How many out there have stocks in their portfolios that have jumped over 50% in one day? Well, holders of American Pharmaceutical Partners (NASDAQ:APPX) can now proudly raise their hands. Just last week, the stock soared after the FDA approved its drug, Abraxane, a less toxic treatment for women with metastatic breast cancer.

The company's proprietary technology shrinks the chemo drug into nano dimensions, which then allows it to be encased within an albumin-coated "shell." Albumin is a naturally occurring protein; therefore, the immune system does not attack it as it would normal chemo drugs. This allows for higher concentrations of chemotherapy to be delivered more precisely, without the nasty side effects.

Bristol Myers Squibb's (NYSE:BMY) Taxol, which can result in nasty side effects, is currently the preferred treatment for metastatic breast cancer. The market for this type of drug is currently $1.4 billion and might grow as large as $3 billion by 2007.

Abraxane is now well positioned to capture a large share of this market, with forecasts of $200 million in revenues in 2005 conservatively rising to $500 million in 2006 and upwards beyond that.

The approval marks a degree of validation for American Pharmaceutical Partners and especially for its chairman, Mr. Patrick Soon Shiong. They have had to contend with rumors of SEC investigations, supposed FDA irregularities, and talk of the intertwined management relationship with American BioSciences, the actual owners of Abraxane.

All of that resulted in a historically very high short position being held in APPX. Several professional hedge fund managers declined to cover their short position, confident that Abraxane would not get approved. This short squeeze explains, in part, the huge jump last week. The shorts, after removing the albumen from their faces, all had to rush to cover once the approval notice hit the airwaves.

With their existing business of generics giving them a "floor" price somewhere in the mid-$20s and with revenues from Abraxane and other potential drugs, there is still lots of room for growth. The fact that APPX has already begun phase I and II trials for a variety of other promising treatments is icing on the cake for holders of these shares.

There is some cause for concern, however. Rivals might offer competing drugs that also avoid the negative side effects associated with chemo. There might also be complications relating to the "agreement" on the licensing deal between the private company that "owns" the public company. The details of the deal are public knowledge, however, so it's difficult for these Fools to see how the deal could break down.

American Pharmaceutical Partners is exactly the type of Rule Breaker we are looking for in the nano arena. Delivering less painful treatment for women with breast cancer is just one of the hopeful applications of the emerging science of nanotechnology. Congratulations to those Fools who held on to their shares of APPX through all the uncertainty -- they earned that spike last week.

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Carl Wherrett doesn't own shares of any company mentioned, and neither does John Yelovich. You can reach them both by email and email. The Fool has a disclosure policy.