PDL Shakeup Lifts Shares (PDLI)

PDL Shakeup Lifts Shares

You can always tell what investors think about a company's leadership by how its shares perform once those leaders leave. Shares of PDL BioPharma (Nasdaq: PDLI ) rose more than 4% yesterday, after a longtime board member, currently the company's interim CEO, departed.

At PDL BioPharma's annual meeting on Wednesday, interim CEO and board member Patrick Gage resigned from his seat on the board of directors, citing "differences of opinion" about PDL's objectives. Interestingly, Gage had already announced several weeks ago that he would resign once PDL finished spinning off its royalty-generating assets into a new company, a move scheduled to take place by the end of 2008.

PDL's board of directors has endured considerable turnover recently. The company gave no specifics on why Gage left -- much like board chairman Karen Dawes, who left for "personal reasons" on Wednesday as well. Counting these two departures, five of PDL's board members have resigned since last year.

This type of board turnover usually only occurs when malfeasance or a dramatic change of strategy occurs at a company. Considering that there's no sign of the former, the latter -- combined with a healthy dose of shareholder activism from investors like PDL's co-founder Cary Queen -- is the likely reason for the board turnover.

PDL confirmed after the annual meeting that its plans to split the company in two remain in place. Other drugmakers, including Enzon Pharmaceuticals (Nasdaq: ENZN ) , are planning similar moves.

The last time a PDL CEO left the company in August, shares rose more than 10% the following day. If PDL can keep repeating this maneuver, it may have found a winning strategy to increase its share price. All kidding aside, as long as the drugmaker remains focused on separating its pipeline assets from its royalty revenue, and returning the latter to shareholders, PDL is poised for a brighter future.

Best Odds in the Universe!
If you're interested in a 98.79% chance at beating the market... and a 70.84% chance at DOUBLING the market's return – Motley Fool Supernova could be just what you're looking for. And get this: We arrived at these odds from 10,000 random back-tested portfolios composed of Motley Fool Co-founder David Gardner's personal stock picks.

It's why David recently handpicked a small team of world-class portfolio managers. You see, he thinks these odds can get even better! And he'd like to prove it to you...

Simply enter your email address. And the answer to the question everybody is asking will be delivered to your inbox!

Motley Fool Rule Breakers is always on the hunt for hot drug stocks and other cutting-edge picks. See all of our latest discoveries with a 30-day free trial subscription.

Fool contributor Brian Lawler owns shares of PDL but no other company mentioned in this article. The Fool has an A+ disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.