Pdl Biopharma: My Morning Pick

My morning pick is Pdl Biopharma PDLI.

How does this company make money?
PDL BioPharma (NASDAQ: PDLI) is a biotech company with a patented process to create humanized antibodies. PDL engages in the management of antibody humanization patents and royalty assets, which consist of its Queen et al. patents and license agreements with various biotechnology and pharmaceutical companies.

Examples include Genentech/Roche’s Avastin®, Herceptin®, and Lucentis® and Elan/Biogen Idec’s Tysabri®, which are all produced using PDLI’s antibody technology and together made up more than 80% of the company’s royalty revenue in 2008.

It is relatively easy for a biotech company to make a mouse or chicken antibody. However, these animal antibodies may be seen by the human body as foreign substances triggering an immune response. Therefore humanized antibodies, which are more difficult to produce, are preferred. PDL licenses the technology to produce humanized antibodies to other pharmaceutical and biotech companies in exchange for royalty payments. Since 2004 PDLI’s revenues have averaged year-over-year growth rates of more than 20%, predominantly as a result of royalty payments from pharmaceutical companies that use PDLI’s antibody humanization technology to make treatments for cancer as well as autoimmune and infectious diseases.
Visit Pdl Biopharma Investor Relations.

Revenues and profit for the last 5 quarters according to Barchart.com:

	Sep 2011	Jun 2011	Mar 2011	Dec 2010	Sep 2010
Revenue, $M	0	122	83	76	86
Net Income, $M	0	70	45	-24	40
Earnings Per Share, $	0	0.39	0.25	0.2	0.25
Dividend, $	0.15	0.15	0.15	0	0.5
Shares Outstanding, K	139,790	139,680	139,680	139,680	139,700

Other key financial metrics:

	Sep 2011	2010	2009	2008	2007	2006	2005
Earnings/Share	0.45	0.54	1.07	0.47	-0.18	-1.14	-1.45
Profit Margin, %	31.99	26.63	59.61	23.24	-8.13	-31.35	-59.56
Return on Equity, %	0.00	-28.34	-45.60	-19.40	-4.15	-27.81	-31.66
Return on Assets, %	70.56	29.01	56.04	35.77	-1.77	-11.39	-14.29
Price/Sales	2.26	2.99	1.73	1.58	2.67	1.75	0.00
Price/Earnings	5.57	9.54	4.29	8.26	-32.89	-5.52	0.00
Price/Book	0.00	-2.22	-1.32	-1.32	1.36	1.55	0.00
Debt/Equity	0.00	-0.26	-0.53	0.00	0.07	0.00	0.01
Interest Coverage	12.04	4.46	15.48	18.13	-0.40	-8.89	-15.29
Book Value, $	0.00	-2.32	-3.48	-2.95	4.34	4.06	4.66
Dividend Payout, %	69.80	152.04	200.02	1,197.16	0.00	0.00	0.00

Technical Analysis of PDLI by Morningpick.
Simply. Go long if PDLI breaks out above $6.25; otherwise, trade PDLI between its narrow trading ranges if this markets continues its insane voliatility.

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