Biotech drug maker Abraxis BioScience Inc. said it is splitting apart the two businesses that were brought together in a 2006 merger, a tacit acknowledgement that investors continue to value the combined company lower than management believes is warranted.

In an effort to compete more effectively in the pharmaceutical and biotech markets, the Los Angeles-based company on Monday said that its hospital-based generic drug unit, which had $583 million in revenue last year, will be spun off under the name APP Inc., short for Abraxis Pharmaceutical Products. APP will be based at its manufacturing facility in Shaumburg, Ill.

The research-and-development and oncology units will stay in Los Angeles, retain the Abraxis BioScience name, and continue to market the proprietary breast cancer drug Abraxane, which is expected to have net sales of $285 million to $308 million this year. Both companies are expected to trade on the Nasdaq Global Market, with Abraxis retaining the ABBI ticker symbol.

Abraxis Chairman and Chief Executive Patrick Soon-Shiong, will continue to hold the same title at each company, the predecessors of which he founded in the 1990s. He is the majority shareholder, controlling 84 percent of the current company either directly and through a variety of trusts.

Abraxis shares jumped 4 percent in early trading Monday but later settled, closing up 1 percent to $22.50 on the Nasdaq. The company continues to be priced 46 percent lower than the share price of the predecessor public company, American Pharmaceutical Partners Inc., before the merger was announced in November 2005. In June 2006, American Pharmaceutical merged with its private Santa Monica research arm, American BioScience, to create Abraxis BioScience.

In the new deal, investors will get one share of stock in each company for every share now owned of the existing enterprise. The transaction is expected to close during the fourth quarter, and is conditional on a ruling from the U.S. Internal Revenue Service that the spin-off will be tax-free both for the company and its shareholders.

CIBC World Markets analyst Elliott Wilbur was skeptical that the change would placate investors, noting that APP not only will not benefit from Abraxane’s growth in future years but will take on almost $1.5 billion in new debt, a billion of which was given Abraxis to fund ongoing R & D.; “This may provide some ‘juice’ but is no fix,” he said in a note to investors.