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Ebb & Flow

Activist investors enjoyed an immediate pop after PDL BioPharma CEO Mark McDade announced last week that he would resign by year end. The news boosted the shares $2.65 (13%) to $23.81 on the week, while the stock earned upgrades from two of the six analysts covering the company.

Hedge fund Third Pointhas been publicly calling for McDade to depart since April, while co-founder Cary Queen seconded that sentiment in May (see BioCentury, April 16 & May 14).

Third Point held 11.4 million shares (9.8%) at June 30. Queen holds the largest insider stake at almost 2 million shares.

The announcement came as the cardiovascular, cancer and autoimmune company said a three-month internal investigation into Third Point's many allegations against McDade found no evidence of improper personal conduct or a breach of fiduciary duty by the CEO.

McDade cited the "personal and professional toll" of the investigation as his reason for stepping down. L. Patrick Gage, who had been a director, will assume the role of executive chairman.

Queen told Ebb & Flow that a "sale of the company is a very viable possibility," even though the company is looking for a new CEO. Queen said he and other shareholders would consider an offer of $30 a share to be a "good outcome."

But it's not clear Third Point would see it that way. One of the fund's complaints was that McDade had allegedly engaged in secret discussions to sell the company for $32-$34 a share - an allegation PDLI's board found to be untrue.

In July, Third Point said it had presented its own analysis to the company's board showing it believed PDLI to be worth more than $40 per share(see BioCentury, July 23).

PDLI said it is conducting a corporate strategic review with Merrill Lynch. Based on recent

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