've heard in recent days changes my mind: The FDA won't approve Abraxane," he forecast.

But not all Abraxane bears are so confident. Another hedge fund manager, who also asked for anonymity, said he covered his short position in American Pharmaceuticals in October, when the stock was trading in the mid-$20s. At that level, American Pharmaceuticals would not have sunk more than another two or three dollars if Abraxane had been rejected because of a valuation floor set by the drugmakers' base generic-drug business, he explained. But if Abraxane had been approved, the stock easily could have doubled or more.

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