Unassociated Document

Revenues for the third quarter of 2010 were $86.4 million, a 21 percent increase when compared with $71.4 million for the same period in 2009. Revenue growth for the third quarter of 2010 over the same period in 2009 was primarily driven by increased second quarter 2010 sales by the Company’s licensees of Avastin® and Herceptin®, which are marketed by Genentech and Roche; Lucentis®, which is marketed by Genentech and Novartis; and Tysabri®, which is marketed by Elan and Biogen Idec. PDL received royalties for these product sales in the third quarter of 2010.

General and administrative expenses for the third quarter of 2010 were $11.1 million compared with $5.3 million for the third quarter of 2009. Significant expense items in the third quarter of 2010 were legal fees of $8.7 million, compensation and benefits of $1.0 million, professional service fees of $0.5 million and stock-based compensation expense of $0.2 million.

Non-operating expenses were $12.1 million for the third quarter of 2010 compared with $2.6 million for the third quarter of 2009. Included in non-operating expense for 2010 is a loss of $2.4 million associated with the conversion of the Company’s 2.75% Convertible Subordinated Notes due 2023 (the 2023 Notes) and interest expense of $9.9 million. In the third quarter of 2009, the Company recorded a gain of $0.3 million on the repurchase of a portion of its 2.00% Convertible Senior Notes due 2012 (the 2012 Notes) and interest expense of $3.1 million. The increase in interest expense is attributable to the 10.25% Non-recourse Notes due 2015 issued in November 2009 (the Non-recourse Notes) that have a current principal balance of $225.0 million.

Revenues for the nine months ended September 30, 2010 were $268.8 million, compared with $259.9 million for the same period in 2009. General and administrative expenses for the nine months ended September 30, 2010 were $29.3 million compared to $15.5 million for the same period in 2009.

Non-operating expenses for the nine months ended September 30, 2010 were $52.4 million compared with $7.7 million for the same period in 2009. Included in non-operating expense for the nine months ended September 30, 2010 are $18.7 million in costs associated with the retirement or conversion of the 2023 Notes. Included in the nine months ended September 30, 2009 are gains associated with the repurchase of a portion of the 2012 Notes of $0.8 million and a portion of the 2023 Notes of $0.7 million.

Net income for the first nine months of 2010 was $116.3 million, or $0.67 per diluted share, compared to $161.1 million, or $0.97 per diluted share for the same period in 2009. Adjusting for gains or losses on retirement or conversion of convertible debt, non-GAAP net income for the nine months ended September 30, 2010 totaled $133.4 million, or $0.77 per diluted share, compared with non-GAAP net income of $160.1 million, or $0.96 per diluted share for the same period in 2009.

Net cash provided by operating activities for the first nine months of 2010 was $154.3 million compared with $132.8 million for the first nine months of 2009. At September 30, 2010, PDL had cash, cash equivalents and short-term investments of $227.2 million compared with $303.2 million at December 31, 2009, a decrease which can be primarily attributed to the retirement of the 2023 Notes, the payment of the April dividend and the $75 million repayment of the Company’s Non-recourse Notes partially offset by cash provided by operations.

As previously announced, the Company completed an exchange of $92.0 million in aggregate principal of the 2012 Notes in separate, privately negotiated transactions with the note holders. Pursuant to the exchange transactions, the note holders received $92.0 million in aggregate principal of new 2.875% Convertible Senior Notes due February 15, 2015 (the 2015 Notes). As part of the transaction, the Company also placed an additional $88.0 million in aggregate principal of the 2015 Notes. Following the exchange transactions, $136.0 million of the 2012 Notes remain outstanding. The conversion rate for the 2015 Notes is 140.571 shares of common stock per $1,000 principal amount of the 2015 Notes or $7.11 per share of common stock.

	Debt Outstanding (In millions)
	11/1/2010		12/31/2009
2.75% Convertible Debt
Put Option - August 2010	$	-	$	200
2.00% Convertible Debt
Maturity - February 2012		136		228
10.25% Securitization Note
Expected Maturity - September 2012		225		300
2.875% Convertible Debt
Maturity - February 2015		180		-
Total Debt	$	541	$	728

PDL previously announced that it would pay two special dividends of $0.50 per share each, to its stockholders in 2010. The first special dividend, totaling $59.9 million, was paid on April 1, 2010 to all stockholders of record on March 15, 2010. The second special dividend, totaling $69.8 million, was paid on October 1, 2010 to all stockholders of record on September 15, 2010. PDL does not pay regular dividends.

As previously announced, PDL will continue to provide revenue guidance for each quarter in the third month of that quarter. Fourth quarter and year-end 2010 revenue guidance will be provided in early December.

To access the live conference call via phone, please dial (866) 271-5140 from the United States and Canada or (617) 213-8893 internationally. The conference ID is 98631412. Please dial in approximately 10 minutes prior to the start of the call. A telephone replay will be available beginning approximately one hour after the call through November 17, 2010, and may be accessed by dialing (888) 286-8010 from the United States and Canada or (617) 801-6888 internationally. The replay passcode is 74992654.

To access the live and subsequently archived webcast of the conference call, go to the Company’s website at http://www.pdl.com and go to “Company Presentations & Events.” Please connect to the website at least 15 minutes prior to the call to allow for any software download that may be necessary.

PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases. PDL is focused on maximizing the value of its antibody humanization patents and related assets. The Company receives royalties on sales of a number of humanized antibody products marketed by leading pharmaceutical and biotechnology companies today based on patents which expire in late 2014. For more information, please visit www.pdl.com.

The Company has presented certain financial information in conformance with generally accepted accounting principles in the U.S. (GAAP) and also on a non-GAAP basis for the three and nine months ended September 30, 2010 and 2009. Management believes that this non-GAAP information is useful for investors taken in conjunction with the Company’s GAAP financial statements. Non-GAAP financial information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the Company’s net income as reported under GAAP. A reconciliation between GAAP and non-GAAP financial information is provided in the table on page 5.

This press release contains forward-looking statements. Each of these forward-looking statements involves risks and uncertainties. Actual results may differ materially from those, express or implied, in these forward-looking statements. Factors that may cause differences between current expectations and actual results include, but are not limited to, the following:

Other factors that may cause PDL’s actual results to differ materially from those expressed or implied in the forward-looking statements in this press release are discussed in PDL’s filings with the SEC, including the “Risk Factors” section of its annual and quarterly reports filed with the SEC. Copies of PDL’s filings with the SEC may be obtained at the “Investors” section of PDL’s website at www.pdl.com. PDL expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in PDL’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based for any reason, except as required by law, even as new information becomes available or other events occur in the future. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

Revenues
Royalties	$	86,442		$	71,446		$	268,846		$	247,147
License and other		-			-			-			12,785
Total revenues		86,442			71,446			268,846			259,932
General and administrative expenses		11,110			5,255			29,340			15,538
Operating income		75,332			66,191			239,506			244,394
Gain (loss) on retirement or conversion of convertible notes		(2,354	)		323			(18,681	)		1,518
Interest and other income, net		167			214			337			860
Interest expense		(9,928	)		(3,105	)		(34,015	)		(10,036	)

Income before income taxes		63,217			63,623			187,147			236,736
Income tax expense		23,028			17,217			70,813			75,636
Net income	$	40,189		$	46,406		$	116,334		$	161,100

Net income per basic share	$	0.32		$	0.39		$	0.95		$	1.35
Net income per diluted share	$	0.24		$	0.29		$	0.67		$	0.97

Cash dividends declared per common share	$	-		$	-		$	1.00		$	1.00

Shares used to compute income per basic share		127,479			119,411			122,209			119,366
Shares used to compute income per diluted share		172,217			168,576			178,448			172,248

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009

Net income	$	40,189		$	46,406		$	116,334		$	161,100
Add back loss (gain) on retirement or conversion of convertible notes		2,354			(323	)		18,681			(1,518	)
Deduct income tax expense (benefit) on retirement or conversion of convertible notes		-			113			(1,590	)		531
Non-GAAP net income		42,543			46,196			133,425			160,113

Add back interest expense for convertible notes, net of estimated taxes		987			1,681			3,982			5,444
Non-GAAP net income used to compute non-GAAP net income per diluted share	$	43,530		$	47,877		$	137,407		$	165,557

Non-GAAP net income per diluted share	$	0.25		$	0.28		$	0.77		$	0.96

Shares used to compute net income per diluted share		172,217			168,576			178,448			172,248
Delete shares issued to induce note conversion to common stock (1)		(104	)		-			(35	)		-
Shares used to compute non-GAAP net income per diluted share		172,113			168,576			178,413			172,248

(1) The shares used to compute non-GAAP net income per diluted share amounts are the same as the shares used to calculate GAAP net income per diluted share amounts, except the shares for the three and nine months ended September 30, 2010 exclude the weighted average effect of the shares issued as an incentive to induce conversion of the 2023 Notes in August 2010.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
Compensation and benefits	$	965	$	821	$	2,962	$	2,389
Legal expense		8,660		3,063		20,821		7,436
Other professional services		535		567		2,618		2,133
Insurance		185		238		608		754
Depreciation		14		35		76		957
Stock-based compensation		166		215		525		617
Other		585		316		1,730		1,252
Total general and administrative expenses	$	11,110	$	5,255	$	29,340	$	15,538

	September 30,			December 31,
	2010			2009
Cash, cash equivalents and short-term investments	$	227,190		$	303,227
Total assets	$	257,507		$	338,411
Convertible notes payable	$	227,990		$	427,998
Non-recourse notes payable	$	225,041		$	300,000
Total stockholders' deficit	$	(304,542	)	$	(415,953	)

	Nine Months Ended
	September 30,
	2010		2009
Net income	$	116,334	$	161,100
Adjustments to reconcile net income to net cash provided by operating activities		20,199		(3,586	)
Changes in assets and liabilities		17,780		(24,710	)
Net cash provided by operating activities	$	154,313	$	132,804

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Avastin
% Ex-U.S.-based Sales		49	%		46	%		49	%		46	%
% Ex-U.S.-based-Manufacturing and Sales		27	%		-			20	%		-
Herceptin
% Ex-U.S.-based-Sales		68	%		68	%		70	%		70	%
% Ex-U.S.-based Manufacturing and Sales		45	%		47	%		45	%		31	%
Lucentis
% Ex-U.S.-based Sales		56	%		55	%		57	%		52	%
% Ex-U.S.-based Manufacturing and Sales		-			-			-			-
Xolair
% Ex-U.S.-based Sales		34	%		31	%		35	%		28	%
% Ex-U.S.-based Manufacturing and Sales		34	%		31	%		35	%		28	%

Contacts:
Cris Larson	Jennifer Williams
PDL BioPharma, Inc.	Cook Williams Communications
775-832-8505	360-668-3701
Cris.Larson@pdl.com	jennifer@cwcomm.org