[Third Point Letterhead]



April 17, 2007


Mr. Mark McDade, CEO
L. Patrick Gage, Chairman
John S. Saxe
Laurence Jay Korn
Karen A. Dawes
Bradford S. Goodwin
George M. Gould
Samuel Broder

PDL BioPharma Inc.
34801 Campus Drive
Fremont, CA  94555

Dear Board of Directors:

We are in receipt of the cursory letter dated April 11th sent in response to our
detailed letter of the same day. We are very disappointed with both that letter
and the subsequent private letter that we received from PDL BioPharma's ("PDLI"
or the "Company") Chairman, L. Patrick Gage, the following day - in which he
offered us the opportunity to "meet and greet" the Board. Both letters
unthinkingly endorse the status quo and turn a blind eye to concerns that we and
other shareholders have raised repeatedly: the Company's failure to meet revenue
and earnings expectations, and product development timelines, as well as PDLI's
excessive R&D and SG&A spending. Under these circumstances, and in light of Mr.
McDade's significant professional disappointments at PDLI and at previous
employers, we have grave concern about Mr. McDade's management skills and
suitability to serve as CEO. We ask that in the best interest of the Company and
its shareholders he step down with immediate effect.

We believe that if the Board were to focus on Mr. McDade's current performance
as well as past missteps which portend no better result here, they would agree
with our well-founded concerns: It is time for new leadership at PDLI, either in
the form of new, more-capable management or through a restructuring or sale of
the Company. We discussed in our previous letters Mr. McDade's unnecessary
spending on the Company's corporate headquarters as well as wasteful R&D and
SG&A spending. What we have learned since then confirms our view that Mr. McDade
is simply not sufficiently competent to lead PDLI. A former management-level
employee wrote the following, which reflects the results of our Investigation:



     "McDade's past imperious behavior and business failures as a key
     manager and CEO in both pharma and biotechnology (are) well known, and
     his abrasive personality resonates throughout the industry... For PDLI
     to move forward and become a successful company McDade (has) to go ...I
     applaud your efforts to fire McDade and resurrect the outstanding
     potential of this Company. I look forward to your success in
     reconfiguring both the Board and focus of PDL."


Mr. McDade's past experiences at both Signature BioScience and Corixa
Corporation demonstrate that his apparent fixation on the long-term can have
dangerous consequences. Signature folded in early 2003 (just after Mr. McDade
had jumped ship). The Signature saga is especially cautionary because Signature
followed a similar path to that which PDLI is pursuing, falling victim to
excessive spending (remarkably, just as at PDLI, Mr. McDade signed an expensive
lease in 2001 - the second largest lease in San Francisco that year - to move
Signature to larger and nicer quarters - right before the Company folded), poor
acquisitions and poor execution. Similarly, Corixa shareholders who were
unfortunate to have believed in the promise of a "long-term strategy" - like
that pursued by PDLI - were taken out in 2005 at a little over $4 per share -
near all-time lows, and down almost 95% from its highs.

Given this history, it is difficult to understand why Mr. McDade was hired at
all by PDLI, and more confounding still that the Board is allowing him to commit
the same mistakes here and pursue the same failed strategy. As we have
repeatedly warned, it is typical for underperforming managements to hide behind
"the long-term," because if the timeframe is undefined, then it is impossible to
fail. We have no doubt that PDLI is already so far off track that, were the
Company left to its own devices, Vision 2010 would soon become Vision 2015.
Regardless, we believe that five years falls well within the definition of
"long-term," and during Mr. McDade's tenure of that duration as CEO he has yet
again presided over or pursued poor strategic decisions, displayed ineffective
execution and engaged in massive overspending.

We also ask that you strongly consider the views of other shareholders as well
as the opinions of respected sell side analysts such as those from Prudential
and Merrill Lynch who have supported our views that PDLI needs to significantly
rationalize its spending and that Mr. McDade lacks the necessary qualification
for leadership of PDLI. We would also advise the Board to interview PDLI
employees and ex-employees at all levels, who have called or written to voice
support for the positions we have articulated. (In fact, this additional
information supports the view that PDLI is far more poorly managed than we had
previously believed - and that the headquarters move to Redwood City will be
more disruptive to the workforce than we had imagined.)

Accordingly, we request that Mr. McDade resign and that Company founder and
board member Laurence Korn be immediately installed as acting chief executive
officer and chairman.

We also reiterate our request for Board seats. In this regard, we were
disappointed to learn that Mr. McDade summarily dismissed all of our Board
nominees as "unqualified" without contacting a single one of the references we
provided for each. If Mr. McDade




had made those inquiries as we requested, and had learned first-hand of the
valuable work that we and our nominees have done -- at Ligand Pharmaceuticals
and Nabi Biopharmaceuticals on behalf of all shareholders of those companies --
we believe that he and the other Board members would have come to a different
conclusion, which would benefit all shareholders.

It is clear that the current Board must be augmented. While the current Board
has presided over the company, the stock has underperformed relative to its
peers, partners, and the broad market indices in general; during the same
period, it is hardly surprising that Board members have collectively owned only
a small outright position in PDLI stock (and have, in aggregate, been
substantial net sellers of the stock, especially Mr. McDade, with no outright
purchases of the stock by insiders for almost two years).

The current Board cannot simply ignore the desires of the Company's shareholders
for significant change. The events that transpired at MedImmune last Thursday
are instructive here. MedImmune's Board engaged Goldman Sachs to explore a sale
of the Company, among other strategic alternatives, "because of interest from
drugmakers and pressure from shareholders. The combination of buyout interest
and unhappy shareholders all forced the board to pursue this action." We believe
you are in the same position. As noted in our previous letter, we are concerned
that Mr. McDade has received an inquiry from a potential buyer of the Company,
which may not have been fully considered and explored by the Board Additionally,
many shareholders have communicated their disappointment with the share price,
which has rallied only since our involvement, as investors have begun to expect
that change is on the way. We hope that you will take careful note of the fact
that the MedImmune Board is honoring its fiduciary and legal duties by not
locking into a single, risky strategy, but is instead exploring all
possibilities to determine what is best for shareholders. The PDLI Board should
act in a similar fashion, in accordance with its fiduciary duties to
shareholders.

Although we are very concerned that your continued offer to meet with us in
person may be a "red-herring" designed to continue to buy time, we nonetheless
will meet with the entire Board within the next two weeks, but without Mr.
McDade. To reiterate, we have had an ongoing dialogue with PDLI management for a
year to voice our concerns, as well as having conducted a recent series of calls
with Mr. McDade on these issues and the time for the Board to act is now; we
will resist any efforts to unnecessarily delay implementing the requested
governance and management changes.

Our willingness to meet should not however be construed as a license for the
Board to drag its feet in responding to shareholder demands . Nor will we be
dissuaded by further bromides such as the following statement that was included
in your responses to us last week:

     "As a publicly traded biotechnology company our key aim is to maximize
     long-term value for all of our stockholders .... We believe the
     Company's current strategy will deliver significant stockholder value
     both in the near-term and the long-term."




Unfortunately, this is the same hollow promise that we would likely have heard
from you 4 1/2 years ago - and the stock (prior to our investment) has been flat
since then.

Notwithstanding Mr. Gage's support for Mr. McDade, we remain hopeful that the
Board is composed of individuals who understand their fiduciary duty and are
able to exercise due care in making decisions on shareholders' behalf. In
particular, we appreciate a conversation we had with Dr. Broder, and were
impressed by his intelligence and admirable career in science and public
service. Similarly, we believe that Company founder Laurence Korn must regret
the decision to have entrusted his life's work to the hands of Mr. McDade and
that he would welcome the opportunity to assume the role of CEO.

In sum, we ask the Board to look past personal loyalty to Mr. McDade and think
objectively about his performance and about the Board's duty to shareholders. We
are confident that you will come to the conclusion that Mr. McDade must go and
that an investment bank should be engaged to explore strategic alternatives
expeditiously.


Sincerely,

/s/ Daniel S. Loeb

Third Point LLC