PDLI » Topics » OVERVIEW

This excerpt taken from the PDLI 10-Q filed May 8, 2009.

OVERVIEW

Our business is the management of antibody humanization patents and royalty assets which consist of our Queen et al. patents and our license agreements with numerous biotechnology and pharmaceutical companies. We receive royalties based on sales of humanized antibody products marketed today pursuant to certain rights we have licensed under our patents and may also receive royalty payments on additional humanized antibody products launched before final patent expiry in 2014. Generally, our license agreements cover humanized antibodies targeting antigens specified in the license agreements.

Under most of our licensing agreements, we are entitled to receive a flat-rate royalty based upon our licensees’ net sales of covered antibodies. These licensing agreements have contributed to the development of ten marketed products by our licensees. Nine of these products are currently approved for use by the U.S. Food and Drug Administration (FDA) and nine are approved for use by other regulatory agencies outside the United States. One of our licensed products, Raptiva®, was recently withdrawn from the United States market and had its marketing approval suspended in the European Union and Canada. We have also entered into licensing agreements pursuant to which we have licensed certain rights under our patents for development stage products that have not yet reached commercialization including products that are currently in Phase III clinical trials.

 

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Until December 2008, our business included biotechnology operations which were focused on the discovery and development of novel antibodies which we spun off (the Spin-Off) to Facet Biotech Corporation (Facet). From March 2005 until March 2008, we also had commercial operations consisting of the manufacture and sale of commercial products (the Commercial Assets) and development stage products which we partially divested in 2006 and fully divested in 2008. The financial results of our former commercial and biotechnology operations are presented as discontinued operations in the Condensed Consolidated Statement of Operations.

These excerpts taken from the PDLI 10-K filed Mar 2, 2009.

OVERVIEW

We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc. Our business is the management of our antibody humanization patents and royalty assets which consist of our Queen et al. patents and license agreements with numerous biotechnology and pharmaceutical companies pursuant to which we have licensed certain rights under our Queen et al. patents. We receive royalties based on these license agreements on sales of a number of humanized antibody products marketed today, and also may receive royalty payments on additional humanized antibody products launched before patent expiry in 2013 and 2014.

We had been evaluating opportunities to monetize a portion or all of our antibody humanization patent and royalties assets through a potential sale or securitization transaction. In November 2008, we announced that we were terminating such efforts primarily due to market conditions. When market conditions warrant, we intend to consider means to monetize our antibody humanization patent and royalties assets. Were we to pursue and complete any such transaction, we would intend to distribute the net proceeds to our stockholders, after payment of any obligations due and after retaining a portion of such proceeds for debt service, working capital and other general purposes. A sale transaction would decrease our revenues, while a securitization transaction would increase our expenses as we would become obligated to make interest payments on any notes issued in connection with such securitization.

 

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We intend to distribute our income, net of operating expenses, debt service and income taxes, to our stockholders. In May 2008, we paid a special cash dividend of approximately $507 million to our stockholders (or $4.25 per share) using proceeds from the sales of our commercial operations and an antibody manufacturing plant, which we sold in March 2008. Commencing in April 2009, we intend to make the first of two dividend payments in 2009 to our stockholders of $0.50 per share with the second dividend to be paid in October 2009. Our board of directors will evaluate our dividend policy for subsequent years based on net income, debt service, cash requirements for future debt service, income taxes, and our progress with respect to a monetization transaction.

In November 2008, we leased office space in Incline Village, Nevada and moved our principal place of business from California to Nevada. See “Item 2—Properties.”

OVERVIEW

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc. Our
business is the management of our antibody humanization patents and royalty assets which consist of our Queen et al. patents and license agreements with numerous biotechnology and pharmaceutical companies pursuant to which we have licensed certain
rights under our Queen et al. patents. We receive royalties based on these license agreements on sales of a number of humanized antibody products marketed today, and also may receive royalty payments on additional humanized antibody products
launched before patent expiry in 2013 and 2014.

We had been evaluating opportunities to monetize a portion or all of our antibody
humanization patent and royalties assets through a potential sale or securitization transaction. In November 2008, we announced that we were terminating such efforts primarily due to market conditions. When market conditions warrant,
we intend to consider means to monetize our antibody humanization patent and royalties assets. Were we to pursue and complete any such transaction, we would intend to distribute the net proceeds to our stockholders, after payment of any
obligations due and after retaining a portion of such proceeds for debt service, working capital and other general purposes. A sale transaction would decrease our revenues, while a securitization transaction would increase our expenses as we would
become obligated to make interest payments on any notes issued in connection with such securitization.

 


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We intend to distribute our income, net of operating expenses, debt service and income taxes, to our
stockholders. In May 2008, we paid a special cash dividend of approximately $507 million to our stockholders (or $4.25 per share) using proceeds from the sales of our commercial operations and an antibody manufacturing plant, which we sold in March
2008. Commencing in April 2009, we intend to make the first of two dividend payments in 2009 to our stockholders of $0.50 per share with the second dividend to be paid in October 2009. Our board of directors will evaluate our dividend policy for
subsequent years based on net income, debt service, cash requirements for future debt service, income taxes, and our progress with respect to a monetization transaction.

FACE="Times New Roman" SIZE="2">In November 2008, we leased office space in Incline Village, Nevada and moved our principal place of business from California to Nevada. See “Item 2—Properties.”

STYLE="margin-top:18px;margin-bottom:0px">DIVESTITURE OF COMMERCIAL ASSETS AND SPIN-OFF OF FACET

SIZE="2">Since our inception in 1986, our company included research and development operations. Since March 2005, we also had commercial operations. In March 2008, we completed the divestiture of our commercial and manufacturing operations, and in
May 2008 paid a special cash dividend of approximately $507 million to our stockholders (or $4.25 per share) using proceeds from such sales. On December 17, 2008, we transferred our biotechnology operations to Facet Biotech Corporation (Facet)
and on December 18, 2008, made a pro rata distribution to our stockholders of record on December 5, 2008 of one share of Facet common stock for every five shares of PDL common stock (the Spin-Off).

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">In connection with the Spin-Off, on December 17, 2008, PDL and Facet entered into a Separation and Distribution Agreement (the Separation
Agreement). The Separation Agreement identifies the assets transferred, liabilities assumed and contracts assigned to Facet as part of the Spin-Off, and describes when and how these transfers, assumptions and assignments occurred. In particular, all
of the assets and liabilities associated or primarily used in connection with the biotechnology operations were transferred to Facet, including our intellectual property assets other than our Queen et al. patents. As a result, the primary assets and
liabilities retained by us after the Spin-Off are our Queen et al. patents, our convertible notes and our leased office space in Nevada. See “Item 2—Properties.” In addition, in connection with the Spin-Off, as of the Spin-Off date,
we capitalized Facet with $405 million in cash and assumed all current liabilities, with the exception of deferred revenue and the current portion of long-term debt, that were incurred by the biotechnology operations prior to the Spin-Off
date.

On December 18, 2008, we also entered into with Facet (1) a Transition Services Agreement pursuant to which Facet and we
will provide each other with a variety of administrative services, including financial, tax, accounting, information technology, legal and human resources services, for a period of time of up to 36 months following the Spin-Off, (2) a Tax
Sharing and Indemnification Agreement that will govern Facet’s and our respective rights, responsibilities and obligations after the Spin-Off with respect to taxes, (3) a Cross License Agreement relating to our Queen et al. patents and
certain other patents and know-how under which we granted to Facet a royalty-free, development license to our Queen et al. patents and a royalty-bearing, commercialization license to our Queen et al. patents and Facet granted to us a royalty-free
license under certain intellectual property Facet owns solely for the purposes of allowing us to perform and fulfill existing obligations that we have under certain agreements with third parties, and (4) an Employee Matters Agreement which
governs the employee benefit obligations of Facet and us as they relate to current and former employees, allocates liabilities and responsibilities relating to employee benefit matters that are subject to ERISA (other than severance plans) in
connection with the Spin-Off, including the assignment and transfer of employees, and the establishment of a savings plan and a welfare plan.

SIZE="2">In connection with the Spin-Off, we also entered into amendments to the leases for the facilities in Redwood City, California, which formerly served as our headquarters, where Facet was added as a co-tenant under the leases although PDL
remains as a guarantor of the leases and a Co-Tenancy Agreement where Facet agreed to indemnify us for all matters associated with the leases attributable to the period after the Spin-Off date. See “Item 2—Properties.”

 


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OVERVIEW

Our primary assets are our antibody humanization patent and royalties assets, which consist of our Queen et al. patents and license agreements with numerous biotechnology and pharmaceutical companies pursuant to which we have licensed certain rights under our Queen et al. patents to make, use, sell, offer for sale and import humanized antibodies. In general, these agreements cover antibodies targeting antigens specified in the license agreements. Under most of our licensing agreements, we are entitled to receive a flat-rate royalty based upon our licensees’ net sales of covered antibodies. We have also entered into licensing agreements pursuant to which we have licensed certain rights under the Queen et al. patents to make and sell certain products in development that have not yet reached commercialization, and certain of these products in development are currently in Phase III clinical trials. With respect to these agreements, we expect to continue to receive minimal annual maintenance fees and, in future periods, we may receive milestone payments if the licensed products in development achieve certain development milestones and royalty payments if the licensed products receive marketing approval and generate sales. However, substantially all of our revenues will now be in the form of royalties derived from our license agreements relating to our Queen et al. patents and we will receive no revenues from the biotechnology operations which we transferred to Facet Biotech Corporation (Facet) in connection with the Spin-Off.

Unless otherwise indicated, our consolidated financial information included in this Annual Report gives effect to the presentation of our biotechnology operations, which we spun off in December 2008, as discontinued operations and to the presentation of our commercial operations, of which we completed the divestiture in March 2008, also as discontinued operations for all periods presented in this Annual Report. See Note 19 to the Consolidated Financial Statements for further details.

These excerpts taken from the PDLI 10-Q filed Nov 7, 2008.
5.1          Overview. As between the Parties, BMS shall be solely responsible for all (and PDL shall have no responsibility for any) Commercialization activities throughout the world, and BMS shall book sales of all Products in all countries.

 

OVERVIEW

 

We are a biotechnology company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. We receive royalties and other revenues through licensing agreements with biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. The technology subject to these licensing agreements has contributed to the development by our licensees of a number of marketed products. We currently have several investigational compounds in clinical development for oncology and immunologic diseases, two of which we are developing in collaboration with Biogen Idec MA, Inc. (Biogen Idec) and one of which we are developing in collaboration with Bristol-Myers Squibb Company (BMS). Our research platform is focused on the discovery of novel antibodies for the treatment of cancer and immunologic diseases.

 

During the period from March 2005 through early March 2008, we marketed and sold acute-care products in the hospital setting in the United States and Canada. We acquired the rights to three of these products, Cardene IV®, IV Busulfex® and Retavase®, which are non-antibody-based products, in connection with our acquisitions of ESP Pharma, Inc. as well as the rights to Retavase in March 2005. We subsequently acquired the rights to Cardene SR® in September 2006. These commercial products (together, the Commercial and Cardiovascular Assets) and the related operations (the Commercial and Cardiovascular Operations) were fully divested during the first quarter of 2008. We recognized a pre-tax loss of $64.6 million in connection with the sale of the Commercial and Cardiovascular Assets, which is presented within discontinued operations, during the nine months ended September 30, 2008.  In August 2008, EKR Therapeutics, Inc. (EKR), which acquired certain of our Commercial and Cardiovascular Assets, received approval from the U.S. Food and Drug Administration (FDA) for a pre-mixed bag formulation of Cardene.  Under the terms of the purchase agreement, we received a $25 million milestone payment from EKR as a result of this approval.

 

In March 2008, we sold our Minnesota manufacturing facility and related operations to an affiliate of Genmab A/S (Genmab), for total cash proceeds of $240 million. Under the terms of this agreement, Genmab acquired our manufacturing and related administrative facilities in Brooklyn Park, Minnesota, and related assets therein, and assumed certain of our lease obligations related to our facilities in Plymouth, Minnesota (together, the Manufacturing Assets). In connection with this transaction, under the terms of a clinical supply agreement, Genmab agreed to produce clinical material for certain of our pipeline products until March 2010.

 

Also during March 2008, in an effort to reduce our operating costs to a level more consistent with a biotechnology company focused on antibody discovery and development, we commenced a restructuring plan pursuant to which we eliminated approximately 120 employment positions in the first quarter of 2008 and would eliminate approximately 130 additional employment positions over the subsequent 12 months (the Transition Employees).  We offered these 130 Transition Employees and the approximately 300 employees that we expected to retain after the restructuring, retention bonuses and other incentives to encourage these employees to stay with the Company until the Spin-off of our biotechnology assets (see below) or with the Spin-off company after the separation transaction.  In connection with this overall restructuring effort, we expect to incur significant transition-related expenses through March 2009, a portion of which will be recognized as restructuring charges.

 

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In April 2008, we announced our intent to spin off our biotechnology assets and related operations (the Biotechnology Business) into a separate publicly traded entity apart from our antibody humanization royalty assets (the Spin-off) by the end of 2008.  In the event that the Spin-off does occur, we expect to retain the rights to antibody humanization royalty revenues from current and future licensed products and plan to distribute this income to our stockholders, net of any operating expenses, debt service and income taxes.  Subsequent to the potential Spin-off, we plan to have only a nominal number of employees to support our intellectual properties, manage our related licensing operations and provide for certain essential reporting and management functions of a public company.  In connection with this process, we organized Facet Biotech Corporation (Facet Biotech), a wholly-owned subsidiary of PDL, which filed an initial Registration Statement on Form 10 with the Securities and Exchange Commission (SEC) during the third quarter of 2008.  We will continue to fund Facet Biotech’s operations through the Spin-off date, and we would transfer our biotechnology assets to Facet Biotech at the time of the Spin-off.  We expect to capitalize Facet Biotech with approximately $405 million in cash at the completion of the Spin-off transaction, which we expect will occur in December 2008.

 

Subsequent to the Spin-off, we intend to continue to operate as an independent, publicly traded Delaware company, but we plan to relocate our corporate headquarters and ongoing business operations to a new location outside California.  Currently, we are evaluating potential locations that would meet our ongoing business needs while also providing a more favorable cost structure.

 

In parallel with our Spin-off preparations, we also had been evaluating opportunities to monetize our antibody humanization royalty assets through a potential sale or securitization transaction; however, primarily due to current market conditions, we are not currently pursuing a monetization transaction, but will continue to evaluate whether such a transaction in the future is in the best interests of our stockholders.  Absent a monetization transaction, as previously announced, we expect to distribute our income, net of operating expenses, debt service and income taxes, to our stockholders.

 

In April 2008, we declared a special cash dividend of $4.25 per share of common stock (the Dividend), which was paid in May 2008 using the proceeds from the sale of the Commercial and Cardiovascular Assets and the Manufacturing Assets. Based on the total shares outstanding as of the May 5, 2008 record date, the total Dividend was expected to be $507.0 million, of which $506.4 million was paid in May 2008.  The remaining $0.6 million unpaid portion of the Dividend related to the dividend payable on employee restricted stock awards that were unvested as of the date of the Dividend and would be paid to employees when and if they vest in the underlying restricted stock awards.  Through September 30, 2008, we had paid out $0.2 million upon vesting of restricted stock awards, and had reversed $0.1 million of the accrual as a result of forfeitures of restricted stock awards prior to vesting.

 

In August 2008, we entered into a collaboration agreement with BMS for the joint development, manufacture and commercialization of elotuzumab in multiple myeloma and other potential oncology indications.  Under the terms of the agreement, BMS has an option to expand the collaboration to include PDL241, another anti-CS1 antibody, upon completion of certain pre-agreed preclinical studies currently underway. In connection with the closing of this agreement in September 2008, we received an upfront cash payment of $30 million from BMS, and we are eligible to receive development and commercialization milestones based on the further successful development of elotuzumab and, if it is included in the collaboration, PDL241. See Collaborative and Strategic Agreements for further details on the agreement.

 

In September 2008, we announced the appointment of Mr. Faheem Hasnain as our new president and chief executive officer (CEO), effective October 1, 2008.  If the Spin-off does occur, Mr. Hasnain will become president and CEO of Facet Biotech.

 

In November 2008, we announced the appointment of John P. McLaughlin to become president and CEO of PDL following the planned spin-off of Facet Biotech.  Following the planned spin-off, Mr. McLaughlin will lead the remaining royalty company, which will continue to operate under the PDL BioPharma name.

 

We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc.

 

This excerpt taken from the PDLI 10-Q filed Aug 11, 2008.

OVERVIEW

 

We are a biotechnology company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. We receive royalties and other revenues through licensing agreements with biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. The technology subject to these licensing agreements has contributed to the development by our licensees of 10 marketed products. We currently have several investigational compounds in clinical development for oncology and immunologic diseases, two of which we are developing in collaboration with Biogen Idec MA, Inc. (Biogen Idec). Our research platform is focused on the discovery of novel antibodies for the treatment of cancer and immunologic diseases.

 

During the period from March 2005 through early March 2008, we marketed and sold acute-care products in the hospital setting in the United States and Canada. We acquired the rights to three of these products, Cardene IV®, IV Busulfex® and Retavase®, which are non-antibody-based products, in connection with our acquisitions of ESP Pharma, Inc. as well as the rights to Retavase in March 2005. We subsequently acquired the rights to Cardene SR® in September 2006. These

 

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commercial products (together, the Commercial and Cardiovascular Assets) and the related operations (the Commercial and Cardiovascular Operations) were fully divested during the first quarter of 2008. We recognized a pre-tax loss of $64.6 million in connection with the sale of the Commercial and Cardiovascular Assets, which is presented within discontinued operations, during the six months ended June 30, 2008.

 

In March 2008, we sold our Minnesota manufacturing facility and related operations to an affiliate of Genmab A/S (Genmab), for total cash proceeds of $240 million. Under the terms of this agreement, Genmab acquired our manufacturing and related administrative facilities in Brooklyn Park, Minnesota, and related assets therein, and assumed certain of our lease obligations related to our facilities in Plymouth, Minnesota (together, the Manufacturing Assets). In connection with this transaction, under the terms of a clinical supply agreement, Genmab agreed to produce clinical material for certain of our pipeline products until March 2010.

 

Also during March 2008, in an effort to reduce our operating costs to a level more consistent with a biotechnology company focused on antibody discovery and development, we commenced a restructuring plan pursuant to which we eliminated approximately 120 employment positions in the first quarter of 2008 and would eliminate approximately 130 additional employment positions over the subsequent 12 months (the Transition Employees).  We offered these 130 Transition Employees and the approximately 300 employees that we expect to retain after the restructuring, retention bonuses and other incentives to encourage these employees to stay with the Company until the Spin-off of our biotechnology assets (see below) or with the Spin-off company after the separation transaction.  In connection with this overall restructuring effort, we expect to incur significant transition-related expenses through March 2009, a portion of which will be recognized as restructuring charges.

 

In April 2008, we announced our intent to spin off our biotechnology assets and related operations (the Biotechnology Business) into a separate publicly traded entity apart from our antibody humanization royalty assets (the Spin-off) by the end of 2008.  In the event that the Spin-off does occur, we expect to retain the rights to antibody humanization royalty revenues from all current and future licensed products and plan to distribute this income to our stockholders, net of any operating expenses, debt service and income taxes.  Subsequent to the potential Spin-off, we plan to have only a nominal number of employees to support our intellectual properties, manage our related licensing operations and provide for certain essential reporting and management functions of a public company.  In connection with this process, we expect to cause a wholly owned subsidiary to file a registration statement on Form 10 with the Securities and Exchange Commission (SEC) subsequent to the filing of this Form 10-Q.  We would transfer our biotechnology assets to this wholly owned subsidiary at the time of the Spin-off.  Assuming the Spin-off does occur, we expect to capitalize the new biotechnology Spin-off company with approximately $375 million in cash at the completion of the Spin-off transaction, which amount will be increased by any milestone or similar payments received by PDL on or prior to the spin-off date related to the Biotechnology Business.  We expect that this initial capitalization, as well as future payments from our collaboration agreement with Biogen Idec and from the asset purchase agreement with EKR, each of which is being assigned to the Biotechnology Business,  would fund the biotechnology Spin-off’s operations and working capital requirements for approximately three years after the closing of the Spin-off based on current operating plans.  While we pursue the Spin-off, we continue to explore the possible sale or securitization of all or part of our antibody humanization royalty assets.  We plan to continue to pursue both the Spin-off and a potential royalty assets monetization transaction in parallel.  As the Company’s goal is to separate its biotechnology assets from its antibody humanization royalty assets, a royatly transaction could be in lieu of the Spin-off.

 

In April 2008 we declared a special cash dividend of $4.25 per share of common stock (the Dividend), which was paid in May 2008 using the proceeds from the sale of the Commercial and Cardiovascular Assets and the Manufacturing Assets. Based on the total shares outstanding as of the May 5, 2008 record date, the total Dividend is expected to be $507.0 million, of which $506.4 million was paid in May 2008.  The remaining $0.6 million unpaid portion of the Dividend relates to the Dividend payable on employee restricted stock awards that were unvested as of the date of the Dividend and would be paid to employees when and if they vest in the underlying restricted stock awards.

 

In August 2008, EKR Therapeutics, Inc., which acquired certain of our Commercial and Cardiovascular Assets, received approval from the U.S. Food and Drug Administration (FDA) for a pre-mixed bag formulation of nicardipine hydrochloride.  Under the terms of the purchase agreement with EKR, we are entitled to a $25 million milestone payment from EKR as a result of this approval.

 

We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc.

 

This excerpt taken from the PDLI 10-Q filed May 12, 2008.

OVERVIEW

 

We are a biotechnology company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. We receive royalties and other revenues through licensing agreements with biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. The technology subject to these licensing agreements has contributed to the development by our licensees of 10 marketed products. We currently have several investigational compounds in clinical development for oncology and immunologic diseases, two of which we are developing in collaboration with Biogen Idec MA, Inc. (Biogen Idec). Our research platform is focused on the discovery of novel antibodies for the treatment of cancer and immunologic diseases.

 

During the period from March 2005 through early March 2008, we marketed and sold acute-care products in the hospital setting in the United States and Canada. We acquired the rights to three of these products, Cardene IV®, IV Busulfex® and Retavase®, which are non-antibody-based products, in connection with our acquisitions of ESP Pharma, Inc. as well as the rights to Retavase in March 2005. We subsequently acquired the rights to Cardene SR® in September 2006. These commercial products (together, the Commercial and Cardiovascular Assets) and the related operations (the Commercial and Cardiovascular Operations) were fully divested during the first quarter of 2008. We recognized a pre-tax loss of $64.6 million in connection with the sale of the Commercial and Cardiovascular Assets, which is presented within discontinued operations, during the first quarter of 2008.

 

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In March 2008, we sold our Minnesota manufacturing facility and related operations to an affiliate of Genmab A/S (Genmab), for total cash proceeds of $240 million. Under the terms of this agreement, Genmab acquired our manufacturing and related administrative facilities in Brooklyn Park, Minnesota, and related assets therein, and assumed certain of our lease obligations related to our facilities in Plymouth, Minnesota (together, the Manufacturing Assets). In connection with this transaction, under the terms of a clinical supply agreement, Genmab agreed to produce clinical material for certain of our pipeline products until March 2010.

 

Also during March 2008, in an effort to reduce our operating costs to a level more consistent with a biotechnology company focused on antibody discovery and development, we commenced a restructuring plan pursuant to which we eliminated approximately 120 employment positions. We intend to eliminate approximately 130 additional employment positions over the next 12 months.  Many of these positions support our provision of transition services to the acquirers of the Commercial and Cardiovascular Assets and Manufacturing Assets in connection with our sale of these assets. We offered these 130 transitional employees and the approximately 300 employees that we expect to retain after the restructuring retention bonuses and other incentives to encourage these employees to stay with the Company until the Spin-off of our biotechnology assets (see below) or with the Spin-off company after the separation transaction.  In connection with this overall restructuring effort, we expect to incur significant transition-related expenses over the next 12-month period, a portion of which will be recognized as restructuring charges.

 

In April 2008, we announced our intent to spin off our biotechnology assets into a separate publicly traded entity apart from our antibody humanization royalty assets (the Spin-off).  We expect to retain the rights to antibody humanization royalty revenues from all current and future licensed products and plan to distribute this income to our stockholders, net of any operating expenses, debt service and income taxes.  Subsequent to the Spin-off, we plan to have only a nominal number of employees to support our intellectual properties and provide for certain essential reporting and management functions of a public company.  We expect to capitalize the new biotechnology Spin-off company with approximately $375 million in cash at the completion of the Spin-off transaction.  This initial capitalization, along with potential milestone payments, non-humanization royalties and other payments under collaboration and other agreements, including the contingent consideration related to the sale of the Commercial and Cardiovascular Assets, is expected to fund the Spin-off company for approximately three years based on current operating plans.  We expect to complete the Spin-off by the end of 2008.  While we plan for the Spin-off, we continue to evaluate opportunities to sell or securitize all or part of our antibody humanization royalties; however, we can not assure that we will be able to consummate a sale or securitization of our antibody humanization patent royalty stream on terms acceptable to us, or at all.

 

In conjunction with our announcement of our intent to spin off our biotechnology assets, in April 2008 we declared a special cash dividend of $4.25 per share of common stock (the Dividend), which was paid in May 2008 using proceeds from the sale of the Commercial and Cardiovascular Assets and the Manufacturing Assets. Based on the number of stockholders as of the May 5, 2008 record date, the Dividend was $507.0 million.

 

We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc.

 

These excerpts taken from the PDLI 10-K filed Mar 13, 2008.

OVERVIEW

        We are a biopharmaceutical company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. We receive royalties and other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening diseases, two of which we are developing in collaboration with Biogen Idec MA, Inc. (Biogen Idec). Our research platform is focused on the discovery of novel antibodies for the treatment of cancer and immunologic diseases.

        During the period from March 2005 through March 2008, we marketed and sold acute-care products in the hospital setting in the United States and Canada. We acquired three of these products,

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Cardene IV, Retavase and IV Busulfex, which are small-molecule-based products, in connection with our acquisitions of ESP Pharma, Inc. and the rights to Retavase in March 2005. We acquired the rights to Cardene SR in September 2007. As discussed below, these products and the related operations were fully divested during the first quarter of 2008.

        On August 28, 2007, in connection with a months-long evaluation of strategic alternatives that our management and Board of Directors conducted, we announced our intent to sell our Commercial and Cardiovascular Assets, which were comprised of our Cardene, Retavase and IV Busulfex commercial products and our ularitide development-stage cardiovascular product (together, the Commercial and Cardiovascular Assets). The decision to pursue a sale of these assets was related to a significant strategic change to focus the Company on the discovery and development of novel antibodies in oncology and immunologic diseases. Given the change in our strategic direction and the current timing of our pipeline products, we determined that our commercial products and cardiovascular development programs, which are not antibody-based products, were no longer a strategic fit. We subsequently announced on October 1, 2007 that we were seeking the sale of our entire Company or of our key assets, which decision was in connection with our ongoing evaluation of strategic alternatives and objective of maximizing stockholder value.

        In December 2007, we entered into an asset purchase agreement with Otsuka Pharmaceutical Co., Ltd. (Otsuka) under which we agreed to sell the rights to IV Busulfex ®, including trademarks, patents, intellectual property and related assets, for $200 million in cash, plus additional consideration for the sale of our IV Busulfex inventories, all to be paid at closing. In addition, in February 2008, we entered into an asset purchase agreement with EKR Therapeutics, Inc. (EKR) for the sale of our Cardene and Retavase commercial products, as well as for ularitide, our development-stage product (together, the Cardiovascular Assets). The consideration for the Cardiovascular Assets, which includes all trademarks, patents, intellectual property, inventories and related assets, consisted of an upfront payment of $85 million, up to $85 million in development and sales milestone payments, as well as royalties on certain future Cardene and ularitide product sales. In March 2008, we closed these transactions, completing the sale of the Commercial and Cardiovascular Assets.

        We did not recognize any asset impairment charges related to the Commercial and Cardiovascular Assets as of December 31, 2007, since their respective fair values exceeded their carrying values at this date. Our assessment of the fair value of the Commercial and Cardiovascular Assets included a probability-weighted and discounted measurement of the contingent consideration, which relates to future milestones and royalties under the terms of the sale of the Cardiovascular Assets. However, as we will not be recognizing the contingent consideration until the milestones and royalties are earned, we expect to recognize a loss of approximately $65 million effective upon the sales of the Commercial and Cardiovascular Assets in March 2008.

        In February 2008, we entered into an asset purchase agreement with GMN, Inc. (Genmab), a wholly owned subsidiary of Genmab A/S, for the sale of our Minnesota manufacturing facility and related operations for $240 million. Under the terms of this agreement, Genmab would acquire our manufacturing and related administrative facilities in Brooklyn Park, Minnesota, and all assets therein, as well as certain of our lease obligations related to our facilities in Plymouth, Minnesota (together, the Manufacturing Assets). In addition, Genmab plans to retain the approximately 170 employees currently working at the manufacturing facility. In connection with this transaction, Genmab would produce clinical material to supply certain of our pipeline products for our investigational studies under a clinical supply agreement. We expect to close this transaction during the first quarter of 2008, and expect to recognize a gain of approximately $50 million at that time.

        In March 2008, we announced that we had ended the sale process for the Company or our biotechnology discovery and development assets and that we would focus on the discovery and development of innovative new antibodies for cancer and immunologic diseases. While we had actively

46



pursued a sale of the entire Company or our key assets since we announced our intent to do so in October 2007, we had not received any firm offers for the Company as a whole or for our biotechnology assets.

        We also announced in March 2008 that we intend to distribute to our stockholders at least $500 million of the initial proceeds from the sale of the Commercial and Cardiovascular Assets and Manufacturing Assets, pending the close of all of the transactions, in a form and at a time yet to be determined. In addition, we announced that we are actively evaluating several alternative structures that, if completed, would result in the distribution to our stockholders of 50 percent or more of the value of future antibody humanization royalties that would be received from currently marketed products, net of any applicable corporate-level taxes. We are carefully evaluating numerous factors, including tax implications, structural considerations, and market conditions, in order to select the alternative that would maximize the value of the humanization royalties for our stockholders. The structures being evaluated include, among others, a sale of the right to receive future royalties, a securitization of future royalties or a distribution to stockholders of securities related to the royalty stream.

        In an effort to reduce operating costs to a level more consistent with a biotechnology company focused solely on antibody discovery and development, in March 2008 we commenced a restructuring effort pursuant to which we intend to eliminate approximately 250 employment positions over approximately one year and undertake other substantial cost cutting measures. This reduction is in addition to previously planned reductions of approximately 335 positions resulting from the sales of the Commercial and Cardiovascular Assets and Manufacturing Assets. Subsequent to the transition period, we expect that our workforce will consist of approximately 300 employees. We anticipate a transition period of approximately 12 months before planned expense reductions and transition services related to the Commercial and Cardiovascular Assets and Manufacturing Assets sales transactions are fully implemented or completed. We have offered retention bonuses and other incentives to the transition employees, as well as to the employees that we expect to retain after the restructuring, to encourage these employees to stay with the Company. In connection with this restructuring effort, we expect to incur significant transition-related expenses over the next 12-month period, a portion of which would be recorded as restructuring charges.

        We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc.

OVERVIEW



        We are a biopharmaceutical company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. We receive royalties and
other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have
contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening
diseases, two of which we are developing in collaboration with Biogen Idec MA, Inc. (Biogen Idec). Our research platform is focused on the discovery of novel antibodies for the treatment of
cancer and immunologic diseases.



        During
the period from March 2005 through March 2008, we marketed and sold acute-care products in the hospital setting in the United States and Canada. We acquired three of
these products,



45











Cardene IV, Retavase and IV Busulfex, which are small-molecule-based products,
in connection with our acquisitions of ESP Pharma, Inc. and the rights to
Retavase in March 2005. We acquired the rights to Cardene SR in September
2007. As discussed below, these products and the related operations were fully divested during the first quarter of 2008.




        On
August 28, 2007, in connection with a months-long evaluation of strategic alternatives that our management and Board of Directors conducted, we announced our intent
to sell our Commercial and Cardiovascular Assets, which were comprised of our
Cardene, Retavase and IV BusulfexSIZE=2> commercial products and our ularitide development-stage cardiovascular product (together, the Commercial and Cardiovascular Assets). The
decision to pursue a sale of these assets was related to a significant strategic change to focus the Company on the discovery and development of novel antibodies in oncology and immunologic diseases.
Given the change in our strategic direction and the current timing of our pipeline products, we determined that our commercial products and cardiovascular development programs, which are not
antibody-based products, were no longer a strategic fit. We subsequently announced on October 1, 2007 that we were seeking the sale of our entire Company or of our key assets, which decision
was in connection with our ongoing evaluation of strategic alternatives and objective of maximizing stockholder value.



        In
December 2007, we entered into an asset purchase agreement with Otsuka Pharmaceutical Co., Ltd. (Otsuka) under which we agreed to sell the rights to IV
Busulfex ®, including trademarks,
patents, intellectual property and related assets, for $200 million in cash, plus additional
consideration for the sale of our IV
Busulfex inventories, all to be paid at closing. In addition, in
February 2008, we entered into an asset purchase agreement with EKR Therapeutics, Inc. (EKR) for the sale of our
Cardene and Retavase commercial
products, as well as for ularitide, our development-stage product (together, the Cardiovascular Assets). The consideration for the
Cardiovascular Assets, which includes all trademarks, patents, intellectual property, inventories and related assets, consisted of an upfront payment of $85 million, up to $85 million in
development and sales milestone payments, as well as royalties on certain future
Cardene and ularitide product sales. In March 2008, we closed these
transactions, completing the sale of the Commercial and Cardiovascular Assets.



        We
did not recognize any asset impairment charges related to the Commercial and Cardiovascular Assets as of December 31, 2007, since their respective fair values exceeded their
carrying values at this date. Our assessment of the fair value of the Commercial and Cardiovascular Assets included a probability-weighted and discounted measurement of the contingent consideration,
which relates to future milestones and royalties under the terms of the sale of the Cardiovascular Assets. However, as we will not be recognizing the contingent consideration until the milestones and
royalties are earned, we expect to recognize a loss of approximately $65 million effective upon the sales of the Commercial and Cardiovascular Assets in March 2008.



        In
February 2008, we entered into an asset purchase agreement with GMN, Inc. (Genmab), a wholly owned subsidiary of Genmab A/S, for the sale of our Minnesota manufacturing
facility and related operations for $240 million. Under the terms of this agreement, Genmab would acquire our manufacturing and related administrative facilities in Brooklyn Park, Minnesota,
and all assets therein, as well as certain of our lease obligations related to our facilities in Plymouth, Minnesota (together, the Manufacturing Assets). In addition, Genmab plans to retain the
approximately 170 employees currently working at the manufacturing facility. In connection with this transaction, Genmab would produce clinical material to supply certain of our pipeline products for
our investigational studies under a clinical supply agreement. We expect to close this transaction during the first quarter of 2008, and expect to recognize a gain of approximately $50 million
at that time.



        In
March 2008, we announced that we had ended the sale process for the Company or our biotechnology discovery and development assets and that we would focus on the discovery and
development of innovative new antibodies for cancer and immunologic diseases. While we had actively



46











pursued
a sale of the entire Company or our key assets since we announced our intent to do so in October 2007, we had not received any firm offers for the Company as a whole or for our biotechnology
assets.



        We
also announced in March 2008 that we intend to distribute to our stockholders at least $500 million of the initial proceeds from the sale of the Commercial and Cardiovascular
Assets and Manufacturing Assets, pending the close of all of the transactions, in a form and at a time yet to be determined. In addition, we announced that we are actively evaluating several
alternative structures that, if completed, would result in the distribution to our stockholders of 50 percent or more of the value of future antibody humanization royalties that would be
received from currently marketed products, net of any
applicable corporate-level taxes. We are carefully evaluating numerous factors, including tax implications, structural considerations, and market conditions, in order to select the alternative that
would maximize the value of the humanization royalties for our stockholders. The structures being evaluated include, among others, a sale of the right to receive future royalties, a securitization of
future royalties or a distribution to stockholders of securities related to the royalty stream.



        In
an effort to reduce operating costs to a level more consistent with a biotechnology company focused solely on antibody discovery and development, in March 2008 we commenced a
restructuring effort pursuant to which we intend to eliminate approximately 250 employment positions over approximately one year and undertake other substantial cost cutting measures. This reduction
is in addition to previously planned reductions of approximately 335 positions resulting from the sales of the Commercial and Cardiovascular Assets and Manufacturing Assets. Subsequent to the
transition period, we expect that our workforce will consist of approximately 300 employees. We anticipate a transition period of approximately 12 months before planned expense reductions and
transition services related to the Commercial and Cardiovascular Assets and Manufacturing Assets sales transactions are fully implemented or completed. We have offered retention bonuses and other
incentives to the transition employees, as well as to the employees that we expect to retain after the restructuring, to encourage these employees to stay with the Company. In connection with this
restructuring effort, we expect to incur significant transition-related expenses over the next 12-month period, a portion of which would be recorded as restructuring charges.



        We
were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc.



This excerpt taken from the PDLI 10-Q filed Nov 14, 2007.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell acute-care products in the hospital setting in the United States and Canada. We also receive royalties and other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening diseases, two of which we are developing in collaboration with Biogen Idec, Inc. (Biogen Idec). Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases.

We continue to evolve from a company dependent on licensing activities, development arrangements, humanization services and royalties as the primary sources of revenues to a commercial enterprise that ultimately derives the majority of its revenues from sales of proprietary products. The key elements of our strategy include leveraging our hospital-focused commercial organization and developing novel, proprietary products, utilizing in particular our antibody humanization expertise, while pursuing corporate development activities that may enable expansion or acceleration of our product portfolio prior to the launch of products from our current proprietary pipeline:

 

   

Focused commercial organization. Our hospital sales force specializes in the acute-care setting and currently markets our Cardene IV, Retavase and IV Busulfex products to nearly 1,800 hospitals in the United States. In the hospital setting, our sales force focuses its efforts in the cardiac, neurological and intensive care units as well as in emergency departments.

 

   

Development of proprietary drugs. Our aim is to develop antibody-based products through our own research and development efforts, as well as to selectively and opportunistically license proprietary therapeutic candidates from other companies. Our current stated aim is to submit to the U.S. Food and Drug Administration (FDA), on average, one investigational new drug application (IND) per calendar year, and augment this pipeline generation through additional in-licensing at various stages of development. Our internal research and development efforts are focused primarily on novel antibodies for the treatment of cancer and autoimmune diseases. Our goal is to market our hospital-focused products in North America. However, certain of our products in development address indications that require specific expertise or large development and marketing efforts, such as heart failure, multiple sclerosis (MS), respiratory diseases and some oncology indications, and our strategy for those products is to seek appropriate partners with global development, manufacturing and commercialization capabilities.

 

- 13 -


Table of Contents
This excerpt taken from the PDLI 10-Q filed Aug 9, 2007.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell acute-care products in the hospital setting in the United States and Canada. We also receive royalties and other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening diseases, two of which we are developing in collaboration with Biogen Idec, Inc. (Biogen Idec). Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases.

We continue to evolve from a company dependent on licensing activities, development arrangements, humanization services and royalties as the primary sources of revenues to a commercial enterprise that ultimately derives the majority of its revenues from sales of proprietary products. The key elements of our strategy include leveraging our hospital-focused commercial organization and developing novel, proprietary products, utilizing in particular our antibody humanization expertise, while pursuing corporate development activities that may enable expansion or acceleration of our product portfolio prior to the launch of products from our current proprietary pipeline:

 

   

Focused commercial organization. Our hospital sales force specializes in the acute-care setting and currently markets our Cardene IV, Retavase and IV Busulfex products to nearly 1,800 hospitals in the United States. In the hospital setting, our sales force focuses its efforts in the cardiac, neurological and intensive care units as well as in emergency departments.

 

   

Development of proprietary drugs. Our aim is to develop antibody-based products through our own research and development efforts, as well as to selectively and opportunistically license proprietary therapeutic candidates from other companies. Our current stated aim is to submit to the U.S. Food and Drug Administration (FDA), on average, one investigational new drug application (IND) per calendar year, and augment this pipeline generation through additional in-licensing at various stages of development. Our internal research and development efforts are focused primarily on novel antibodies for the treatment of cancer and autoimmune diseases. Our goal is to market our hospital-focused products in North America. However, certain of our products in development address indications that require specific expertise or large development and marketing efforts, such as heart failure, multiple sclerosis (MS), respiratory diseases and some oncology indications, and our strategy for those products is to seek appropriate partners with global development, manufacturing and commercialization capabilities.

 

- 12 -


Table of Contents
This excerpt taken from the PDLI 10-Q filed May 10, 2007.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell products in the acute-care hospital setting in the United States and Canada. We also receive royalties and other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening diseases, and we have entered into collaborations with other pharmaceutical or biotechnology companies for the joint development, manufacture and commercialization of certain of these compounds. Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases.

We continue to evolve from a company dependent on licensing activities, development arrangements, humanization services and royalties as the primary sources of revenues to a commercial enterprise that ultimately derives the majority of its revenues from sales of proprietary products. The key elements of our strategy include continuing to build our acute-care, hospital-focused commercial organization and developing novel, proprietary products by leveraging our antibody humanization platform, while pursuing corporate development activities that may enable expansion or acceleration of our product portfolio prior to the launch of products from our current proprietary pipeline:

 

   

Acute-care focused commercial organization. Our hospital sales force specializes in the acute-care setting and currently markets our Cardene IV, Retavase and IV Busulfex products to nearly 1,800 hospitals in the United States. In the hospital setting, our sales force focuses its efforts in the cardiac, neurological and intensive care units as well as in emergency departments.

 

   

Development of proprietary drugs. Our aim is to develop antibody- or other protein-based products through our own research and development efforts, as well as to selectively and opportunistically license proprietary therapeutic candidates from other companies. Our current stated aim is to submit to the U.S. Food and Drug Administration (FDA), on average, one investigational new drug application (IND) per calendar year, and augment this pipeline generation through additional in-licensing at various stages of development. Our internal research and development efforts are focused primarily on novel antibodies for the treatment of cancer and autoimmune diseases. Our goal is to market our hospital-focused products in North America. However, certain of our products in development address indications that require specific expertise or large development and marketing efforts, such as heart failure, multiple sclerosis (MS), respiratory diseases and some oncology indications, and our strategy for those products is to seek appropriate partners with global development, manufacturing and commercialization capabilities.

 

12


Table of Contents
This excerpt taken from the PDLI 10-K filed Mar 1, 2007.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell products in the acute-care hospital setting in the United States and Canada. We also receive royalties and other revenues through licensing agreements with numerous biotechnology and pharmaceutical companies based on our proprietary antibody humanization technology platform. These licensing agreements have contributed to the development by our licensees of nine marketed products. We currently have several investigational compounds in clinical development for severe or life-threatening diseases, and we have entered into collaborations with other pharmaceutical or biotechnology companies for the joint development, manufacture and commercialization of certain of these compounds. Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases.

We continue to evolve from a company dependent on licensing activities, development arrangements, humanization services and royalties as the primary sources of revenues to a commercial enterprise that ultimately derives the majority of its revenues from sales of proprietary products. The key elements of our strategy include continuing to build our acute-care, hospital-focused commercial organization and developing novel, proprietary products by leveraging our antibody humanization platform and pursuing corporate development activities:

 

   

Acute-care focused commercial organization. Our hospital sales force specializes in the acute-care setting and currently markets our Cardene IV, Retavase and IV Busulfex products to nearly 1,800 hospitals in the United States. In the hospital setting, our sales force focuses its efforts in the cardiac, neurological and intensive care units as well as in emergency departments.

 

   

Development of proprietary drugs. Our aim is to develop antibody- or other protein-based products through our own research and development efforts, as well as to selectively and opportunistically license proprietary therapeutic candidates from other companies. Our current stated aim is to submit to the FDA, on average, one new IND per calendar year, and augment this pipeline generation through additional in-licensing at various stages of development. Our internal research and development efforts are focused primarily on novel antibodies for the treatment of cancer and autoimmune diseases. Our goal is to market our hospital-focused products in North America. However, certain of our products in development address indications that require specific expertise or large development and marketing efforts, such as heart failure, multiple sclerosis (MS), respiratory diseases and some oncology indications, and our strategy for those products is to seek appropriate partners with global development, manufacturing and commercialization capabilities.

 

42


Table of Contents

We were organized as a Delaware corporation in 1986 under the name Protein Design Labs, Inc. In 2006, we changed our name to PDL BioPharma, Inc. to better reflect our status as a commercial biopharmaceutical enterprise.

This excerpt taken from the PDLI 10-Q filed Nov 7, 2006.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell three products in the acute-care hospital setting in the United States and Canada and receive royalties and other revenue through licensing agreements with numerous biotechnology and pharmaceutical companies based on our antibody humanization technology platform. We currently have several investigational compounds in Phase 2 or Phase 3 clinical development for severe or life-threatening diseases. We have entered into collaborations with other pharmaceutical or biotechnology companies for the joint development, manufacture and commercialization of certain of these compounds. Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases, with the aim of placing, on average, one new candidate into clinical studies every 12 months.

This excerpt taken from the PDLI 10-Q filed Aug 9, 2006.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We currently market and sell three products in the acute-care hospital setting in the United States and Canada and receive royalties and other revenue through licensing agreements with numerous biotechnology and pharmaceutical companies based on our antibody humanization technology platform. We currently have several investigational compounds in Phase 2 or Phase 3 clinical development for severe or life-threatening diseases. We have entered into collaborations with other pharmaceutical or biotechnology companies for the joint development, manufacture and commercialization of certain of these compounds. Our research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases, with the aim of placing about one new candidate into clinical studies every 12 months.

This excerpt taken from the PDLI 10-Q filed May 10, 2006.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We are a fully integrated, commercial biopharmaceutical company with proprietary marketed products, a growing and diverse operating revenue base and a broad, proprietary pipeline. We currently market and sell three products in the acute-care hospital setting in the United States and Canada and receive royalties and other revenue through licensing agreements with numerous biotechnology and pharmaceutical companies based on our antibody humanization technology platform. We have six investigational compounds in Phase 2 or Phase 3 clinical development for hepatorenal syndrome, inflammation and autoimmune diseases, cardiovascular disorders and cancer.

Our products are sold through our hospital-focused sales force which focuses on the cardiac, neurological and intensive care unit departments of a hospital. Cardene IV is the only branded, U.S.-approved dihydropyridine class calcium channel blocker delivered intravenously that is indicated for short-term treatment of hypertension when oral therapy is not feasible or desirable. Retavase is indicated for use in the management of heart attacks (acute myocardial infarction, or AMI) in adults for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure, and the reduction of mortality associated with AMI. IV Busulfex, an IV formulation of busulfan, is a chemotherapeutic agent used as part of a conditioning regimen prior to allogeneic hematopoietic progenitor cell transplantation for chronic myelogenous leukemia. IV Busulfex provides not only an anti-tumor effect to eradicate residual malignancy, but also ablation of the bone marrow, which makes space for the new source of stem cells, and immunosuppression to prevent graft rejection.

We have licensed and will continue to offer to license our patents covering numerous humanized antibodies in return for license fees, annual maintenance payments, and royalties on product sales. By making certain modifications to the mouse antibody that make it more like a human antibody, our technology enhances the utility of such antibodies, while retaining their biological activity, for human therapeutic use. We believe our technology for the creation of humanized therapeutic monoclonal antibodies is widely validated in our industry, based on the existence of multiple approved and licensed antibodies. Eight of the nine humanized antibodies currently approved by the FDA are licensed under our patents and generated royalties to us in 2005: Genentech Inc.’s (Genentech) Avastin™, Herceptin®, Xolair® and Raptiva®; MedImmune, Inc.’s (MedImmune) Synagis®; Wyeth’s Mylotarg®; Elan Corporation, Plc’s (Elan) Tysabri® and Hoffmann-La Roche’s (Roche) Zenapax®. Almost half of our revenues generated in the first quarter of 2006 were from royalties paid for use of our patented antibody humanization technology as applied to mouse antibodies. In October 2005 we signed a Second Amended and Restated Worldwide Agreement with Roche pursuant to which Roche will pay us royalties at a reduced rate only once Zenapax product sales have reached a certain threshold. As such, we received a significantly lower royalty payment from Roche’s sale of Zenapax in the first quarter of 2006 than in prior quarters and expect to receive minimal to no royalty revenue from Roche’s sale of Zenapax going forward. In February 2005, Biogen Idec and Elan announced that they had voluntarily suspended supplying, marketing and selling Tysabri. Although we received a marginal amount of royalties in the first and second quarters of 2005 from Elan’s sale of Tysabri prior to this voluntary suspension, we have not received any such royalties since that time. Although Biogen Idec and Elan have submitted data in support of Tysabri to the FDA for approval, there can be no assurance that Tysabri will be returned to the market, the timing of such return, if ever, or that even if subsequently marketed and sold, the product will result in our receiving any significant royalties from any future sales of Tysabri.

 

- 15 -


Table of Contents
This excerpt taken from the PDLI 10-K filed Mar 16, 2006.

OVERVIEW

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. We are a fully integrated, commercial biopharmaceutical company with proprietary marketed products, a growing and diverse operating revenue base and a broad, proprietary pipeline. We currently market and sell three products in the acute-care hospital setting in the United States and Canada and receive royalties through licensing agreements with numerous biotechnology and pharmaceutical companies based on our antibody humanization technology platform. We have six investigational compounds in Phase 2 or Phase 3 clinical development for hepatorenal syndrome, inflammation and autoimmune diseases, cardiovascular disorders and cancer.

Our products are sold through our hospital-focused sales force which focuses on the cardiac, neurological and intensive care unit sections. Cardene IV is the only branded, U.S.-approved dihydropyridine class calcium channel blocker delivered intravenously that is indicated for short-term treatment of hypertension when oral therapy is not feasible or desirable. IV Busulfex, an IV formulation of busulfan, is a chemotherapeutic agent used as part of a conditioning regimen prior to allogeneic hematopoietic progenitor cell transplantation for chronic myelogenous leukemia. IV Busulfex provides anti-tumor effect to eradicate residual malignancy, ablation of the bone marrow to make space for the new source of stem cells and to provide immunosuppression to prevent graft rejection. Retavase is indicated for use in the management of heart attacks (acute myocardial infarction, or AMI) in adults for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure, and the reduction of mortality associated with AMI.

Almost half of our revenues generated in 2005 were from royalties paid for use of our patented antibody humanization technology as applied to mouse antibodies. By making certain modifications to the mouse antibody that make it more like a human antibody, our technology enhances the utility of such antibodies, while retaining their biological activity, for human therapeutic use. We believe our technology for the creation of humanized therapeutic monoclonal antibodies is widely validated in our industry, based on the existence of multiple approved and licensed antibodies.

We have licensed and will continue to offer to license our patents covering numerous humanized antibodies in return for license fees, annual maintenance payments and royalties on product sales. Eight of the nine humanized antibodies currently approved by the U.S. Food and Drug Administration (FDA) are licensed under our patents and generated royalties to PDL in 2005: Genentech Inc.’s (Genentech) Avastin™, Herceptin®, Xolair® and Raptiva®; MedImmune, Inc.’s (MedImmune) Synagis®; Wyeth’s Mylotarg®; Elan Corporation, Plc’s (Elan) Tysabri® and Hoffmann-La Roche’s (Roche) Zenapax®. Combined annual worldwide sales of these products exceeded $4.0 billion in 2005. We are aware of more than 90 humanized antibodies in development worldwide by various pharmaceutical and biotechnology companies, and we have entered into patent agreements which may cover many of these products.

2005 was a year of significant growth for PDL. During the year, we acquired ESP Pharma Holding Company, Inc. (ESP Pharma) a privately held, hospital-focused pharmaceutical company. Consistent with our strategy of entering into development and commercialization partnerships for those pipeline programs which would be commercialized largely outside the hospital setting, in August 2005, we entered into a collaboration agreement with Biogen Idec, Inc. (Biogen Idec), a global biotechnology leader with products and capabilities in oncology, neurology and immunology, for the joint development, manufacture and commercialization of three of our Phase 2 antibody products. In October 2005, we expanded our existing relationship with Roche to include the co-development and commercialization of daclizumab for organ transplant patients on longer-term maintenance therapy (transplant maintenance). The addition of marketed products resulting from the ESP Pharma and Retavase acquisitions, as well as the financial effects of the Biogen Idec and Roche collaborations, contributed to the achievement of positive cash flows from operations in the fourth quarter of 2005.

In order to better reflect our status as a commercial biopharmaceutical company, on January 9, 2006, we changed our name from Protein Design Labs, Inc. to PDL BioPharma, Inc. This change coincided with the merger of ESP Pharma into PDL to create a single organization and operating structure. ESP Pharma had been operating as a wholly-owned subsidiary since the acquisition in the first quarter of 2005.

 

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Table of Contents
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