PDL BioPharma's largest shareholder Third Point calls for CEO's immediate resignation

By Lisa Kerner

Charlotte, N.C., April 11 - PDL BioPharma Inc.'s largest shareholder Third Point LLC, led by Daniel S. Loeb, is calling for the company's chief executive officer Mark McDade to resign.

"We believe that a PDL unencumbered by Mr. McDade's management blunders and wasteful spending will appreciate in value considerably, and thus we have increased our position by 1,100,000 shares and now beneficially own 9.7% of the company's outstanding stock," Loeb wrote in a lengthy letter to McDade and the company's board members.

Third Point has been in contact with PDL since attempting to work with management to streamline the cost structure and asset base at PDL. Loeb believes cost cutting could boost PDL's stock by $1.00 per share in 2008 and by $1.50 per share in 2009, according to a company news release.

PDL's shares rose 15%, or increased in value by over $300 million, as a result of Third Point's involvement with the company, Loeb said.

"Unfortunately, our initial optimism that we could work constructively with management quickly faded through a series of subsequent telephone calls with Mr. McDade, culminating in a 'slap-in-the face' on Friday, April 6, in which it became abundantly clear that Mr. McDade has no intention of pursuing a constructive dialogue," the letter stated.

Loeb also cited McDade's "inexplicable insouciance towards us," other negative findings and McDade's managerial abilities, judgment and ethics as grounds for the CEO's termination.

Third Point's letter also accused McDade of being disorganized specifically in regards to the investor's push for board representation. Loeb alleged that McDade, who failed to contact any of the 12 references provided for Third Point's board candidates, determined Loeb's candidates were not qualified to serve on PDL's board.

"We also want to emphasize that during the course of our discussions over the past month it became clear that Mr. McDade does not see the benefits of adding representatives of the major owners of the company to the board. In fact, he told us that the board's ideal next candidate(s) would be a late-stage development expert," Loeb said in his letter.

Loeb called the decision to build out PDL's "absurdly large and unnecessary new corporate headquarters" at the cost of almost $100 million appalling and said the build out of leased space into a "Taj Mahal" was done to shorten McDade's commute while inconveniencing many PDL employees.

Third Point's Loeb suggested that the Wilmington, N.C., pharmaceutical company consider a split into two publicly traded entities, one commercial and the other a research and development operation. "We would be happy to share with the board our analysis as to why we believe that separating PDL into two public companies would create significant shareholder value."

Loeb cited feedback from the business leaders saying that McDade has "consistently disappointed the Street by missing revenue and earnings projections and development timelines" and that PDL is being "treated like McDade's personal science experiment."

"We are confident that some members of PDL's board share our negative sentiment towards Mr. McDade. We urge these members to speak up and take action to dismiss him immediately," Loeb said in his letter.

The investor said it is time to "put the valuable assets of this company into more capable hands, either by bringing in a high-quality CEO or selling the assets to a larger, better-run company."

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