PDL BioPharma: A portfolio of patents

With antibodies produced from mouse and human components, this biotech is advancing drug research.

By TheStockAdvisors Aug 15, 2012 1:07PM
By Benjamin Shepherd, Personal Finance

A major trend in the pharmaceuti­cal business has been toward tailor­ing treatment to fit an individual pa­tient's biology and disease. As a result, advanced biotechnology has come to play an increasingly critical role in the health care sector.

PDL BioPharma (PDLI) owns a portfolio of patents covering the production of "humanized anti­bodies," which are a mixture of mouse and human components. Antibodies are the gendarmerie of our immune systems. Each antibody fights a particular sort of pathogenic invader by binding with specific pro­teins.

Using antibodies to fight specif­ic diseases has become a cornerstone of personalized medicine and the basis of several next-generation drugs for the treatment of cancer, multiple sclerosis and other diseases.

However, the antibodies used in those drugs are derived from mice, which means our immune systems of­ten recognize them as foreign invad­ers and destroy them.

That biologi­cal response can be overcome by PDL's process of humanization, which essentially reorganizes the antibod­ies' proteins into a more human form, thereby tricking an immune system into believing the mice antibodies be­long within the host.

Several major drug companies -- including Roche and Genentech, Wyeth (PFE) and Novartis (NVS) -- have licensed PDL's technology to produce block­buster drugs such as the cancer treat­ment Herceptin, the macular degenera­tive disease treatment Lucentis and the asthma drug Xolair.

The technology is also used to produce Perjeta, a breast cancer treatment that was approved in early June and is widely predicted to become a blockbuster drug with annual sales in excess of $1 billion.

Under licensing agreements, PDL collects a sliding percentage of drug sales based on total revenue gener­ated. PDL's revenues have grown an average of 22.4% over the past five years.

Annual revenue growth is expected to slow to about 13%, as the current slate of drugs in­corporating PDL's technology mature. However, it's unlikely that PDL won't strike new licensing deals, because a growing number of new drugs incorporate antibodies.

PDL is trading at its lowest valua­tion in several years, with a price-to-earnings ratio of 5.6. The company also offers an attractive 15-cent quar­terly dividend, which amounts to a yield of about 9%. PDL Bio­Pharma is a buy under $7.

More from TheStockAdvisors
2Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

117
117 rated 1
280
280 rated 2
478
478 rated 3
656
656 rated 4
650
650 rated 5
640
640 rated 6
647
647 rated 7
482
482 rated 8
277
277 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
ITUBITAU UNIBANCO BANCO MULTIPLO S.A.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.