Ulcerative Colitis

A Phase IIa trial is being conducted in Crohn's disease, with preliminary results possible in the second quarter of 2006.PDL ISSUES OPTIONS.

Terlipressin is being developed by partner Orphan Therapeutics, and is undergoing Phase III trials for the treatment of type 1 hepatorenal syndrome (HRS), a rare life-threatening kidney disorder.

Results are expected this year with a possible New Drug Application submission in early 2007.

PDL would market terlipressin.Our estimates for Standard & Poor's Core Earnings essentially consist of our projections for option costs.

Relatively speaking, we do not find PDL's issuance of stock options to be excessive compared to peers in the biotech space.

We note that our operating EPS estimates for 2006 and 2007 include our forecasts for option expense.

Additionally, we view projected stock option expense as a percentage of overall sales and income as reasonable compared to other biotech players in the small- and mid-cap arena.

While the company was unprofitable in 2005, we anticipate profitability in 2006.

Although the p-e of 92.8 times our 2006 EPS estimate of 32 cents is high, the p-e of 35.8 times our 2007 EPS estimate of 83 cents is appropriate, in our view, in light of our projected growth rate.

We forecast annualized EPS growth of 34.6% through 2010, using 2006 EPS as the base year for our calculation.

BEST CASE.

The p-e to growth (PEG) ratio on 2006 EPS...

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