SEC Filing | PDL BioPharma, Inc.

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form8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 9, 2011

PDL BioPharma, Inc.

(Exact name of Company as specified in its charter)

000-19756

(Commission File Number)

Delaware		94-3023969
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

932 Southwood Boulevard

Incline Village, Nevada 89451

(Address of principal executive offices, with zip code)

(775) 832-8500

(Company’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 9, 2011, PDL BioPharma, Inc. (the Company) issued a press release announcing the financial results for the third quarter ended September 30, 2011. A copy of this earnings release is attached as Exhibit 99.1 hereto. The Company will host an earnings call and webcast on November 9, 2011, during which the Company will discuss its financial results for the third quarter ended September 30, 2011.

Item 7.01 Regulation FD Disclosure.

On November 9, 2011, the Company distributed to analysts covering the Company’s securities a summary of certain information regarding the Company’s 2011 dividends and licensed product development and regulatory updates (the Information Sheet) to assist those analysts in valuing the Company’s securities. A copy of the Information Sheet and its associated tables are attached hereto as Exhibits 99.2 and 99.3.

Limitation of Incorporation by Reference

In accordance with General Instruction B.2. of Form 8-K, the information in this report, including the exhibits, is furnished pursuant to Items 2.02 and 7.01 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Cautionary Statements

This filing includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could impair the Company’s royalty assets or business are disclosed in the “Risk Factors” contained in the Company’s 2010 Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such factors. We do not undertake any duty to update any forward-looking statement except as required by law.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.		Description
99.1		Press Release
99.2		Information Sheet
99.3		Tables to Information Sheet

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PDL BIOPHARMA, INC.
	(Company)

	By:	/s/ Christine R. Larson
		Christine R. Larson
		Vice President and Chief Financial Officer
Dated: November 9, 2011

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release
99.2		Information Sheet
99.3		Tables to Information Sheet

ex99_1.htm

EXHIBIT 99.1

Contacts:

Cris Larson

PDL BioPharma, Inc.

775-832-8505

Cris.Larson@pdl.com

Jennifer Williams

Cook Williams Communications, Inc.

360-668-3701

jennifer@cwcomm.org

PDL BioPharma Announces Third Quarter 2011 Financial Results

INCLINE VILLAGE, NV – November 9, 2011 – PDL BioPharma, Inc. (PDL) (NASDAQ: PDLI) today reported financial results for the third quarter ended September 30, 2011.

Revenues

Total revenues for the third quarter of 2011 were $83.8 million, compared to $86.4 million for the same period of 2010, a three percent year-over-year decrease. Total revenues for the nine months ended September 30, 2011, were $289.2 million, compared to $268.8 million for the same period of 2010, an eight percent increase.

The third quarter 2011 revenue decline is driven primarily by reduced royalties from second quarter 2011 sales of Avastin® partially offset by increased royalties from second quarter 2011 sales of Herceptin®, Lucentis® and Tysabri®. Also contributing to the decline is a lower average royalty rate on sales of Avastin, Herceptin, Lucentis and Xolair® (the Genentech Products) that are either made or sold in the United States (U.S.-based Sales) due to higher year-to-date sales in 2011. Sales of the Genentech Products are subject to a tiered royalty rate for U.S.-based Sales and a flat royalty rate of three percent for product that is manufactured and sold outside of the United States. Due to the tiering, in the second quarter of 2011, only 15% of U.S.-based Sales were above the lowest royalty rate of one percent as compared with 45% of U.S.-based Sales for the second quarter 2010. The net sales thresholds and the applicable royalty rates for product that is either made or sold in the United States are outlined below:

	Royalty Rate
Net sales up to $1.5 billion		3.0	%
Net sales between $1.5 billion and $2.5 billion		2.5	%
Net sales between $2.5 billion and $4.0 billion		2.0	%
Net sales exceeding $4.0 billion		1.0	%

The third quarter 2011 royalty payment received from Genentech included royalties generated on all worldwide sales. Total revenue for the third quarter is net of the payment made pursuant to our February 2011 settlement agreement with Novartis, which is based on a portion of the royalties that the Company receives for Lucentis sales made by Novartis outside of the United States.

General and Administrative Expenses

Total general and administrative expenses for the third quarter of 2011 were $4.0 million, compared with $11.1 million for the same period of 2010. Total general and administrative expenses for the nine months ended September 30, 2011, were $13.5 million, compared to $29.3 million for the same period in 2010. The decrease in general and administrative expenses was driven primarily by a reduction in legal expenses for both the third quarter and first nine months of 2011 as a result of the conclusion of several legal matters in the first quarter of 2011.

Other Income (Expense)

Total other income (expense), for the three months ended September 30, 2011, was $(8.9) million, compared to $(12.1) million for the same period in 2010. Total other income (expense), for the nine months ended September 30, 2011, was $(28.2) million, compared to $(52.4) million for the same period of 2010. The decrease in other income (expense), for both the third quarter and first nine months of 2011 was driven primarily by reduced costs associated with the retirement or conversion of convertible notes and a reduction in interest expense. The reduction in interest expense for both the third quarter and first nine months of 2011 is primarily attributable to repayment and reduction in principal of PDL’s Non-recourse Notes Payable, for which the current principal balance at September 30, 2011, was $115.3 million as compared with $225.0 million at September 30, 2010.

Net Income

Net income for the third quarter of 2011 was $45.9 million, or $0.28 per diluted share, as compared with net income of $40.2 million, or $0.24 per diluted share, for the same period of 2010. Net income for the nine months ended September 30, 2011, was $160.4 million, or $0.88 per diluted share compared to $116.3 million, or $0.67 per diluted share, for the same period in 2010.

Non-GAAP Net Income

Adjusting for convertible note retirement or conversion transactions and amortization of the non-cash debt discount accounting treatment for the 3.75% Convertible Senior Notes due May 1, 2015 (the May 2015 Notes), non-GAAP net income for the third quarter of 2011 was $46.6 million, or $0.28 per diluted share, compared with $42.5 million, or $0.25 per diluted share, in the third quarter of 2010. Non-GAAP net income for the nine months ended September 30, 2011, was $162.0 million, or $0.89 per diluted share, compared with $133.4 million, or $0.77 per diluted share in the nine months ended September 30, 2010. A description of the non-GAAP adjustments is provided below in the accompanying table entitled “Reconciliation of GAAP Financial Information to Non-GAAP.”

Cash, Cash Equivalents and Investments

Net cash provided by operating activities in the nine months ended September 30, 2011, was $124.6 million, compared with $154.3 million for the nine months ended September 30, 2010. At September 30, 2011, PDL had cash, cash equivalents and investments of $225.3 million, compared with $248.2 million at December 31, 2010.

RECENT DEVELOPMENTS

Dividend Payment

PDL’s board of directors declared a regular quarterly dividend on February 25, 2011, of $0.15 per share of common stock, payable March 15, June 15, September 15 and December 15 of 2011 to stockholders of record on March 8, June 8, September 8 and December 8 of 2011, the record dates of each of the dividend payment dates, respectively. The Company paid $21.0 million to PDL stockholders on each of March 15, June 15, and September 15, 2011, using current year earnings and cash on hand. As of September 30, 2011, the Company has accrued $21.0 million in dividends payable for the December 15, 2011, dividend.

Adjustments to Convertible Note Conversion Ratios

In connection with the September 15, 2011, dividend payment, the conversion ratios for PDL’s convertible notes increased. The conversion ratio for the 2.875% Convertible Senior Notes due February 15, 2015 (February 2015 Notes), was adjusted to 151.713 shares of common stock per $1,000 principal amount, or approximately $6.59 per share, effective September 9, 2011. The conversion ratio for the May 2015 Notes was adjusted to 132.6682 shares of common stock per $1,000 principal amount, or approximately $7.54 per share, effective September 6, 2011. The conversion ratio for the February 2015 Notes was previously 147.887 shares of common stock per $1,000 principal amount, or a conversion price of approximately $6.76 per share. The conversion ratio for the May 2015 Notes was previously 129.2740 shares of common stock per $1,000 principal amount, or a conversion price of approximately $7.74 per share.

Genentech and Roche Dispute

PDL received a letter from Genentech, Inc. (Genentech) in August 2010 sent on behalf of F. Hoffman-La Roche Ltd. (Roche) and Novartis AG (Novartis), asserting that Avastin, Herceptin, Lucentis and Xolair (the Genentech Products) do not infringe PDL’s supplementary protection certificates (SPCs) granted to the Company by various countries in Europe for each of the Genentech Products and seeking a response to these assertions. The SPCs covering the Genentech Products effectively extend the patent protection for PDL’s European Patent No. 0 451 216B (the ‘216B Patent) until December 2014, except that the SPCs for Herceptin will generally expire in July 2014. PDL responded to Genentech, stating that the Company believes its assertions of non-infringement are without merit and that it disagreed fundamentally with the assertions of non-infringement with respect to the Genentech Products. In August 2010, PDL filed a complaint in the Second Judicial District of Nevada, Washoe County, against Genentech and, Roche seeking to enforce the Company’s rights under the 2003 settlement agreement with Genentech and an order from the court declaring that Genentech is obligated to pay royalties to PDL on sales of the Genentech Products that are manufactured and sold outside of the United States.

The Second Judicial District Court of Nevada ruled in favor of PDL on July 7, 2011, on two motions to dismiss filed by Genentech and Roche in PDL’s lawsuit related to the 2003 settlement agreement with Genentech. The court denied Genentech and Roche’s motion to dismiss four of PDL’s five claims for relief and, further, denied Roche’s separate motion to dismiss for lack of personal jurisdiction. The court dismissed one of PDL’s claims that Genentech committed a bad-faith breach of the covenant of good faith and fair dealing stating that, based on the current state of the pleadings, no “special relationship” had been established between Genentech and PDL, as required under Nevada law.

The effect of the Court’s ruling is that PDL is permitted to continue to pursue its claims that (i) Genentech is obligated to pay royalties to PDL on international sales of the Genentech Products; (ii) Genentech, by challenging, at the behest of Roche and Novartis, whether PDL’s SPCs cover the Genentech Products breached its contractual obligations to PDL under the 2003 settlement agreement; (iii) Genentech breached the implied covenant of good faith and fair dealing with respect to the 2003 settlement agreement and (iv) Roche intentionally and knowingly interfered with PDL’s contractual relationship with Genentech in conscious disregard of PDL’s rights.

PDL seeks compensatory damages, including liquidated damages and other monetary remedies set forth in the 2003 settlement agreement, punitive damages and attorney’s fees as a result of Genentech and Roche’s conduct. The ultimate outcome of this litigation is uncertain and PDL may not be successful in its allegations.

Revenue Guidance for 2011

As previously announced, PDL will continue to provide revenue guidance for each quarter in the third month of that quarter. Fourth quarter and full year 2011 revenue guidance will be provided in early December.

Conference Call Details

Please dial (877) 677-9122 in the United States and Canada and (708) 290-1401 internationally to access the live conference today call via phone,. The conference ID is 19555218. Please dial in approximately 10 minutes prior to the start of the call. A telephone replay will be available beginning approximately one hour after the call through November 16, 2011, and may be accessed by dialing (855) 859-2056 in the United States and Canada or (404) 537-3406 internationally. The replay passcode is 19555218.

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

About PDL BioPharma

PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases. Today, PDL is focused on intellectual property asset management, investing in new royalty bearing assets and maximizing the value of its patent portfolio and related assets. For more information, please visit www.pdl.com.

NOTE: PDL BioPharma and the PDL BioPharma logo are considered trademarks of PDL BioPharma, Inc.

Forward-Looking Statements

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

The expected rate of growth in royalty-bearing product sales by PDL's existing licensees;

The relative mix of royalty-bearing Genentech products manufactured and sold outside the U.S. versus manufactured or sold in the U.S.;

The ability of PDL’s licensees to receive regulatory approvals to market and launch new royalty-bearing products and whether such products, if launched, will be commercially successful;

Changes in any of the other assumptions on which PDL's projected royalty revenues are based;

The outcome of pending litigation or disputes;

The change in foreign currency exchange rates; and

The failure of licensees to comply with existing license agreements, including any failure to pay royalties due.

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

###

PDL BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues:
Royalties	$	83,370		$	86,442		$	278,833		$	268,846
License and other		400			-			10,400			-
Total revenues		83,770			86,442			289,233			268,846

General and administrative expenses		3,960			11,110			13,516			29,340
Operating income		79,810			75,332			275,717			239,506

Other income (expense)
Loss on retirement or conversion of convertible notes		-			(2,354	)		(766	)		(18,681	)
Interest and other income		130			167			463			337
Interest and other expense		(9,007	)		(9,928	)		(27,941	)		(34,015	)
Total other income (expense)		(8,877	)		(12,115	)		(28,244	)		(52,359	)
Income before income taxes		70,933			63,217			247,473			187,147
Income tax expense		25,017			23,028			87,026			70,813

Net income	$	45,916		$	40,189		$	160,447		$	116,334

Net income per share
Basic	$	0.33		$	0.32		$	1.15		$	0.95
Diluted	$	0.28		$	0.24		$	0.88		$	0.67

Cash dividends declared and paid per common share	$	0.15		$	0.50		$	0.45		$	0.50

Weighted average shares outstanding
Basic		139,680			127,479			139,665			122,209
Diluted		167,019			172,217			186,756			178,448

PDL BIOPHARMA, INC.

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP

(Unaudited)

(In thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010

Net income	$	45,916	$	40,189		$	160,447	$	116,334
Add Back:
Loss on retirement or conversion of convertible notes, net of estimated taxes		-		2,354			498		17,091
Amortization of debt discount for May 2015 Notes, net of estimated taxes		683		-			1,020		-
Non-GAAP net income		46,599		42,543			161,965		133,425

Add back interest expense for implied conversion of convertible notes included in determination of fully diluted shares, net of estimated taxes		841		987			3,391		3,982

Non-GAAP income used to compute non-GAAP net income per diluted share	$	47,440	$	43,530		$	165,356	$	137,407

Shares used to compute net income per diluted share		167,019		172,217			186,756		178,448
Delete shares issued to induce note conversion to common stock (1)		-		(104	)		-		(35	)
Shares used to compute non-GAAP net income per diluted share		167,019		172,113			186,756		178,413

Non-GAAP net income per diluted share	$	0.28	$	0.25		$	0.89	$	0.77

The shares used to compute non-GAAP net income per diluted share amounts are the same as the shares used to calculate GAAP net income per diluted share amounts, except the shares used for the three and nine months ended September 30, 2010, exclude the weighted average effect of the shares issued as an incentive to induce conversion of the 2.75% convertible subordinated notes due 2023.

PDL management uses these non-GAAP financial measures to monitor and evaluate our net income and trends on an on-going basis and internally for operating, budgeting and financial planning purposes. PDL management believes the non-GAAP information is useful for investors by offering them the ability to better identify trends in our business and better understand how management evaluates the business. These non-GAAP measures have limitations, however, because they do not include all expense items that affect PDL. These non-GAAP financial measures that management uses are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP.

These non-GAAP financial measures exclude the following items from GAAP net income:

Loss on Retirement or Conversion of Convertible Notes, Net of Estimated Taxes

The effects of retirement or conversion of convertible notes, net of estimated taxes, are excluded because these capital restructuring charges are transaction specific and result from changes made to a capital structure established when PDL was a commercial, manufacturing, and research and development biotechnology company. For the three months ended September 30, 2010, the loss on retirement or conversion of convertible notes was $2.4 million which was not deductible for income tax purposes. During the nine months ended September 30, 2011 and 2010, the losses on retirement or conversion of convertible notes were $0.8 million, or $0.5 million net of estimated tax, and $18.7 million, or $17.1 million net of estimated tax, respectively.

Imputed Interest on May 2015 Notes, Net of Estimated Taxes

The effects of imputed interest on the May 2015 Notes, net of estimated taxes, are excluded because this expense is non-cash; such exclusion facilitates comparisons of PDL’s cash operating results. For the three months and nine months ended September 30, 2011, the additional interest expense attributable to using an imputed borrowing rate of 7.5% rather than the stated coupon rate of 3.75% was $1.1 million, or $0.7 million net of estimated tax, and $1.6 million, or $1.0 million net of tax, respectively.

PDL BIOPHARMA, INC.

GENERAL AND ADMINISTRATIVE EXPENSE DATA

(Unaudited)

(In thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2011		2010		2011		2010
Compensation and benefits	$	1,045	$	965	$	2,958	$	2,962
Legal expense		1,263		8,660		6,162		20,821
Other professional services		810		535		2,001		2,618
Insurance		176		185		556		608
Depreciation		14		14		43		76
Stock-based compensation		132		166		256		525
Other		520		585		1,540		1,730
Total general and administrative expenses	$	3,960	$	11,110	$	13,516	$	29,340

PDL BIOPHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

(In thousands)

	September 30, 2011			December 31, 2010
Cash, cash equivalents and investments	$	225,335		$	248,229
Total assets	$	270,525		$	316,666
Convertible notes payable	$	315,368		$	310,428
Non-recourse notes payable	$	115,268		$	204,270
Total stockholders' deficit	$	(243,239	)	$	(324,182	)

PDL BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2011			2010
Net income	$	160,447		$	116,334
Adjustments to reconcile net income to net cash provided by operating activities		34,393			20,199
Changes in assets and liabilities		(70,204	)		17,780
Net cash provided by operating activities	$	124,636		$	154,313

PDL BIOPHARMA, INC.

MIX OF EX-U.S. SALES AND EX-U.S.-BASED MANUFACTURING AND SALES

OF GENENTECH PRODUCTS

(Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2011			2010			2011			2010
Avastin
	% Ex-U.S. Sold		56	%		49	%		56	%		49	%
	% Ex-U.S.-based Manufactured and Sold		19	%		27	%		19	%		20	%
Herceptin
	% Ex-U.S. Sold		73	%		68	%		72	%		70	%
	% Ex-U.S.-based Manufactured and Sold		43	%		45	%		38	%		45	%
Lucentis
	% Ex-U.S. Sold		60	%		56	%		58	%		57	%
	% Ex-U.S.-based Manufactured and Sold		0	%		0	%		0	%		0	%
Xolair
	% Ex-U.S. Sold		41	%		34	%		40	%		35	%
	% Ex-U.S.-based Manufactured and Sold		41	%		34	%		40	%		35	%

ex99_2.htm

EXHIBIT 99.2

PDL BioPharma, Inc.

Q3-2011

November 9, 2011

Following are some of the key points from PDL’s press release today regarding its third quarter 2011 financial and business results.

Net Income

●	Net income for the third quarter of 2011 was $45.9 million, or $0.28 per diluted share, as compared with net income of $40.2 million, or $0.24 per diluted share, for the same period of 2010.

●	Net income for the nine months ended September 30, 2011, was $160.4 million, or $0.88 per diluted share compared to $116.3 million, or $0.67 per diluted share, for the same period in 2010.

Non-GAAP Net Income

●	Non-GAAP net income for the third quarter of 2011 was $46.6 million, or $0.28 per diluted share, compared with $42.5 million, or $0.25 per diluted share, in the third quarter of 2010.

●	Non-GAAP net income for the nine months ended September 30, 2011, was $162.0 million, or $0.89 per diluted share, compared with $133.4 million, or $0.77 per diluted share in the nine months ended September 30, 2010.

PDL management believes the non-GAAP information is useful for investors by offering them the ability to better identify trends in our business and better understand how management evaluates the business. These non-GAAP measures have limitations, however, because they do not include all expense items that affect PDL. These non-GAAP financial measures exclude the following items from GAAP net income:

●

●	The effects of imputed interest on our 3.75% Convertible Senior Notes due May 1, 2015 (May 2015 Notes), net of estimated taxes, are excluded because this expense is non-cash; such exclusion facilitates comparisons of PDL’s cash operating results.

Dividend Payment

●	We paid $0.15 per share of common stock or $21.0 million to our stockholders on September 15, 2011, to stockholders of record on September 8, 2011, as part of our regular, quarterly dividend policy for 2011.

Adjustments to Convertible Notes Conversion Ratios

In connection with the September 15, 2011, dividend payment:

●	The conversion ratio for our 2.875% Convertible Senior Notes due February 15, 2015, was adjusted to 151.713 shares of common stock per $1,000 principal amount, or approximately $6.59 per share, effective September 9, 2011.

●

The conversion ratio for the May 2015 Notes was adjusted to 132.6682 shares of common stock per $1,000 principal amount, or approximately $7.54 per share, effective September 6, 2011. However, we entered into purchased call options and warrants to synthetically increase the conversion ratio on the May 2015 Notes. The strike price on the warrants is approximately $8.87 per share.

Page 1

PDL BioPharma, Inc.

Q3-2011

November 9, 2011

Updates On Approved Royalty Bearing Products

ACTEMRA®/RoACTEMRA (tocilizumab):

●

On August 3, 2011, Roche announced that the European Commission has approved the use of RoACTEMRA for the treatment of active Systemic Juvenile Idiopathic Arthritis (sJIA) in patients two years of age or older who have responded inadequately to previous therapy with NSAIDs and systemic corticosteroids. RoACTEMRA can be used alone or in combination with methotrexate in patients with sJIA.

AVASTIN® (bevacizumab):

●	On September 23, 2011, Roche announced that the Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion for the use of Avastin in combination with standard chemotherapy (carboplatin and paclitaxel) as a front-line therapy for women with advanced ovarian cancer.

●	On September 26, 2011, Chugai announced that Avastin in combination with paclitaxel has been approved by the Japanese Ministry of Health, Labour and Welfare to treat inoperable or recurrent breast cancer.

HERCEPTIN® (trastuzumab):

●	On October 18, 2011, Roche announced positive results from a Phase 3 study demonstrating that a subcutaneous formulation showed comparable efficacy to the standard intravenous infusion of Herceptin in women with HER2+ early breast cancer.

LUCENTIS® (ranibizumab):

●	On August 30, 2011, FDA issued a health warning alert after at least 16 AMD patients suffered eye infections after being treated with repackaged Avastin.

TYSABRI® (natalizumab):

●	On October 28, 2011, Biogen Idec announced that at the end of September 2011, they estimated that approximately 63,500 patients were on commercial and clinical TYSABRI therapy worldwide as compared with 61,500 at the end of June 2011.

Updates on Selected Development Stage Potential Royalty Bearing Products

OCRELIZUMAB:

●	On October 20, 2011, Roche announced results from a Phase 2 study of ocrelizumab in patients with relapsing-remitting multiple sclerosis that showed the significant reduction in the total number of active brain lesions and relapses previously reported for 24 weeks was maintained through 96 weeks.

PERTUZUMAB (Unlicensed Product):

●

In July 2011, Roche announced positive results from a Phase 3 clinical trial using pertuzumab combined with Herceptin (trastuzumab) and docetaxel chemotherapy to treat patients with HER2-positive metastatic breast cancer. Based on this data, Roche plans to seek approval with US and EU regulatory authorities in 2011.

T-DM1 (trastuzumabemtansine):

●	On September 23, 2011, Roche/Genentech announced results from a Phase 2 trial in first line HER2+ breast cancer patients which showed a progression free survival of 14.2 months in the T-DM1 treated patients compared to 9.2 months in the women treated with combination of Herceptin and docetaxel.

●	Overall response rate was 64.2% in the T-DM1 treated patients and 58% in the Herceptin and docetaxel treated patients.

●	Roche/Genentech expect to file for second line approval in 2012 and first line approval in 2014.

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PDL BioPharma, Inc.

Q3-2011

November 9, 2011

Forward-Looking Statements

●	The expected rate of growth in royalty-bearing product sales by PDL's existing licensees;

●	The relative mix of royalty-bearing Genentech products manufactured and sold outside the U.S. versus manufactured or sold in the U.S.;

●	The ability of PDL’s licensees to receive regulatory approvals to market and launch new royalty-bearing products and whether such products, if launched, will be commercially successful;

●	Changes in any of the other assumptions on which PDL's projected royalty revenues are based;

●	The outcome of pending litigation or disputes;

●	The change in foreign currency exchange rates; and

●	The failure of licensees to comply with existing license agreements, including any failure to pay royalties due.

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ex99_3.htm

EXHIBIT 99.3

Royalty Revenue by Product ($ in 000's) *

Avastin	Q1	Q2	Q3	Q4	Total
2011	22,283	41,967	23,870	-	88,120
2010	16,870	44,765	29,989	24,922	116,547
2009	13,605	35,161	21,060	15,141	84,966
2008	9,957	30,480	19,574	12,394	72,405
2007	8,990	21,842	17,478	9,549	57,859
2006	10,438	15,572	15,405	12,536	53,952

Herceptin	Q1	Q2	Q3	Q4	Total
2011	25,089	42,209	31,933	-	99,231
2010	23,402	38,555	27,952	25,441	115,350
2009	16,003	32,331	26,830	18,615	93,779
2008	14,092	34,383	28,122	20,282	96,880
2007	19,035	28,188	22,582	14,802	84,608
2006	15,142	19,716	21,557	20,354	76,769

Lucentis	Q1	Q2	Q3	Q4	Total
2011	8,878	24,313	12,157	-	45,348
2010	7,220	19,091	10,841	8,047	45,198
2009	4,621	12,863	8,123	6,152	31,759
2008	3,636	11,060	7,631	4,549	26,876
2007	2,931	6,543	6,579	3,517	19,570
2006	-	-	289	3,335	3,624

Xolair	Q1	Q2	Q3	Q4	Total
2011	4,590	7,621	5,916	-	18,126
2010	3,723	6,386	4,980	4,652	19,741
2009	2,665	5,082	4,085	3,722	15,553
2008	1,488	4,866	3,569	2,927	12,850
2007	1,684	3,942	3,332	2,184	11,142
2006	2,263	2,969	3,041	2,495	10,768

Tysabri	Q1	Q2	Q3	Q4	Total
2011	9,891	10,796	11,588	-	32,275
2010	8,791	8,788	8,735	9,440	35,754
2009	6,656	7,050	7,642	8,564	29,912
2008	3,883	5,042	5,949	6,992	21,866
2007	839	1,611	2,084	2,836	7,370
2006	-	-	-	237	237

Actemra	Q1	Q2	Q3	Q4	Total
2011	913	1,136	1,401	-	3,450
2010	1,587	237	315	688	2,827
2009	585	537	909	1,197	3,228
2008	44	-	146	369	559
2007	32	-	-	17	49
2006	-	-	-	-	-
* As reported to PDL by its licensees

Reported Net Sales Revenue by Product ($ in 000's) *

Avastin	Q1	Q2	Q3	Q4	Total
2011	1,597,461	1,582,705	1,581,095	-	4,761,261
2010	1,506,788	1,596,892	1,594,707	1,646,218	6,344,605
2009	1,345,487	1,295,536	1,439,730	1,514,053	5,594,806
2008	980,715	1,084,930	1,180,427	1,239,382	4,485,454
2007	678,068	746,587	797,013	875,084	3,096,752
2006	439,318	516,052	570,551	592,897	2,118,817

Herceptin	Q1	Q2	Q3	Q4	Total
2011	1,391,568	1,559,975	1,642,898	-	4,594,441
2010	1,270,846	1,349,512	1,300,934	1,409,310	5,330,602
2009	1,210,268	1,133,993	1,226,435	1,278,626	4,849,323
2008	1,105,426	1,195,215	1,211,982	1,186,806	4,699,428
2007	891,761	949,556	979,602	1,015,033	3,835,952
2006	529,585	659,719	761,099	803,576	2,753,979

Lucentis	Q1	Q2	Q3	Q4	Total
2011	887,757	943,418	1,052,809	-	2,883,984
2010	721,967	698,890	745,376	804,684	2,970,917
2009	462,103	469,736	555,296	615,212	2,102,347
2008	363,615	393,682	460,167	454,922	1,672,386
2007	224,820	219,579	299,995	322,300	1,066,695
2006	-	-	10,689	157,742	168,431

Xolair	Q1	Q2	Q3	Q4	Total
2011	267,754	277,642	310,874	-	856,270
2010	228,859	225,878	251,055	263,389	969,179
2009	184,669	181,086	211,006	219,693	796,454
2008	137,875	169,521	177,179	183,753	668,329
2007	129,172	130,700	144,250	147,754	551,876
2006	95,241	99,354	112,608	118,002	425,204

Tysabri	Q1	Q2	Q3	Q4	Total
2011	329,696	356,876	388,758	-	1,075,330
2010	293,047	287,925	293,664	316,657	1,191,292
2009	221,854	229,993	257,240	285,481	994,569
2008	129,430	163,076	200,783	233,070	726,359
2007	30,468	48,715	71,972	94,521	245,675
2006	-	-	-	7,890	7,890

Actemra	Q1	Q2	Q3	Q4	Total
2011	30,433	35,370	46,709	-	112,512
2010	52,908	5,405	10,493	22,919	91,725
2009	19,504	17,920	30,313	39,888	107,625
2008	1,452	1,377	5,981	12,305	21,115
2007	-	-	-	1,137	1,137
2006	-	-	-	-	-

* As reported to PDL by its licensees

Manufacturing Location & Sales - Genentech / Roche & Novartis ($ in 000's) *

Avastin Sales	2010 - Q2	2010 - Q3	2010 - Q4	2011 - Q1	2011 - Q2	2011 - Q3
US Made & Sold	814,872	820,453	800,139	708,539	719,967	688,966
US Made & ex-US Sold	355,742	338,929	415,576	580,981	548,710	587,975
ex-US Made & Sold	426,277	435,325	430,503	307,941	314,028	304,155
Total	1,596,892	1,594,707	1,646,218	1,597,461	1,582,705	1,581,095
US Made & Sold	51%	51%	49%	44%	45%	44%
US Made & ex-US Sold	22%	21%	25%	36%	35%	37%
ex-US Made & Sold	27%	27%	26%	19%	20%	19%

Herceptin Sales	2010 - Q2	2010 - Q3	2010 - Q4	2011 - Q1	2011 - Q2	2011 - Q3
US Made & Sold	406,222	410,563	416,611	409,854	442,903	445,395
US Made & ex-US Sold	312,792	306,085	425,303	423,053	642,670	495,086
ex-US Made & Sold	630,498	584,286	567,396	558,661	474,402	702,416
Total	1,349,512	1,300,934	1,409,310	1,391,568	1,559,975	1,642,898
US Made & Sold	30%	32%	30%	29%	28%	27%
US Made & ex-US Sold	23%	24%	30%	30%	41%	30%
ex-US Made & Sold	47%	45%	40%	40%	30%	43%

Lucentis Sales	2010 - Q2	2010 - Q3	2010 - Q4	2011 - Q1	2011 - Q2	2011 - Q3
US Made & Sold	300,501	326,840	360,911	378,451	409,674	422,335
US Made & ex-US Sold	398,389	418,536	443,773	509,307	533,745	630,474
ex-US Made & Sold	-	-	-	-	-	-
Total	698,890	745,376	804,684	887,757	943,418	1,052,809
US Made & Sold	43%	44%	45%	43%	43%	40%
US Made & ex-US Sold	57%	56%	55%	57%	57%	60%
ex-US Made & Sold	0%	0%	0%	0%	0%	0%

Xolair Sales	2010 - Q2	2010 - Q3	2010 - Q4	2011 - Q1	2011 - Q2	2011 - Q3
US Made & Sold	145,245	165,109	170,001	164,621	167,608	184,837
US Made & ex-US Sold	-	-	-	-	-	-
ex-US Made & Sold	80,632	85,945	93,388	103,133	110,034	126,037
Total	225,878	251,055	263,389	267,754	277,642	310,874
US Made & Sold	64%	66%	65%	61%	60%	59%
US Made & ex-US Sold	0%	0%	0%	0%	0%	0%
ex-US Made & Sold	36%	34%	35%	39%	40%	41%

Total Sales	2010 - Q2	2010 - Q3	2010 - Q4	2011 - Q1	2011 - Q2	2011 - Q3
US Made & Sold	1,666,840	1,722,965	1,747,662	1,661,465	1,740,152	1,741,534
US Made & ex-US Sold	1,081,147	1,063,551	1,284,652	1,513,340	1,725,125	1,713,535
ex-US Made & Sold	1,137,407	1,105,556	1,091,287	969,735	898,464	1,132,608
Total	3,885,394	3,892,072	4,123,601	4,144,540	4,363,741	4,587,677
US Made & Sold	43%	44%	42%	40%	40%	38%
US Made & ex-US Sold	28%	27%	31%	37%	40%	37%
ex-US Made & Sold	29%	28%	26%	23%	21%	25%

* As reported to PDL by its licensees