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•	Total revenues of $53.6 million and $177.8 million for the three and nine months ended September 30, 2016, respectively.

•	GAAP diluted EPS of $0.08 and $0.45 for the three and nine months ended September 30, 2016, respectively.

•	GAAP net income attributable to PDL's shareholders of $13.9 million and $73.9 million for the three and nine months ended September 30, 2016, respectively.

•	Non-GAAP net income of $18.9 million and $118.2 million for the three and nine months ended September 30, 2016, respectively.

•	Total revenues of $53.6 million for the three months ended September 30, 2016 included:

◦	Royalties from PDL's licensees to the Queen et al. patents of $15.0 million, which consisted of royalties earned on sales of Tysabri® under a license agreement;

◦	Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of $16.1 million, which consisted of the change in estimated fair value of our royalty right assets, primarily related to the Depomed, Inc., University of Michigan and AcelRx Pharmaceuticals, Inc. royalty rights acquisitions;

◦	Interest revenue from notes receivable financings to late-stage healthcare companies of $8.6 million; and

◦	Product revenues from sales of Tekturna® and Tekturna HCT® in the United States and Rasilez® and Rasilez HCT® in the rest of the world of $14.1 million.

•	Total revenues decreased by 57 percent for the three months ended September 30, 2016, when compared to the same period in 2015.

◦	The decrease in royalties from PDL's licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc. PDL continues to receive royalties on sales of Tysabri. The duration of this royalty payment is based on the sales of product manufactured prior to patent expiry, the amount of which is uncertain.

◦	The increase in royalty rights - change in fair value was driven by the $9.6 million increase in the fair value of the Depomed royalty rights assets primarily due to a $5.0 million milestone payment based on FDA

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◦	PDL received $15.3 million in net cash royalty and milestone payments from its royalty rights in the third quarter of 2016, compared to $6.9 million for the same period of 2015.

◦	The decrease in interest revenues was primarily due to ceasing to recognize interest from Direct Flow Medical, Inc. notes receivable.

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Product revenues were derived from sales of Tekturna and Tekturna HCT in the United States and Rasilez and Rasilez HCT in the rest of the world (collectively, the Noden Products). Pursuant to the purchase agreement, when Noden Pharma DAC (Noden) acquired the exclusive worldwide rights to manufacture, market, and sell the Noden Products from Novartis. Novartis continued distributing the Noden Products during the third quarter of 2016 and transferred profits with Noden on a net basis (i.e. net of cost of manufacturing and a fee to Novartis). Noden is commercializing the products in the U.S. as of the fourth quarter of 2016.

◦	Total revenues decreased by 57 percent for the nine months ended September 30, 2016, when compared to the same period in 2015.

◦	The decrease in royalties from PDL's licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.

◦	The decrease in royalty rights - change in fair value was driven by the $19.2 million decrease in the fair value of the Depomed royalty rights asset, and a $3.4 million decrease in the fair value of the University of Michigan royalty right asset.

◦	PDL received $47.2 million in net cash royalty payments and milestone payments from its acquired royalty rights in the nine months ended September 30, 2016, compared to $9.0 million for the same period of 2015.

◦	Product revenues and interest revenue variances were the same as the three months ended September 30, 2016.

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Operating expenses were $21.0 million for the three months ended September 30, 2016, compared to $8.5 million for the same period of 2015. The increase in operating expenses for the three months ended September 30, 2016, as compared to the same period in 2015, was primarily a result of the product sales segment acquisition, contributing an additional $6.0 million of acquisition intangible amortization, $2.1 million in a change in fair value in acquisition-related contingent consideration, $1.9 million in research and development costs for the completion of a pediatric trial for the acquired branded prescription medicines Tekturna by Noden and acquisition related costs of $0.5 million. General and administrative expenses increased by $1.9 million, of which $1.1 million relates to an increased headcount and expenses due to the Noden related product acquisitions and $0.3 million relates to additional stock-based compensation expenses and an increase in legal services mostly related to ongoing legal proceedings.

•	Operating expenses were $40.7 million for the nine months ended September 30, 2016, compared to $23.5 million for the same period of 2015. The increase in operating expenses for the nine months ended September 30, 2016, as compared to the same period in 2015, was the result of the expenses related to the acquisition of the Noden Products.

•	PDL had cash, cash equivalents, and investments of $114.6 million at September 30, 2016, compared to $220.4 million at December 31, 2015.

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The decrease was primarily attributable to the acquisition of a business, net of cash of $109.9 million, the purchase of a certificate of deposit for $75.0 million, the purchase of additional royalty rights for $59.5 million, repayment of the March 2015 Term Loan for $25.0 million, payment of dividends of $16.4 million, an additional note receivable purchase of $8.0 million, the purchase of short-term investments of $8.0 million, and the payment of debt issuance costs of $0.3 million, partially offset by the repayment of a note receivable balance of $54.7 million, proceeds from royalty right payments of $47.2 million, proceeds from the sale of available-for-sale securities of $1.7 million, cash received from a noncontrolling investor of $0.3 million and cash generated by operating activities of $86.1 million.

•	Net cash provided by operating activities in the nine months ended September 30, 2016 was $86.1 million, compared with $231.4 million in the same period in 2015.

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•	Total revenues of $53.6 million and $177.8 million for the three and nine months ended September 30, 2016, respectively.

•	GAAP diluted EPS of $0.08 and $0.45 for the three and nine months ended September 30, 2016, respectively.

•	GAAP net income attributable to PDL's shareholders of $13.9 million and $73.9 million for the three and nine months ended September 30, 2016, respectively.

•	Non-GAAP net income of $18.9 million and $118.2 million for the three and nine months ended September 30, 2016, respectively.

•	Continue to receive royalties on Tysabri from Biogen with respect to sales of the licensed product manufactured prior to patent expiry in jurisdictions providing patent protection licenses.

•	Q3 2016 PDL royalty revenue was $15.0 million based upon Biogen’s sales from Q2 2016.

•	Historical royalty and sales data is listed [in the table below.]

•	Lilly reported that completed enrollment and continuing patient follow up on Phase 3 clinical trial.

•	Top line data from Phase 3 trial in mild Alzheimer’s disease expected in December 2016. Lilly expected to file for product approval in 1H17 if data are positive.

•	PDL has a 2% know-how royalty on solanezumab which runs for 12.5 years from the date of its first sale.

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On July 1, 2016, Noden Pharma DAC, a newly-formed company organized under the laws of Ireland purchased from Novartis the exclusive worldwide rights to manufacture, market, and sell the branded prescription medicine product sold under the name Tekturna® and Tekturna HCT® in the United States and Rasilez® and Rasilez HCT® in the rest of the world (collectively the "Noden Products") and certain related assets and will assume certain related liabilities in exchange for the following cash commitments: $110.0 million paid on July 1, 2016, the closing date of the acquisition, $89.0 million payable on the first anniversary of the closing date and up to $95.0 million of additional cash consideration contingent on achievement of sales targets and the date of the launch of a generic drug containing the pharmaceutical ingredient aliskiren.

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On July 1, 2016, PDL entered into an investment and stockholders’ agreement with Noden Pharma DAC and an affiliate and certain members of Noden’s management. PDL acquired an approximately 99% equity stake and obtained the majority voting power of Noden, for a total cash consideration of $75.0 million. It is expected that PDL’s equity ownership stake will ultimately be reduced to 88% upon the vesting of shares granted to Noden's noncontrolling interest holders.

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•	In July 2016, Noden began earning profits on the sale of Tekturna, Tekturna HCT, Rasilez and Rasilez HCT. During the transitional service period, we expect to receive monthly reporting from Novartis, that is, generally after Novartis has sold the Noden Products. We recognize revenue when we can reliably estimate such amounts and collectability is reasonably assured.

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Product revenues were derived from sales of the Noden Products. Pursuant to the purchase agreement, when Noden Pharma DAC (Noden) acquired the exclusive worldwide rights to manufacture, market, and sell the Noden Products from Novartis. Novartis was required to continue distributing the Noden Products during the third quarter of 2016 and transferred profits with Noden on a net basis (i.e. net of cost of manufacturing and a fee to Novartis). Noden is commercializing the products in the U.S. as of the fourth quarter of 2016.

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We have reduced the fair value of the Depomed royalty rights year to date 2016 by $57.6 million, primarily due to a reduction in Glumetza royalties received and a reduction in future cash flows due to lower projected demand data, greater erosion of market share due to the launch of a generic, and higher gross-to-net adjustments for Glumetza. As you will recall, Glumetza was marketed by Salix until its acquisition by Valeant. Because we have limited information from Valeant, we employ an independent third party consulting group to assist us in our quarterly evaluation of Glumetza and the other Depomed products on which we receive or will receive royalties. In February and August 2016, generic competitors to Glumetza launched as expected. The impact of the generic on pricing and gross-to-net has been greater than typical generic models would predict.

•	PDL received a $6 million milestone payment for FDA approval of Jentadueto® XR in the second quarter of 2016. Jentadueto XR is the third approved product for which we will receive royalties from our Depomed royalty rights assets. We expect to begin receiving royalties on Jentadueto XR in the fourth quarter of 2016.

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On September 21, 2016, the Company obtained a notification indicating that the FDA approved Invokamet XR for use in patients with Type 2 diabetes. The product approval triggered a $5.0 million approval milestone payment to the Company. Based on the FDA approval and expected product launch, the Company adjusted the timing of future cash flows and discount rate used in the discounted cash flow model at September 30, 2016.

•	Since PDL’s acquisition of the Depomed royalty rights in October 2013, PDL has received $185.6 million in net cash payments.

•	PDL and Depomed are in the process of conducting a royalty audit on Glumetza royalties owed by Valeant.

•	Glumetza royalty payment for October 2016 is $8 million, which will be included in PDL’s fourth quarter results.

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On July 28, 2016, PDL funded the second tranche of $50 million to ARIAD. This agreement was entered into in July 2015, in exchange for royalties on the net revenues of Iclusig. As a result of the second tranche payment, under the terms of the ARIAD Royalty Agreement, PDL’s royalty percentage increased to 5.0% of the U.S. and European net revenues of Iclusig and 5.0% of the payments ARIAD receives elsewhere in the world until December 31, 2018.  Beginning January 1, 2019 and thereafter, the royalty rate will increase to 6.5% in all jurisdictions and continue until December 31, 2033, subject to a put option of PDL upon the occurrence of specified events and a call option of ARIAD.

•	On October 31, 2016, Ariad reported that its application for approval for brigatinib had been accepted for filing by the FDA and was granted Priority Review. Brigatinib is a backup source of repayment to PDL in the Ariad transaction.

•	On July 8, 2016, PDL entered into a royalty purchase agreement with an individual, whereby the Company acquired that individual's rights to receive certain royalties on sales of KYBELLA® by Allergan, in exchange for a $9.5 million cash payment and up to $1.0 million in future milestone payments based upon product sales targets. The first revenues on this transaction were recognized in Q3 2016.

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On July 29, 2016, the Supreme Court of New York issued its Memorandum of Decision granting the Company’s motion for summary judgment and denying the Wellstat Diagnostics Guarantors’ cross-motion for summary judgment.  The Supreme Court of New York held that the Wellstat Diagnostics Guarantors are liable for all “Obligations” owed by Wellstat Diagnostics to PDL.  It did not set a specific dollar amount due, but ordered that a judicial hearing officer or special referee be designated to determine the amount of the Obligations owing, and awarded PDL its attorneys’ fees and costs in an amount to be determined.  The Supreme Court of New York has also set a hearing on August 23, 2016 to consider the implication of the status quo ante instruction on certain actions of the Wellstat Diagnostics Guarantors and whether to issue a writ of attachment.

•	On September 1, 2016, the Company filed a motion for relief pursuant to New York law (i) restraining the Wellstat Diagnostics Guarantors from making any sale, assignment, transfer or interference in any of their property, or from paying over or otherwise disposing of any debt, and (ii) authorizing the Company to examine the assets of each of the Wellstat Diagnostics Guarantors.

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On October 5, 2016, the Wellstat Diagnostics Guarantors filed a motion for leave of the court to assert counterclaims against the Company, and certain officers and consultants of the Company, for (i) breach of fiduciary duty, (ii) intentional interference with prospective economic advantage, (iii) breach of the duty of good faith and fair dealing, and negligent misrepresentation. A hearing has been scheduled by the court regarding such motions and counterclaims for November 14, 2016.

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On October 24, 2016, in response to a request from the Wellstat Guarantors’ to stay the damages hearing pending resolution of the Wellstat Guarantors’ appeal of the Supreme Court’s summary judgment against them by the Appellate Division, a single justice of the Appellate Division granted a temporary stay of all proceedings before the Supreme Court until the Wellstat Guarantors’ motion to stay can be addressed by a three judge panel of the Appellate Division. The motion for a stay will be fully briefed and submitted for decision by the motions panel on November 9, 2016.

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On July 15, 2016, PDL and Direct Flow Medical entered into the fifth Amendment and Limited Waiver to the Credit Agreement. PDL funded an additional $1.5 million to Direct Flow Medical in the form of a note with substantially the same interest and payment terms as the existing loans and a conversion feature whereby the $1.5 million loan would convert into equity of Direct Flow Medical upon the occurrence of certain events.

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On September 12, 2016, the Company and Direct Flow Medical entered into the sixth amendment and limited waiver to the credit agreement under which the Company funded an additional $1.5 million to Direct Flow Medical in the form of a note with substantially the same interest and payment terms as the existing loans. In addition, Direct Flow Medical agreed to issue to the Company a specified amount of warrants to purchase shares of convertible preferred stock at an exercise price of $0.01 per share.

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On September 30, 2016, the Company and Direct Flow Medical entered into the tenth limited waiver to the credit agreement where the parties agreed, among other things, to (i) delay payment on all overdue interest payments until October 31, 2016, (ii) waive the initial principal repayment until October 31, 2016 and (iii) continue to waive the liquidity requirements until October 31, 2016. Further, Direct Flow Medical agreed to issue to the Company a specified amount of warrants to purchase shares of convertible preferred stock at an exercise price of $0.01 per share.

•	On October 31, 2016 the Company agreed to extend the waivers described above until November 30, 2016 and is exploring its options while Direct Flow Medical continues to seek additional financing.

•	On August 26, 2016, the Company received $57.5 million in connection with the prepayment of the loans under the Paradigm Spine Credit Agreement, which included a repayment of the full principal amount outstanding of $54.7 million, plus accrued interest and a prepayment fee.

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PDL entered into a secured note purchase agreement with Accel 300, a wholly-owned subsidiary of kaléo, which as of June 30, 2016, had a principal balance of $144.8 million due to PDL. Interest payments due have been paid on time and in full through the second quarter of 2016, and kaléo has indicated that it intends to make payments due to PDL under the note agreement until Auvi-Q is returned to the market.

•	In October 2016, kaleo announced that Auvi-Q will be reintroduced to the market in the first half of 2017. kaleo indicated that the manufacturing problems experienced when Sanofi was making the product have been resolved by kaleo’s investment in an extensive new, automated manufacturing process that uses a production line composed entirely of robots with more than one hundred quality checks.

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