PDL BioPharma
(NDAQ:PDLI) shares rose $0.49, or 1.92%, to $26.06 today after Daniel
Loeb's Third Point disclosed a letter to the company's board once again
calling for Mark McDade's termination and its support for a recent
directive given to an investment bank to explore strategic
alternatives. Many shareholders are hoping that the activist hedge fund
will be able to clean up management and force the company to put itself
up for sale to unlock value.
Third Point has been pushing for
the termination of Chairman and CEO Mark McDade for several months now.
The hedge fund contends that Mr. McDade (1) sabotaged a previous buyout
offer, (2) moved the company's headquarters against the advice of his
advisors at a cost of $100 million, (3) oversaw the loss of countless
senior employees due to his incompetence, (4) consistently disappointed
investors with poor earnings and delayed product launches, (5) failed
to communicate with the analyst community to garner interest in the
stock, and (6) committed several ethical violations according to former
employees. All the evidence to back these claims are clearly laid out
in their
letter to the board.
Third
Point made three recommendations to the company after meeting with them
in June to discuss both Mr. McDade and the future of the company.
First, the hedge fund demanded three of their own nominees be placed on
the company's board. Secondly, they suggested that the company slow the
progression of Ularitide and Nuvion Partnerships until all alternatives
are considered. And finally, replace CEO McDade with a more competent
executive that can help unlock shareholder value.
In the end,
if the company heeds the hedge funds advice and decides to take action
it could mean significant share appreciation for shareholders. Not only
would McDade's removal pave the way towards a much more efficient
company, but the strategic alternatives being explored could lead to a
significant sale in the near term. This makes PDLI a stock
worth watching!
Related CompaniesGenentech Inc. (DNA)The Medicines Company (MDCO)Medarex Inc. (MEDX)