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 4, 2008

PDL BioPharma, Inc.

(Exact name of registrant as specified in its charter)

Delaware		000-19756		94-3023969
(State or other jurisdiction of incorporation)		(Commission File No.)		(I.R.S. Employer Identification No.)

1400 Seaport Boulevard

Redwood City, California 94063
(Address of principal executive offices)

Registrant’s telephone number, including area code:
(650) 454-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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 6, 2008, PDL BioPharma, Inc. (the “ Company ” or “ we ”) issued a press release announcing our financial results for the third quarter ended September 30, 2008 (the “ Earnings Release ”). The Earnings Release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c) We entered into an employment offer letter with John McLaughlin on November 4, 2008 (the “ Offer Letter ”) pursuant to which Mr. McLaughlin agreed to join the Company as Senior Advisor effective November 6, 2008. Subject to and in connection with the proposed spin off (the “ Spin-off ”) of PDL’s biotechnology operations into Facet Biotech Corporation (“ Facet ”), which will be a separate publicly traded company, PDL (the remaining royalty company) will appoint Mr. McLaughlin, effective as of the Spin-off date, as its President and Chief Executive Officer.

Mr. McLaughlin served as the Chief Executive Officer and a director of Anesiva, Inc., formerly known as Corgentech, Inc., a biopharmaceutical company, from January 2000 to June 2008. He currently serves as a consultant to Anesiva. From December 1997 to September 1999, Mr. McLaughlin was President of Tularik Inc., a biopharmaceutical company. From September 1987 to December 1997, Mr. McLaughlin held a number of senior management positions at Genentech, Inc., a biopharmaceutical company, including Executive Vice President and General Counsel. From January 1985 to September 1987, Mr. McLaughlin was a partner at a Washington, D.C. law firm specializing in food and drug law. Prior to that, Mr. McLaughlin served as counsel to various subcommittees in the United States House of Representatives, where he drafted numerous measures that became FDA laws. Mr. McLaughlin co-founded and served as chairman of the Board of Directors of Eyetech Pharmaceuticals, Inc., a biopharmaceutical company. He serves as a director of Seattle Genetics, Inc. and co-founded and serves as a director of Peak Surgical, Inc. He received a B.A. in Government from the University of Notre Dame and a J.D. from the Catholic University of America.

Pursuant to the Offer Letter, we will employ Mr. McLaughlin as an at-will employee for an annual base salary of $500,000. Mr. McLaughlin’s annual target bonus will be 50% of his annual base salary, with the actual amount earned dependent upon company and individual performance. Mr. McLaughlin’s bonus with respect to 2008 service would be prorated based on his employment commencement date and would be determined by his contribution to the Company’s achievement of 2008 goals and objectives and his individual performance during 2008.

Effective 15 days following the Spin-off date, PDL will grant Mr. McLaughlin a special retention incentive award (the “ Special Retention Incentive ”) comprised of two components: (i) the right to receive $700,000 in cash, and (ii) a number of unvested restricted shares of PDL common stock with a Grant Value equal to $300,000. For this purpose, “ Grant Value ” means the average of the closing prices of PDL’s common stock for the first 10 trading days following the Spin-off date. Subject to Mr. McLaughlin’s continued employment, the Special Retention Incentive will vest and become payable upon the earlier to occur of (i) the second anniversary of the Spin-off date, or (ii) a merger or sale of PDL or a sale of all or substantially all of PDL’s assets, or any securitization or other monetization of all or substantially all of PDL’s assets.

If Mr. McLaughlin is terminated without Cause, as defined in the Offer Letter, or resigns for Good Reason, as defined in the Offer Letter, following his accession to the Chief Executive Officer position, but prior to his entitlement to the Special Retention Incentive, Mr. McLaughlin will receive, within five days of his separation from service, a lump sum cash payment equal to the sum of his annual base salary and target bonus.

The terms and conditions of Mr. McLaughlin’s employment set forth in the Offer Letter and summarized above will also apply upon Mr. McLaughlin’s appointment as President and Chief Executive Officer of the Company, provided , however , that if PDL does not complete the Spin-off, for any reason, within six months following November 6, 2008 (the “ Spin-off Period ”), then Mr. McLaughlin will be entitled to resign and PDL will pay him a special lump sum severance amount equal to six-months’ base salary, provided he tenders his resignation no later than three months following the end of the Spin-off Period.

The Offer Letter is attached hereto as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. The foregoing description of the Offer Letter is qualified in its entirety by reference to Exhibit 10.1.

As previously announced, on October 8, 2008, Mr. McLaughlin was elected to serve as a Class II member of our Board, with a term expiring at the 2009 annual meeting of stockholders. Consistent with our policy for the compensation of non-employee directors, effective November 6, 2008 Mr. McLaughlin will no longer be eligible to receive any compensation with respect to his service as a member of our Board.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Exhibit Description
10.1		Offer Letter between PDL BioPharma, Inc. and John McLaughlin effective November 4, 2008
99.1		Press Release, dated November 6, 2008, regarding the financial results of PDL BioPharma, Inc. for the third quarter ended September 30, 2008

SIGNATURES

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

Date: November 10, 2008

	PDL BioPharma, Inc.

	By:	/s/ Francis Sarena
		Francis Sarena
		Vice President, General Counsel and Secretary

Exhibit 10.1

November 4, 2008

Mr. John McLaughlin

[*]

Dear John:

On behalf of PDL BioPharma, Inc. (‘PDL’ or ‘we’), I am pleased to extend to you an employment offer for the position of Senior Advisor. Your employment with PDL will begin on November 6, 2008 (the ‘Employment Date’).

As we have discussed, PDL is undertaking to spin off of its biotechnology operations into a separate publicly traded company, currently named Facet Biotech Corporation (‘Facet’ and such spin-off transaction, the ‘Spin-off’). You and PDL agree that, subject to and in connection with the Spin-off, PDL shall appoint you, effective as of the Spin-off date, as its President and Chief Executive Officer, reporting to its Board of Directors (the ‘Board’), and you would continue to be employed on the terms and conditions set forth in this offer letter (the ‘Offer Letter’) and you agree to accept such appointment on such terms and conditions. While we plan to complete the Spin-off by the end of 2008, it is possible for various reasons that the Spin-off may not occur by that time or at all. If PDL does not complete the Spin-off, for any reason, within six (6) months following the Employment Date (the ‘Spin-off Period’), you will be entitled to resign and PDL will pay to you, within five (5) days of your separation from service, a special lump sum severance amount equal to six (6) months’ Base Salary; provided , however , that you tender your resignation no later than three (3) months following the end of the Spin-off Period.

You agree that you will devote your full business time and efforts to PDL. You agree that you will not engage in any other business or serve in any position with or as a consultant or adviser to any other corporation or entity (including as a member of such corporation’s or entity’s board of directors or other governing or advising body), without the prior written consent of the Board. Notwithstanding the foregoing, but only for so long as such activities in the aggregate do not materially interfere with your duties hereunder or create a business or fiduciary conflict, you will not be prohibited from (i) participating in charitable, civic, educational, professional, community or industry affairs (including membership on boards of directors), (ii) managing your passive personal investments, and (iii) continuing your service in the positions that you held as of the date of this Offer Letter, which positions you have disclosed to the Board and set forth on Appendix A hereto, provided that any such service obligation is not materially increased beyond what you have disclosed to us.

Your monthly base salary (as in effect from time to time, ‘Base Salary’) will be $41,666.67 ($500,000/annually), less applicable taxes and withholdings, and will be payable in accordance PDL’s payroll procedures. Your Base Salary shall be reviewed each year but will not be subject to decrease unless such decrease is part of an overall reduction effected for executive officers of PDL. Your annual target bonus will be set at fifty percent (50%) of your annual Base Salary. Your bonus with respect to 2008 service will be prorated from the Employment Date and based on your contribution to PDL’s achievement of its 2008 goals and objectives during 2008 and your individual performance during this period as determined by the Board or the Compensation Committee of the Board. Your annual bonus payout and the applicable performance goals for subsequent years will be determined annually by the Board or the Compensation Committee.

Effective fifteen (15) days following the Spin-off date, PDL will grant you a special retention incentive award (the ‘Special Retention Incentive’) comprised of two components: (i) the right to receive $700,000 in cash; and (ii) a number of unvested restricted shares of PDL common stock with a Grant Value equal to $300,000. For this purpose, ‘Grant Value’ means the average of the closing prices of PDL’s common stock for the first ten (10) trading days following the Spin-off date. Subject to your continued employment, the Special Retention Incentive will vest and become payable upon the earlier to occur of (i) the second anniversary of the Spin-off date, or (ii) a Monetization Event. For purposes of this Offer Letter, ‘Monetization Event’ means (i) a merger or sale of PDL or a sale of all or substantially all of PDL’s assets, or (ii) any securitization or other monetization of all or substantially all of PDL’s assets. In the event any dividends or other distributions are paid on PDL’s common stock following the grant of the Special Retention Incentive but prior to the vesting and payment thereof, the amount of the dividends or other distributions payable on the restricted stock component of the Special Retention Incentive shall be withheld, credited to an account in your name, and shall vest and become payable if and when the Special Retention Incentive vests and becomes payable.

If you are terminated without Cause or resign for Good Reason following your accession to the Chief Executive Officer position, but prior to your entitlement to the Special Retention Incentive, you will receive, within five (5) days of your separation from service, a lump sum cash payment equal to the sum of your annual base salary and target bonus.

For purposes of this Offer Letter, ‘Cause’ means the occurrence of any of the following: (i) your intentional theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any PDL documents or records; (ii) your material failure to abide by the PDL’s code of conduct or other written policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) your material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of PDL (including, without limitation, your improper use or disclosure of PDL confidential or proprietary information); (iv) any willfull act by you that has a material detrimental effect on PDL’s reputation or business; (v) your repeated failure or inability to perform any reasonable assigned duties after written notice from the Board of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by you of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between

you and PDL, which breach is not cured pursuant to the terms of such agreement or within twenty (20) days of receiving written notice of such breach; (vii) your conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs your ability to perform your duties with PDL. For purposes of the foregoing, no act or omission will be deemed ‘willful’ unless done, or omitted to be done, by you without a reasonable good faith belief that you were acting in the best interest of PDL.

For purposes of this Offer Letter, ‘Good Reason’ means the occurrence of any of the following conditions without your informed written consent: (i) a material diminution in your authority, duties or responsibilities, causing your position to be of materially lesser rank or responsibility within PDL; (ii) a requirement that you report to a corporate officer or other employee rather than directly to the Board or the board of directors of PDL’s parent; (iii) a material reduction in your Base Salary or bonus, unless reductions comparable in amount and duration are concurrently made for all other PDL officers; or (iv) any action or inaction by a PDL that constitutes, with respect to the you, a material breach of this Offer Letter.

We currently also offer to our employees a welfare benefits package, including a comprehensive medical policy and dental plan, as well as life insurance coverage, in which you will be eligible to participate in accordance with PDL guidelines. You acknowledge that in connection with the Spin-off, PDL will transfer its welfare benefit plans to Facet and PDL would need to establish a new set of welfare benefit plans following the Spin-off. The new welfare benefit plans to be established following the Spin-off will be reasonably comparable to those currently maintained by the company, and to the extent the transition involves your making a COBRA or similar election in connection with the Spin-off and PDL’s transfer of its welfare benefit plans to Facet, PDL will reimburse you for the incremental cost of the transitional coverage provided pursuant to any such election.

Your employment with PDL will not be for a set term, and you will be an at-will employee. As a PDL employee, you will be free to resign at any time, just as we will be free to terminate your employment at any time, with or without Cause. There will be no express or implied agreements to the contrary. By signing this Offer Letter, you agree to waive any right to participate in the PDL Executive Retention and Severance Plan or any other severance plan maintained by PDL from time to time.

PDL intends that payments and benefits provided to you pursuant to this Offer Letter be exempt from or comply with all applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended. Any ambiguities in this Offer Letter shall be construed in a manner consistent with such intent.

For purposes of federal immigration law, you will be required to provide PDL documentary evidence of your identity and eligibility for employment in the United States.

To indicate your acceptance of our offer, please sign and date this Offer Letter in the space provided below and return it, along with a signed copy of the enclosed Proprietary Information and Invention Assignment Agreement, to Francis Sarena in the enclosed envelope. By executing this Offer Letter, you hereby represent that your execution hereof and performance of your obligations hereunder do not and will not contravene or otherwise conflict with any other agreement to which you are a party or any other legal obligation applicable to you. This Offer Letter, along with the Proprietary Information and Invention Assignment Agreement, supersedes any prior representations or agreements, whether written or oral, with respect to our offer of employment to you. This Offer Letter may not be modified or amended except by a written agreement, signed by PDL and you.

We are very excited at the prospect of your joining PDL. This offer will remain open until November 6, 2008, at which time it will expire if not previously accepted.

Sincerely,

PDL BioPharma, Inc.		Accepted by:

/s/ Francis Sarena		/s/ John McLaughlin


Francis Sarena Vice President, General Counsel and Secretary		John McLaughlin
		11/04/08
		Date

Appendix A

Current Board Positions

Peak Surgical, private commercial stage medical device company

Seattle Genetics, public development stage biotech company

Current Consultancies

Anesiva, Inc., a public commercial stage biotech company, which expires on June 30, 2009

Exhibit 99.1

For Immediate Release

Contacts:

Ami Knoefler		Jean Suzuki
Corporate and Investor Relations		Investor Relations
(650) 454-2331		(650) 454-2648
ami.knoefler@pdl.com		jean.suzuki@pdl.com

PDL BIOPHARMA REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS AND
UPDATES 2008 GUIDANCE FOR ROYALTY REVENUES

— Spin-off of biotechnology operations anticipated by end of year —

— Company plans to provide additional royalty guidance prior to spin-off —

Redwood City, Calif., November 6, 2008 — PDL BioPharma, Inc. (PDL) (Nasdaq: PDLI) today reported financial results for the quarter ended September 30, 2008. The financial results for continuing operations are summarized below. The complete financial results, including discontinued operations, are included in the financial tables accompanying this press release. As previously announced, PDL will conduct a conference call this afternoon to review this information.

Summary of Financial Results

· Total revenues for the third quarter of 2008 were $77.3 million compared to $61.3 million in the same period of 2007.

· Royalty revenues for the third quarter of 2008 were $68.7 million, a 25 percent increase from $55.1 million in the comparable period in 2007. This increase was driven primarily by an increase in the volume and percentage of Herceptin® product that was manufactured and sold outside the U.S., which resulted in a greater percentage of Herceptin sales being subject to the higher, fixed royalty rate that applies to Genentech’s products that are both manufactured and sold outside the U.S. as opposed to the lower, tiered royalty fee structure that applies to Genentech’s products that are manufactured or sold in the U.S. In addition, overall growth in royalty-bearing net sales reported by PDL’s antibody product licensees contributed to the royalty revenue increase in the third quarter of 2008 as compared to the same period in 2007. These increases were offset partially by a decrease in the effective royalty rate earned on aggregate underlying licensee net product sales due to the impact of the tiered fee structure applicable to sales of Genentech’s products that were either manufactured or sold in the U.S.

· License, collaboration and other revenues were $8.7 million for the third quarter of 2008 compared to $6.1 million for the same period of 2007. The increase was primarily due to the commencement of the collaboration agreement with Bristol-Myers Squibb Company for the elotuzumab program, which agreement became effective in early September.

· Total costs and expenses for the third quarter of 2008 were $64.3 million compared to $69.7 million reported for the third quarter of 2007.

· Research and development (R&D) expenses were $44.7 million for the third quarter of 2008, a decrease from $47.7 million for the same period of 2007. This decrease was primarily attributable to reduced spending for the company’s Nuvion® program as a result of its termination in the second half of 2007, and lower employee-related expenses as a result of the company’s ongoing restructuring activities. These decreases were partially offset by higher expenses in the third quarter of 2008 related to the company’s daclizumab, elotuzumab and volociximab development programs resulting primarily from the purchase of $12 million of clinical trial material from the company’s contract manufacturing organization during the quarter.

· General and administrative (G&A) expenses in the third quarter of 2008 were $18.5 million compared to $17.2 million for the prior year comparable period. This increase was due primarily to $5.4 million in legal and professional services fees incurred in the third quarter of 2008 related to the company’s spin-off efforts, royalty monetization efforts and litigation and other disputes related to the company’s intellectual property. Lower employee-related G&A costs during the quarter resulting from the company’s restructuring activities partially offset the increases in legal and professional services fees.

· As a result of a restructuring plan announced in March 2008, the company incurred additional restructuring charges in the third quarter of 2008 of $1.0 million related to post-termination benefits for expected employee terminations, a decrease from the $4.5 million recognized in the third quarter of 2007.

· Income from continuing operations, after taxes, for the third quarter of 2008 was $9.7 million, or $0.08 per diluted share, compared to a loss from continuing operations, after taxes, of $6.6 million, or $0.06 per diluted share, in the comparable 2007 period.

· Income from discontinued operations, net of income taxes, increased to $46.0 million in the third quarter of 2008 as compared to $0.8 million for the comparable period in 2007 primarily due to a $25.0 million milestone payment received from EKR Therapeutics, Inc. for the approval of a new Cardene® formulation and a net income tax benefit of $19.8 million recorded in the third quarter of 2008 primarily as a result of tax elections related to contingent consideration the company may receive from EKR.

· Net income for the third quarter of 2008 was $55.7 million, or $0.38 per diluted share, compared to a net loss of $5.8 million, or $0.05 per diluted share, in the comparable 2007 period.

· Cash provided by operating activities was $91.8 million for the nine months ended September 30, 2008 compared to $41.7 million for the nine months ended September 30, 2007.

· Cash, cash equivalents, marketable securities and restricted cash and investments totaled approximately $558.6 million at September 30, 2008 compared to $440.8 million at December 31, 2007.

Recent Developments

· In August, PDL and Bristol-Myers Squibb Company announced an agreement for the global development and commercialization of PDL’s anti-CS1 antibody, elotuzumab, currently in phase 1 development for multiple myeloma. Under the terms of the collaboration agreement, Bristol-Myers Squibb Company paid PDL an upfront cash payment of $30 million for the development and marketing rights to elotuzumab and for an option to expand the collaboration to include PDL241, another anti-CS1 antibody, upon completion of certain pre-agreed preclinical studies. The development costs for elotuzumab are shared, with Bristol-Myers Squibb Company funding 80 percent and PDL funding the remaining 20 percent.

· In September, PDL announced the appointment of Faheem Hasnain as president and chief executive officer of PDL and a director of the company, effective October 1. Following the company’s planned separation of its biotechnology and royalty operations, Mr. Hasnain will become a director and the president and CEO of Facet Biotech Corporation, the biotechnology operations spin-off company. Mr. Hasnain brings more than 20 years of biopharmaceutical leadership experience and joins PDL from Biogen Idec Inc., where he most recently served as executive vice president of its Oncology/Rheumatology Strategic Business Unit.

· In September, PDL announced that UCB S.A. has taken the position that its Cimzia® product does not infringe PDL’s antibody humanization patents and therefore does not intend to pay PDL royalties on sales of the product that PDL believes it is owed under the Patent License Agreement between PDL and Celltech Therapeutics Limited, which was acquired by UCB. Separately, in August, MedImmune, LLC informed PDL that it was exercising its asserted right, purportedly under the Patent License Agreement between PDL and MedImmune, to have a non-binding written determination made by a non-conflicted third-party legal counsel as to whether MedImmune’s Synagis® product or motavizumab development product infringes claims under PDL’s antibody humanization patents. MedImmune has been paying royalties to PDL on sales of the Synagis product on a quarterly basis since 1998.

· In October, PDL announced the election of Paul Sandman and John McLaughlin to the company’s board of directors. Sandman and McLaughlin will remain on the board of the royalty company, which will retain the PDL BioPharma name, following the company’s planned separation of its biotechnology and royalty operations.

· In October, PDL presented preclinical data for its PDL192 program at the EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics in Geneva, Switzerland. PDL192, a novel humanized antibody that targets the TWEAK receptor, is currently enrolling patients with advanced solid tumor cancers in a phase 1 trial.

· In November, PDL announced the appointment of John McLaughlin as president and CEO of PDL BioPharma after the completion of the spin-off transaction. Following the planned spin-off of the biotechnology operations, McLaughlin will lead the remaining royalty company, which will continue to operate under the PDL BioPharma name. In the interim period, the Board has appointed McLaughlin to be a special advisor to the company.

Update on Planned Separation and Royalty Monetization Process

PDL previously announced its plan to separate its biotechnology operations from its antibody humanization royalty assets by the end of 2008 via a spin-off of the biotechnology operations. The company is currently taking the steps necessary to complete the spin-off, including finalizing the Form 10 Registration Statement initially filed with the SEC in August by the biotechnology operations spin-off company, Facet Biotech Corporation. Assuming that the company obtains SEC and other required regulatory approvals and third-party consents, and subject to final PDL Board approval, the company intends to announce a record date in the next few weeks and to complete the spin-off in mid-December.

Subsequent to the spin-off, PDL will continue to operate as an independent, publicly traded Delaware company, but plans to relocate its corporate headquarters and ongoing business operations to a new location outside California. Currently, PDL is evaluating potential locations that would meet the company’s ongoing business needs while also providing a more favorable cost structure.

In parallel with its spin-off preparations, PDL also had been evaluating opportunities to monetize its antibody humanization royalty assets through a potential sale or securitization transaction; however, primarily due to current market conditions, the company is not currently pursuing a monetization transaction, but will continue to evaluate whether such a transaction in the future is in the best interests of its stockholders. Absent a monetization transaction, as previously announced, PDL expects to distribute its income, net of operating expenses, debt service and income taxes, to its stockholders. Under the right conditions, and at the right time, PDL continues to believe that a monetization transaction, in the form of a sale or securitization, is the optimal outcome for the company.

Full Year 2008 Royalty Revenue Expectation

Based on PDL’s actual royalty revenues for the first nine months of 2008, the underlying third quarter 2008 net product sales recently reported by a number of PDL’s licensees, which will impact the company’s fourth quarter 2008 royalties, and an increase in the percentage of Herceptin product manufactured and sold outside the U.S. in recent quarters as compared to the company’s initial expectations, the company anticipates full year 2008 royalty revenues of $270-280 million, an increase from the original estimate of $240-260 million. The fourth quarter and full year 2008 royalty revenues will depend primarily on the actual percentage of Herceptin product manufactured and sold outside the U.S. and the actual net product sales reported to PDL by its licensees for the fourth quarter.

Royalty Outlook

PDL expects continued growth in its royalty revenues based on the following current assumptions:

· Continued growth in aggregate net product sales from its existing royalty-bearing products;

· An increase in the percentage of Herceptin product manufactured and sold outside the U.S. in future periods as compared to recent historical levels based on announcements by Roche that its new Herceptin production facility in Penzberg, Germany will commence commercial production in early 2009;

· The commencement of ex-U.S. manufacturing of Avastin® product based on announcements by Roche that its new Avastin production facility in Basel, Switzerland will commence commercial production in early 2009, some of which the company expects will be sold outside the U.S., and expected subsequent increases in the percentage of Avastin® product manufactured and sold outside the U.S. due to expected scale-up of production; and

· The potential marketing approval and launch of new royalty-bearing products.

Prior to completion of the spin-off transaction, PDL intends to provide additional royalty guidance.

Forward-looking Statements

This press release contains forward-looking statements, including regarding:

· PDL’s plan to spin off its biotechnology operations into an independent publicly traded entity by mid-December 2008;

· The possibility of pursuing in the future the sale or securitization of PDL’s antibody humanization royalty assets;

· PDL’s expectation that its projected full-year 2008 royalty revenues will be greater than originally reported;

· PDL’s expectation to provide additional royalty related expectations in the near future; and

· PDL’s expectation that its royalty revenues will continue to grow long-term.

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 failure to obtain necessary regulatory approvals and consents from third parties, or to complete other steps necessary to complete the spin-off, could delay or make impractical the spin-off of PDL’s biotechnology operations;

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

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

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

· Alternative transactions or opportunities could arise or be pursued which would alter the timing or advisability of anticipated or planned transactions; and

· Cost-reduction efforts may not be completed as anticipated or other events could arise which increase the company’s expenses.

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” sections 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.

About PDL BioPharma

PDL BioPharma, Inc. is a biotechnology company focused on the discovery and development of novel antibodies in oncology and immunologic diseases. For more information, please visit www.pdl.com.

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

PDL BIOPHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
REVENUES:
Royalties	$	68,695		$	55,135		$	223,336		$	183,572
License, collaboration and other	8,651			6,121			23,232			25,597
Total revenues	77,346			61,256			246,568			209,169

COSTS AND EXPENSES:
Research and development	44,718			47,695			132,799			151,823
General and administrative	18,545			17,187			55,570			45,205
Restructuring charges	990			4,545			9,616			6,130
Asset impairment charges	—			315			3,784			5,331
Gain on sale of assets	—			—			(49,671		)	—
Total costs and expenses	64,253			69,742			152,098			208,489
Operating income (loss)	13,093			(8,486		)	94,470			680

Interest income and other, net	3,218			5,378			12,553			15,341
Interest expense	(3,983		)	(3,284		)	(11,958		)	(10,268		)
Income (loss) from continuing operations before income taxes	12,328			(6,392		)	95,065			5,753
Income tax expense	2,612			235			4,979			648
Income (loss) from continuing operations	9,716			(6,627		)	90,086			5,105
Discontinued operations, net of income taxes (1)	45,975			843			(62,338		)	(10,587		)
Net income (loss)	$	55,691		$	(5,784	)	$	27,748		$	(5,482	)

NET INCOME (LOSS) PER BASIC SHARE:
Income from continuing operations	$	0.08		$	(0.06	)	$	0.76		$	0.04
Discontinued operations	0.39			0.01			$	(0.53	)	(0.09		)
Net income (loss)	$	0.47		$	(0.05	)	$	0.23		$	(0.05	)

NET INCOME (LOSS) PER DILUTED SHARE:
Income from continuing operations	$	0.08		$	(0.06	)	$	0.64		$	0.04
Discontinued operations	0.30			0.01			(0.41		)	(0.09		)
Net income (loss)	$	0.38		$	(0.05	)	$	0.23		$	(0.05	)

WEIGHTED-AVERAGE SHARES - BASIC	119,267			116,861			118,540			116,017

WEIGHTED-AVERAGE SHARES - DILUTED	152,812			116,861			152,302			118,444

(1) Discontinued operations reflects the financial results of our Commercial and Cardiovascular Operations. The sale of the Commercial and Cardiovascular Operations was completed on March 7, 2008.

PDL BIOPHARMA, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(in thousands)

(unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008			2007

Depreciation (1)	$	4,007	$	8,024	$	16,770		$	22,711
Amortization of intangibles (1)	$	412	$	8,784	$	1,235		$	26,350
Stock-based compensation (1)	$	1,517	$	5,088	$	9,946		$	14,464
Restructuring charges (1)	$	890	$	4,545	$	11,273		$	6,130
Asset impairment charges	$	—	$	315	$	3,784		$	5,331
Gain on sale of manufacturing assets	$	—	$	—	$	49,671		$	—
Loss on sale of commercial and cardiovascular assets (1)	$	—	$	—	$	(64,568	)	$	—

(1) Portions of depreciation, amortization of intangibles, stock based compensation and restructuring charges as well as the loss on sale of the commercial and cardiovascular assets have been allocated to discontinued operations in the accompanying consolidated statements of operations.

PDL BIOPHARMA, INC.

SUPPLEMENTAL FINANCIAL INFORMATION ON DISCONTINUED OPERATIONS

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Net revenues	$	26,765		$	48,812		$	66,499		$	146,901
Total costs and expenses	(627		)	(48,021		)	(108,622		)	(157,364		)
Income tax benefit (expense)	19,837			52			(20,215		)	(124		)
Discontinued operations	$	45,975		$	843		$	(62,338	)	$	(10,587	)

PDL BIOPHARMA, INC.

CONSOLIDATED BALANCE SHEET DATA

(in thousands)

(unaudited)

	September 30,		December 31,
	2008		2007
Cash, cash equivalents, marketable securities and restricted cash	$	558,580	$	440,788
Total assets	$	718,243	$	1,192,192
Total stockholders’ equity	$	66,373	$	507,610

CONSOLIDATED STATEMENT OF CASH FLOW DATA

(in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2008		2007
Net income (loss)	$	27,748	$	(5,482	)
Adjustments to reconcile net loss to net cash provided by operating activities	49,014		71,405
Changes in assets and liabilities	15,084		(24,199		)
Net cash provided by operating activities	$	91,846	$	41,724

PDL BIOPHARMA REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS AND UPDATES 2008 GUIDANCE FOR ROYALTY REVENUES

PDL BIOPHARMA REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS AND
UPDATES 2008 GUIDANCE FOR ROYALTY REVENUES