PDL BioPharma CEO willing to work with Third Point, says company's problems are being addressed

By Lisa Kerner

Charlotte, N.C., April 12 - PDL BioPharma, Inc. chief executive officer Mark McDade said the company is interested "in a constructive dialogue with Third Point, while we evaluate qualified candidates who may enhance the membership of our board of directors."

McDade's comments were made in a letter to shareholder Third Point LLC's chief executive officer Daniel S. Loeb and included in an 8-K filing with the Securities and Exchange Commission

Wednesday, Loeb blasted what he considered McDade's poor performance and asked for the CEO's resignation in a letter to McDade and the company's board members. Loeb is also seeking to place his slate of nominees on the PDL board.

McDade said that PDL plans to provide investors with additional information related to the company's research and development spending in disclosures and public communications.

"We have openly and repeatedly acknowledged the clinical program disappointments that occurred in 2006," McDade said. He noted that the company is addressing the problem with a process improvement strategy within its clinical teams as well as through the February appointment of a new chief medical officer.

"We remain committed to becoming a leading therapeutics company with a sustainable product portfolio by leveraging our innovative pipeline and antibody expertise. A key component of this strategy is also to leverage our commercial platform to support our pipeline programs as they continue to advance through the clinic," McDade said in the letter.

As a result, McDade does not agree with Loeb's plan to sell PDL's current commercial products.

McDade said PDL's key aim is to "maximize long-term value for all of our stockholders, while providing products that meet important needs of patients and caregivers." The letter ended with McDade extending an offer to meet with Loeb in person.

Third Point, the company's largest shareholder, recently increased its stake in PDL to 9.7%.

The investor has been in contact with PDL 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.

Loeb harshly criticized McDade's management, ethics and judgment in his April 11 letter to the PDL board. He cited the CEO's failure to see the benefits of having major shareholders represented on the company's board and questioned McDade's willingness to qualify Loeb's board nominees.

In addition, Loeb called the decision to build out PDL's leased space into a "Taj Mahal" absurd and said it basically served to shorten McDade's commute while inconveniencing many PDL employees.

The investor said it is time to put the valuable assets of the Wilmington, N.C., pharmaceutical 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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