38.
     1.
[  *  ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT  TO  RULE  24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                                                   EXHIBIT 10.28

                             COLLABORATION AGREEMENT

     THIS  COLLABORATION AGREEMENT (the "Agreement") is dated as of May 22, 2001
(the  "Effective  Date")  by  and between EXELIXIS, INC., a Delaware corporation
having  its  principal  place of business at 170 Harbor Way, P.O. Box 511, South
San  Francisco, California 94083-0511 ("EXEL"), and PROTEIN DESIGN LABS, INC., a
Delaware  corporation  having  its  principal  place of business at 34801 Campus
Drive,  Fremont,  California  94555-3606  ("PDL").  EXEL  and  PDL are sometimes
referred  to herein individually as a "Party" and collectively as the "Parties."

                                    RECITALS

     A.  PDL  has  expertise  and  capability  in  developing  antibodies, in
particular  humanized  antibodies,  as  pharmaceuticals.

     B.  EXEL has expertise and proprietary technology relating to drug
discovery  focused  particularly  on  genetic  model  systems,  genomics  and
computational  biology  and is applying such technology to discover and validate
targets  and  products  for  drug  discovery  in  a  variety  of  disease areas.

     C.  PDL  and  EXEL  desire  to  establish  a  collaboration  to utilize the
technology  and  expertise  of PDL and EXEL to identify and characterize targets
for  the  treatment  of  cancer  and  precancerous  conditions, controlling cell
growth,  apoptosis,  and  proliferation, to generate antibodies directed against
such  targets,  and  to  develop  and  commercialize novel antibody products for
diagnostic,  prophylactic  and  therapeutic  uses.

NOW,  THEREFORE,  the  Parties  agree  as  follows:

1.   DEFINITIONS

     The  following  terms  shall  have  the  following meanings as used in this
Agreement:

     1.1  "AFFILIATE"  means,  with  respect to a particular Party, a person,
corporation, partnership, or other entity that controls, is controlled by, or is
under  common  control  with  such Party.  For the purposes of the definition in
this  Section  1.1, the word "control" (including, with correlative meaning, the
terms  "controlled  by"  or  "under  the  common control with") means the actual
power,  either  directly  or  indirectly  through one or more intermediaries, to
direct  or  cause  the  direction of the management and policies of such entity,
whether  by the ownership of at least fifty percent (50%) of the voting stock of
such  entity,  or  by  contract  or  otherwise.
     1.2  "ANTIBODY"  means  a  Humanized  Antibody  or  Precursor  Antibody.

     1.3  "ANTIBODY  INVENTIONS"  means  an  Invention  directed  to Antibodies,
including  without  limitation,  composition  of matter, methods of manufacture,
methods  of  use,  formulations,  dosing  regimens,  etc.

     1.4  "ANTIBODY  TARGET"  means  [  *  ].

     1.5  "ANTIBODY  TARGET  CANDIDATE"  means  [  *  ].

     1.6  "BLA"  means a Biologics License Application as defined in the current
Federal  Food,  Drug  and  Cosmetic  Act, and applicable regulations promulgated
thereunder  by the FDA or the equivalent application to the equivalent agency of
any  other regulatory jurisdiction, as amended from time to time during the term
of  this  Agreement.

     1.7  "CO-FUNDED  PRODUCT"  means  a  Product  for  which  EXEL  has made an
effective  election  to co-fund pursuant to Section 5.1 and which has not ceased
to  be  a  Co-Funded  Product  pursuant  to  Section  5.9.

     1.8  "COLLABORATION"  means all of the research activities performed by, or
on  behalf  of,  EXEL  or  PDL during the Research Term pursuant to the Research
Plan,  through  the  stage  of  evaluation  of  Precursor  Antibodies.

     1.9  "COMBINATION  PRODUCT"  means  any  product  containing  both  (i)
substantially  all  of at least one variable region of an Antibody, and (ii) one
or  more  other  therapeutically  active  ingredients.

     1.10  "COMMERCIALIZATION  PLAN" shall have the meaning set forth in Section
3.4(b).

     1.11  "CONTROLLED"  means,  with respect to all or any portion of any gene,
protein,  compound,  material,  Information or intellectual property right, that
the  Party  owns  or  has  a  license to such gene, protein, compound, material,
Information  or  intellectual property right and has the ability to grant to the
other  Party  access,  a  license  or a sublicense (as applicable) to such gene,
protein,  compound,  material,  Information  or  intellectual  property right as
provided  for  herein  without  violating  the  terms  of any agreement or other
arrangements with any Third Party existing at the time such Party would be first
required  hereunder to grant the other Party such access, license or sublicense.

     1.12  "COST  OF  GOODS  SOLD"  means  [  *  ].

     1.13  "COST  OF  MANUFACTURE"  means  [  *  ].

     1.14  "DEVELOPMENT"  means  those  activities  undertaken with respect to a
Product  that  are  directed  toward  obtaining  Regulatory  Approval  and  the
pre-marketing, marketing research, marketing and sale of such Product, including
without  limitation,  humanization, cell line optimization, pre-clinical testing
and  toxicology  studies,  human  clinical trials, formulation, bulk production,
fill/finish, manufacturing process development, manufacturing scale-up costs and
validation,  qualification and certification costs and preparation of regulatory
filings.

     1.15  "DEVELOPMENT PLAN" means the plan describing the Development intended
to  be  conducted for a given Co-Funded Product, including an estimated schedule
and  budget,  as  such  plan  may  be  amended by the relevant Joint Development
Committee  from  time  to  time.

     1.16  "DEVELOPMENT  COSTS"  means  [  *  ].

     1.17 "DILIGENT EFFORTS" means the carrying out of obligations or tasks in a
sustained  manner  consistent with the efforts a Party devotes to a product or a
research,  development  or marketing project of similar market potential, profit
potential  or  strategic value resulting from its own research efforts, based on
conditions  then  prevailing  and taking into account its relative risk profile,
time  to  market, and other factors considered in portfolio management. Diligent
Efforts  requires  that  the  Party: (i) promptly assign responsibility for such
obligations  to  specific  employee(s)  who monitor such progress on an on-going
basis,  (ii)  set  and  consistently  seek  to  achieve  specific and meaningful
objectives  for  carrying  out  such  obligations,  and (iii) allocate resources
designed  to  advance  progress  with  respect  to  such  objectives.

     1.18  "DRUG  APPROVAL  APPLICATION"  means  an  application  for Regulatory
Approval  required  before  commercial  sale  of  a  Product as a pharmaceutical
product  in  a  regulatory  jurisdiction.

     1.19  "EXEL  DIAGNOSTIC  PRODUCT"  means  [  *  ].

     1.20  "EXEL  KNOW-HOW"  means all Information Controlled by EXEL during the
term  of  the  Agreement  that  is necessary or reasonably useful for PDL (a) to
fulfill  its  obligations  under the Research Plan, or (b) to research, develop,
use,  import,  manufacture, market or sell Antibodies or Products, but excluding
the  EXEL  Patents.

     1.21  "EXEL  PATENTS"  means  all  (i)  unexpired letters patent (including
inventor's  certificates) which have not been held invalid or unenforceable by a
court  of  competent  jurisdiction from which no appeal can be taken or has been
taken  within  the  required  time  period,  including  without  limitation  any
substitution,  extension,  registration,  confirmation, reissue, re-examination,
renewal,  patent  of  addition  or  any  like  filing  thereof  and (ii) pending
applications  for letters patent, including without limitation any continuation,
division,  or  continuation-in-part  thereof  and  any  provisional applications
Controlled  by  EXEL  related  to  Targets  or  Antibodies,  including  the
identification and generation of Antibody Target Candidates and Antibody Targets
for  use  in identifying and generating Antibodies, including but not limited to
issued  patents  and  pending applications that claim the composition of matter,
manufacture,  import  or  use  of  a Target, Antibody Target Candidate, Antibody
Target, Antibody or Product, which are filed prior to or during the term of this
Agreement in the United States or any foreign jurisdiction. "EXEL Patents" shall
not  include  Joint Patents or PDL Patents or, after assignment to PDL, Antibody
Patents.

     1.22  "EXEL  PRODUCTS" means those Products which previously were Co-Funded
Products,  but  which  EXEL  has  assumed  responsibility  for  Development  and
commercialization  as  described  in  Section  5.9(c).

     1.23 "FIRST COMMERCIAL SALE" means the first sale of the applicable Product
to  a  Third  Party  following Regulatory Approval of the Product in the country
where  sold.

     1.24  "HUMANIZED ANTIBODY" means [ * ] pursuant to this Agreement by [ * ].
The  term  "Humanized  Antibody"  shall  include,  without  limitation  [  *  ].

     1.25  "INDEPENDENT  RESEARCH"  means  [  *  ].

     1.26  "IND" means an Investigational New Drug Application as defined in the
current  Federal  Food,  Drug  and  Cosmetic  Act  and  applicable  regulations
promulgated  thereunder  by  the  FDA  or  the  equivalent  application  to  the
equivalent  agency in any other regulatory jurisdiction, as amended from time to
time during the term of this Agreement, and any equivalent application or filing
for  diagnostics  or  medical  devices.

     1.27  "INFORMATION"  means  information,  results  and  data  of  any  type
whatsoever,  in  any  tangible  or intangible form whatsoever, including without
limitation,  databases,  inventions,  practices,  methods,  techniques,
specifications,  formulations, formulae, knowledge, know-how, skill, experience,
test  data  including  pharmacological,  biological,  chemical,  biochemical,
toxicological  and  clinical  test  data,  analytical  and quality control data,
stability  data,  studies and procedures, and patent and other legal information
or  descriptions.

     1.28 "INVENTIONS" means any and all inventions, results, know-how and other
Information, and all intellectual property relating thereto, made, discovered or
developed  by  one  or  more  Parties  and their employees or agents (including,
without  limitation,  consultants  or  contractors  who  have assigned rights to
inventions  to a Party) pursuant to work performed under the Collaboration or in
the  course  of  developing  a  Pre-Opt-In  Product or developing or marketing a
Co-Funded  Product.

     1.29  "JOINT  INVENTIONS" means any and all Inventions (other than Antibody
Inventions)  made  jointly  by  employees  or agents of both Parties (including,
without  limitation,  consultants  or  contractors  who  have assigned rights to
inventions  to  a  Party), as determined in accordance with United States patent
laws.

     1.30  "JOINT  PATENTS"  means  all  (i) unexpired letters patent (including
inventor's  certificates) which have not been held invalid or unenforceable by a
court  of  competent  jurisdiction from which no appeal can be taken or has been
taken  within  the  required  time  period,  including  without  limitation  any
substitution,  extension,  registration,  confirmation, reissue, re-examination,
renewal,  patent  of  addition  or  any  like  filing  thereof, and (ii) pending
applications  for letters patent, including without limitation any continuation,
division,  or  continuation-in-part  thereof  and  any  provisional applications
claiming  Joint Inventions, which are filed during the term of this Agreement in
the United States or any foreign jurisdiction. "Joint Patents" shall not include
EXEL  Patents  or  PDL  Patents  or  Antibody  Patents.

     1.31  "MODEL  SYSTEM  TARGETS"  means  [  *  ].

     1.32 "NET SALES" means [ * ]. In the case of Combination Products for which
a  Product and each of the other therapeutically active ingredients contained in
the Combination Product have established market prices when sold separately, Net
Sales shall be determined by multiplying the Net Sales for each such Combination
Product  by  a  fraction, the numerator of which shall be the established market
price  for  the  Product(s)  contained  in  the  Combination  Product,  and  the
denominator  of  which shall be the sum of the established market prices for the
Product(s)  plus  the  other  active  ingredients  contained  in the Combination
Product.  When such separate market prices are not established, then the Parties
shall  negotiate  in good faith to determine the method of calculating Net Sales
for  Combination  Products.

     If  PDL,  its Affiliates or sublicensees receive non-cash consideration for
any  Product  sold  or  otherwise  transferred to a Third Party, the fair market
value  of  such  non-cash  consideration on the date of the transfer as known to
PDL,  or  as  reasonably  estimated  by PDL if unknown, shall be included in the
definition  of  Net  Sales.  EXEL shall have a right to review the basis of such
determination  and  upon  written  notice,  audit  such estimates as provided in
Section  9.16.

     1.33  "ONCOLOGY  SCREENS"  shall  have  the  meaning  [  *  ].

     1.34  "OPT-IN  PERIOD"  shall  have  the  meaning set forth in Section 5.1.

     1.35  "PATENTS" means EXEL Patents, PDL Patents and/or Joint Patents as the
context  requires.

     1.36  "PDL  DIAGNOSTIC  PRODUCT"  means a product that is being or has been
developed  for  [  *  ]  for  use  with  a  [  *  ].

     1.37 "PDL KNOW-HOW" means all Information Controlled by PDL during the term
of  the Agreement that is necessary or reasonably useful for EXEL to (a) fulfill
its  obligations  under  the  Research  Plan,  or  (b)  develop,  import,  use,
manufacture,  market  or  sell  EXEL Products, but excluding the PDL Patents and
excluding  all  Information  Controlled  by PDL that relates to antibodies other
than  EXEL  Products  (including,  without  limitation,  general methods for the
humanization  or  manufacture  of  antibodies), except to the extent the Parties
agree  pursuant  to  Section  5.9(c).

     1.38  "PDL  PATENTS"  means  all  (i)  unexpired  letters patent (including
inventor's  certificates) which have not been held invalid or unenforceable by a
court  of  competent  jurisdiction from which no appeal can be taken or has been
taken  within  the  required  time  period,  including  without  limitation  any
substitution,  extension,  registration,  confirmation, reissue, re-examination,
renewal,  patent  of  addition  or  any  like  filing  thereof  and (ii) pending
applications  for letters patent, including without limitation any continuation,
division,  or  continuation-in-part  thereof  and  any provisional applications,
Controlled  by  PDL  related to the development of Antibodies, including but not
limited  to  applications  that claim the composition of matter, manufacture, or
use  of  a  Target,  Antibody  or Product, which are issued or filed prior to or
during  the  term  of  this  Agreement  in  the  United  States  or  any foreign
jurisdiction.  "PDL Patents" shall not include Joint Patents or EXEL Patents or,
until  assigned  to  PDL,  Antibody  Patents.

     1.39  "PDL  PRODUCT" means any Product developed under this Agreement which
(a)  [  *  ],  or  (b)  [  *  ].

     1.40  "PHASE  III  CLINICAL  TRIAL"  means a trial on sufficient numbers of
patients that is designed to establish that a pharmaceutical product is safe and
efficacious  for  its  intended  use,  and  to  define warnings, precautions and
adverse  reactions  that  are  associated with the pharmaceutical product in the
dosage  range  to  be  prescribed,  and  to  support Regulatory Approval of such
pharmaceutical  product  or  label  expansion  of  such  pharmaceutical product.

     1.41  "PRECURSOR  ANTIBODY" means [ * ] pursuant to this Agreement from [ *
].  The  term  "Precursor  Antibody"  shall  include,  without limitation [ * ].

     1.42  "PRE-OPT-IN  PRODUCT"  means  a Product for which EXEL has not made a
decision  under  Section  5.1 whether to co-fund and for which the Opt-In Period
has  not  expired.

     1.43  "PRODUCT"  means  any  therapeutic  or prophylactic product developed
under  this  Agreement,  for  [  *  ],  incorporating  [  *  ].

     1.44  "PRODUCT  PROFIT" means the profit or loss for a particular Co-Funded
Product  for  a  particular  period  calculated  as  described  in  Exhibit  B.

     1.45  "REGULATORY  APPROVAL"  means  any  and  all  approvals  (including
supplements,  amendments,  pre-  and  post-approvals,  pricing and reimbursement
approvals),  licenses,  registrations  or  authorizations  of  any  national,
supra-national  (e.g.,  the  European  Commission or the Council of the European
Union),  regional,  state  or  local  regulatory  agency,  department,  bureau,
commission,  council  or  other  governmental entity, that are necessary for the
manufacture,  distribution,  use  and  sale  of  a  Product  in  a  regulatory
jurisdiction.

     1.46  "RESEARCH  FUNDING"  means  the research funding and license payments
made  by  PDL  to  EXEL  as  described  in  Section  9.2.

     1.47  "RESEARCH  PLAN"  means  the  research  plan describing the goals and
activities  to  be  conducted through the stage of Precursor Antibody evaluation
during  the  Research  Term,  including initially a detailed description of such
goals  and  activities  for  the  first  year of the Research Term and a general
description  of  the  goals  and  intended  activities  for the remainder of the
Research  Term,  as  such  plan is amended from time to time during the Research
Term in accordance with Section 3.1(b). The Research Plan, including any amended
Research  Plan,  shall  be  attached  as  Exhibit  A.

     1.48 "RESEARCH TERM" means the period commencing on [ * ] and ending on the
termination  [  *  ].

     1.49  "SOLE  INVENTIONS"  means any and all Inventions (other than Antibody
Inventions)  made, discovered or developed solely by one Party and its employees
or  agents  (including,  without limitation, consultants or contractors who have
assigned  rights  to  inventions  to  a  Party).

     1.50 "TARGET(S)" means [ * ]. The term "Target(s)" shall include [ * ], but
shall  exclude  [  *  ].

     1.51  "TARGET  POOL"  means  [  *  ]  whenever  identified,  [  *  ].

     1.52  "THIRD PARTY" means any entity other than (i) EXEL, (ii) PDL or (iii)
an  Affiliate  of  either  of  them.

     1.53  "THIRD  PARTY  ROYALTY"  means  any  royalty  paid  by  a Party or an
Affiliate  to  a  Third Party in respect of the manufacture, importation, use or
sale  of  a  Product.

2.     THE  COLLABORATION  RELATIONSHIP

     2.1     OVERVIEW.  PDL  and  EXEL  will  collaborate  to identify, develop,
market  and  sell antibodies for use in the diagnosis, prophylaxis and treatment
of  one  or more [ * ] cancerous conditions.  EXEL will conduct activities under
the Research Plan to identify Targets and will present all such Targets to PDL [
*  ].  Targets  will  be  analyzed  [ * ].  [ * ] conduct preclinical testing in
preparation  for an IND and develop a Development Plan for any Product for which
PDL  intends to file an IND.  If EXEL elects to co-fund one or more Products [ *
]

3.     MANAGEMENT  OF  THE  COLLABORATION

     3.1  JOINT  SCIENTIFIC  COMMITTEE.

          (A)  MEMBERSHIP. [ * ] the Effective Date, the Parties shall establish
a  Joint  Scientific Committee (the "JSC") to oversee the research activities of
EXEL  and  PDL  under  the  Research  Plan.  The  JSC  shall be composed of four
representatives,  two  members  appointed  by  each  of  the  Parties.  One
representative  from  each Party on the JSC shall be the individual at the Party
with  primary  responsibility  for the management of the Collaboration.  Initial
designees  shall  be  Geoff  Duyk and Greg Plowman on behalf of EXEL and William
Benjamin and Max Vasquez on behalf of PDL.  Each Party may replace its appointed
JSC  representatives  at  any time upon written notice to the other Party.  EXEL
shall  designate  one  of its representatives as Chairperson of the JSC, and PDL
shall designate one of its representatives as Vice-Chairperson.  The Chairperson
shall  be  responsible  for  scheduling meetings and preparing and circulating a
draft  agenda  in  advance  of  each  meeting.  Any member may add topics to the
agenda.  The  Vice-Chairperson  shall  be  responsible for preparing and issuing
minutes  of  each  meeting  within  thirty  (30)  days  thereafter.

          (B)  RESPONSIBILITIES.  During  the  [  *  ],  the JSC shall meet on a
quarterly basis as provided in Section 3.5. Following the Research Term, the JSC
shall  meet  on  a quarterly basis for [ * ] for the purposes of winding down or
completing work [ * ]. [ * ] may elect to continue to work in the same manner as
described  in  the Research Plan on [ * ] and [ * ] on a case-by-case basis. For
those [ * ] for which [ * ] continues to conduct such work and that complete the
stage  of  in  vitro  and  in vivo validation as described in Section 2.7 of the
Research  Plan  (to  the  extent  specified by the JSC), for each such resulting
Product,  the Opt-In Decision as set forth in Section 5.1 (i.e., EXEL's right to
co-fund)  shall  survive;  otherwise, such rights shall terminate. The JSC shall
operate [ * ] and in accordance with the principles set forth in this Article 3.
The  JSC  shall: (i) evaluate the data generated by the Parties in the course of
the  Collaboration,  (ii)  decide  what  research  activities  the Parties shall
perform  on  Targets  or Precursor Antibodies under the Collaboration, except as
provided  in Section 4.2, and (iii) review and amend the Research Plan from time
to  time  as appropriate, including not less than an annual review to detail the
activities  and  goals for the upcoming year; provided that any amendment of the
Research  Plan that varies any material terms of this Agreement shall be subject
to  Section  15.4,  which  requires  that any such amendment shall be reduced to
writing  and  signed  by  an  authorized  officer  of  each  Party.


     3.2  JOINT  PATENT  COMMITTEE.  Within [ * ] the Effective Date, a Joint
Patent Committee (the "JPC") shall be formed.  The JPC, in consultation with the
JSC,  will devise a strategy for the protection of intellectual property arising
from  the  Collaboration, including Antibody Target Candidates, Antibody Targets
and  Antibody  Inventions, and will supervise and direct the filing, prosecution
and  maintenance  of  all  Patents  covering  the  Joint  Inventions, as further
described  in  Article  10.  This committee will consist of one member from each
Party's  management  team  or  the  Party's  designated  alternate.  The  PDL
representative will serve as the Chairperson of the JPC. During the term of this
Agreement,  the JPC will meet at [ * ], as provided in Section 3.5, and may hold
additional  meetings  at  the  request  of  either  Party.

     3.3  JOINT  DEVELOPMENT  COMMITTEE.

          (A)  MEMBERSHIP.  [  *  ]  as  EXEL  exercises its option to co-fund a
Product,  as  provided  in  Section  5.1, the Parties promptly shall establish a
Joint  Development  Committee  (a  "JDC")  to  oversee  the  development  and
commercialization  of  that Co-Funded Product. The JDC shall be composed of four
representatives,  two  members  appointed  by  each  of  the  Parties.  One  JDC
representative  from  PDL  shall  be  the  individual  at  PDL  with  primary
responsibility  for the management of the development of the Product. Each Party
may replace its appointed JDC representatives at any time upon written notice to
the  other  Party. PDL shall designate one of its representatives as Chairperson
of  the  JDC,  and  EXEL  shall  designate  one  of  its  representatives  as
Vice-Chairperson.  The  Chairperson shall be responsible for scheduling meetings
and  preparing  and  circulating  an  agenda  in  advance  of  each meeting. The
Vice-Chairperson  shall be responsible for preparing and issuing minutes of each
meeting  within  thirty  (30)  days  thereafter.


          (B)  RESPONSIBILITIES.  During the Development of a Co-Funded Product,
the  JDC  for that Co-Funded Product shall meet on a quarterly basis as provided
in  Section  3.5.  Each  JDC  shall  operate  [  *  ] and in accordance with the
principles set forth in this Article 3. Each JDC shall: (i) oversee the progress
of  the  Development conducted by PDL for its Co-Funded Product, and (ii) review
and  approve  any  material amendments to the Development Plan for its Co-Funded
Product.


     3.4  JOINT  COMMERCIALIZATION  COMMITTEE.

          (A)  MEMBERSHIP.  [  * ] for each Co-Funded Product, the Parties shall
establish  a  Joint  Commercialization  Committee  ("JCC")  for  that  Co-Funded
Product.  The  JCC  shall  be  composed  of  four  representatives,  two members
appointed  by  each of the Parties. One representative from PDL on the JCC shall
be  the  individual at PDL with primary responsibility for the commercialization
of  the Product. Each Party may replace its appointed JCC representatives at any
time  upon  written  notice  to  the other Party. PDL shall designate one of its
representatives  as  Chairperson of the JDC, and EXEL shall designate one of its
representatives  as  Vice-Chairperson.  The Chairperson shall be responsible for
scheduling  meetings  and preparing and circulating an agenda in advance of each
meeting.  The  Vice-Chairperson  shall  be responsible for preparing and issuing
minutes  of  each  meeting  within  thirty  (30)  days  thereafter.


          (B)  RESPONSIBILITIES.  Each  JCC  shall  meet on a quarterly basis as
provided in Section 3.5. Each JCC shall operate [ * ] and in accordance with the
principles  set  forth  in  this  Article 3. Each JCC shall: (i) prepare a basic
commercialization plan, including a launch and marketing plan and budget for the
commercialization  of its Co-Funded Product (the "Commercialization Plan"), (ii)
oversee  the  implementation  of  the  Commercialization  Plan by PDL, and (iii)
review and approve any material amendments to the Commercialization Plan. In any
event,  the  Commercialization  Plan  shall  not  include  detailed  Information
regarding  PDL's implementation of the Plan, including without limitation, sales
force incentives, which shall be in PDL's sole discretion. The Commercialization
Plan shall be prepared taking into consideration such factors as: (i) the use of
Third Party collaborators to develop, market and sell in particular countries or
territories,  (ii)  market  conditions,  (iii)  regulatory  factors,  and  (iv)
competition.  The  Commercialization  Plan  budget  will  include  all projected
additional  Regulatory  Approvals,  and  sales  and  marketing  expenses for the
Co-Funded  Product.


     3.5  MEETINGS.  All  meetings  of  the  JSC, JPC, JDCs and JCCs shall be
held  at the headquarters of either EXEL or PDL (or at any other mutually agreed
upon  location),  on  an  alternating  basis.  Either Party may bring additional
representatives  to  attend  meetings  of  a  particular  committee as nonvoting
observers.  A  meeting  of  a  committee  may  be  held  by  audio  or  video
teleconference  with  the  consent of each Party, provided that at least half of
the  minimum  number  of  meetings  for  that committee shall be held in person.
Meetings  of  a committee shall be effective only if at least one representative
of  each  Party  is  present  or  participating.

     3.6  OBLIGATIONS  OF PARTIES. EXEL and PDL shall provide the JSC, JPC, JDCs
and  JCCs  and  their  authorized  representatives with reasonable access during
regular  business  hours  to all records, documents, and Information relating to
the  Collaboration  which  any such committee may reasonably require in order to
perform its obligations hereunder; provided, however, that if such documents are
under  a  bona fide obligation of confidentiality to a Third Party, then EXEL or
PDL,  as the case may be, may withhold access thereto to the extent necessary to
satisfy  such  obligation, such access not to be unreasonably withheld. EXEL and
PDL  may  also  withhold  documents  relating  to  any  evaluations  of  the
Collaboration,  including  documents relating to evaluating the activities under
this  Agreement  or  relating  to a decision whether to continue a Collaboration
project.

     3.7  COLLABORATION  GUIDELINES.

          (A)  GENERAL.  In  all  matters  related  to the Collaboration and the
development  and marketing of Co-Funded Products, the Parties shall be guided by
standards  of  reasonableness  in  economic  terms  and  fairness to each of the
Parties,  striving  to  balance  as  best  they can the legitimate interests and
concerns of the Parties to further the goals of the Collaboration and to realize
the  economic  potential  of  the  Products.

          (B) [ * ]; DEADLOCKS. The JSC, JPC, JDCs and JCCs shall operate [ * ].
In  the  event  of a deadlock within the JSC, the JPC, a JDC or a JCC concerning
any  decision,  such  deadlock  shall  be  resolved  as  follows:


               (I)  JSC  DEADLOCKS.  If a deadlock arises between the members of
the JSC, a non-JSC-member officer of each party shall be advised of the deadlock
in  writing  and  shall  attempt  to provide the JSC with a mutually agreed upon
resolution  within one (1) month. If such resolution is not timely provided, the
Chief  Executive  Officer ("CEO") of each Party shall be advised of the deadlock
in  writing  and  the  deadlock  shall  be  resolved  by mutual agreement of the
Parties'  CEOs within one (1) month after they have been so advised. If the CEOs
do  not  agree  on  a resolution, [ * ] regarding any deadlock concerning target
selection  (i.e.,  whether  a  Target  meets  the  Antibody  Target Candidate or
Antibody  Target  criteria)  and  all  other deadlocks shall be submitted to and
resolved  by binding arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA Rules"). In any event, each Party
shall  submit  a briefing document detailing its position in the deadlock not to
exceed  25 double-spaced 8.5"x11" pages within 10 business days of the selection
of  the  arbitrator,  and  the  arbitrator  shall  be  instructed  to  make such
determination  within  30 days of submission of both position papers, but in any
event  not later than 40 days following submission of the matter to arbitration.
The  arbitration  shall  be  held  in  San  Francisco,  California  and shall be
conducted  by one arbitrator who is knowledgeable in the subject matter at issue
and  who  is  selected  by  mutual  agreement  of  the  Parties or, failing such
agreement,  shall  be  selected  according  to  the AAA Rules. In conducting the
arbitration,  the  arbitrator  shall apply the California Rules of Evidence, and
shall  be  able  to  decree any and all relief of an equitable nature, including
without  limitation  such relief as a temporary restraining order, a preliminary
injunction,  a  permanent injunction, and specific performance. Each Party shall
bear  its  respective costs and expenses and the fees of the arbitrator shall be
shared  equally.

               (II)  JPC  DEADLOCKS. If a deadlock arises between the members of
the  JPC,  the General Counsel of each Party shall be advised of the deadlock in
writing  and  shall  attempt  to  provide  the  JPC  with a mutually agreed upon
resolution  within  one  (1) month. If such resolution is not timely provided by
the  General  Counsels of the Parties, the CEO of each Party shall be advised of
the  deadlock  in writing and the deadlock shall be resolved by mutual agreement
of  the  Parties'  CEOs within one (1) month after they have been so advised. If
the  CEOs  do  not  agree  on  a  resolution,  then  [  *  ].

                    (III)  JDC  DEADLOCKS.  If  a  deadlock  arises  between the
members  of  a  JDC,  the  CEO of each Party shall be advised of the deadlock in
writing  and  shall  attempt  to  provide  the  JDC  with a mutually agreed upon
resolution  within  one  (1) month. If such resolution is not timely provided by
the  CEOs  of the Parties, the deadlock shall be resolved by mutual agreement of
the  Parties'  CEOs within one (1) month after they have been so advised. If the
CEOs  do  not  agree  on  a  resolution,  then  [  *  ].

                    (IV) JCC DEADLOCKS. If a deadlock arises between the members
of  a JCC, the CEO of each Party shall be advised of the deadlock in writing and
shall  attempt  to provide the JCC with a mutually agreed upon resolution within
one  (1)  month.  If  such  resolution is not timely provided by the CEOs of the
Parties,  the  deadlock  shall  be  resolved  by  [  *  ].

          (C)  INDEPENDENCE.  Subject  to  the  terms  of  this  Agreement,  the
activities  and  resources  of each Party shall be managed by such Party, acting
independently  and in its individual capacity. The relationship between EXEL and
PDL is that of independent contractors and neither Party shall have the power to
bind  or  obligate the other Party in any manner, other than as is expressly set
forth  in  this  Agreement.

     4.  COLLABORATION;  HUMANIZATION

     4.1  COLLABORATION.

          (A)  GENERAL.  [ * ], the Parties shall conduct collaborative research
with  the  general  goals  and  objectives  of:  (a) applying EXEL technology to
discover  and characterize Targets that may be useful as tools for the discovery
and  development  of  therapeutic and diagnostic Antibodies for controlling cell
growth,  apoptosis  and proliferation in the diagnosis, prevention, treatment or
cure  of cancer or pre-cancerous conditions, and (b) applying PDL technology [ *
].  Subject to [ * ], the obligations of EXEL described in [ * ] shall terminate
[  *  ].  The rights and obligations of PDL in [ * ] shall terminate as provided
for  in [ * ]. The obligations of PDL in [ * ] shall continue until the later of
(i)  the  [ * ] or (ii) the time [ * ]. The details of the Collaboration are set
forth  below  and in the Research Plan. In the event of any conflict between the
provisions  of  this Agreement and those of the Research Plan, the provisions of
this  Agreement  shall  govern.

          (B)  PRESENTATION  OF TARGETS. Promptly after the Effective Date, EXEL
shall  present  to the JSC all Model System Targets and Targets identified prior
to  the Research Term. During the Research Term, EXEL will conduct activities as
described  in  Sections  2.1 and 2.2 of the Research Plan to identify additional
Model  System  Targets  and  Targets  and,  promptly  after identification, will
present  all such additional Model System Targets and Targets to the JSC. [ * ].

          (C) ALLOCATION OF TARGETS TO [ * ]. As described in Section 2.3 of the
Research  Plan,  [ * ] shall conduct [ * ] for each [ * ]. After presentation to
the  JSC  of  the  [  *  ]  and results of such [ * ] for a [ * ], the JSC shall
determine  whether  the  [  *  ]  is  to  be  designated an [ * ] and pursued in
accordance  with  the  Research  Plan.  All [ * ] shall be included in and shall
constitute  the "Work Pool." For each [ * ] determined not to be designated an [
*  ],  then,  promptly  following such determination by the JSC, and in no event
later  than  the  quarterly  JSC meeting following the JSC meeting at which such
determination  was made, [ * ] shall elect, by notifying the JSC, whether such [
*  ] shall be included in the [ * ] (in which case it shall be a [ * ]) or the [
*  ]  (in  which  case  it  shall  be  an  [  *  ]).

          (D) [ * ] [ * ] shall be reserved for possible future inclusion by the
JSC  in  the Work Pool. [ * ] shall have [ * ] license with respect to the [ * ]
as  set forth in [ * ]. [ * ] may designate a maximum number of [ * ] equal to [
*  ]. [ * ] may at any time, by notifying the JSC, elect to re-designate a [ * ]
as  an [ * ], in which event it shall no longer count against the maximum number
of  [  *  ].  The  JSC may designate a [ * ] for out-licensing, in which case it
shall  continue to count as a [ * ] until such time as it is either out-licensed
or re-designated by [ * ] as an [ * ] or re-designated by the JSC to be included
in  the  Work  Pool.
          (E)  [  *  ] [ * ] shall be available for possible future inclusion by
the  JSC  in  the  Work  Pool or by [ * ] in the [ * ] at [ * ] , subject to the
following  limitation: If [ * ] [ * ] in one or more model organisms, other than
[  *  ], either on its own behalf or pursuant to an agreement with a Third Party
Antibody  Collaborator (as defined below) and if [ * ] identifies through such [
*  ]  that  is also a [ * ], then [ * ] shall promptly notify the JSC in writing
that  such [ * ] was identified in a screen outside the Collaboration. If such [
*  ]  is  an [ * ], and if there is a reasonable basis to believe such [ * ] may
have potential in cancer, then no later than the quarterly JSC meeting following
the  JSC meeting at which such notice was provided, the JSC may elect to include
such [ * ] in the Work Pool or [ * ] may elect to include such [ * ]. If neither
the  JSC  nor  [ * ] so elects, then such [ * ] shall be remain in the [ * ] and
shall  be deemed an [ * ] [ * ] shall have [ * ] license with respect to the [ *
]  as  set forth in Section 8.1(b), except that it shall have [ * ] license with
respect  to  any [ * ] in the [ * ] as set forth in Section 8.1(a). "Third Party
Antibody  Collaborator"  shall  mean  a  Third  Party  providing  average annual
research  funding  or  other  non-cash consideration (which shall be fair market
value on the date of transfer if known to [ * ] or, as reasonably estimated by [
*  ]  if  unknown)  of  not  less  than  [ * ] in a designated therapeutic area.

          (F)  [  * ] Each [ * ] shall be available for selection by the JSC for
inclusion  in  the Work Pool until such time as [ * ] notifies [ * ] and the JSC
in writing that either [ * ] or the Third Party Antibody Collaborator has made a
decision  (as  documented  by written records of [ * ]) to begin work to express
and  purify the protein expressed by such [ * ] for purposes of developing a [ *
]. Upon receipt of such notice, [ * ] shall have no further rights to that [ * ]
and  it  shall  cease  to  be  a  [  *  ].

     4.2  HUMANIZED  ANTIBODY GENERATION AND PRECLINICAL TESTING.  [ * ] will
determine  which Precursor Antibodies should be humanized.  If [ * ] decides not
to  humanize a particular Precursor Antibody, then the provisions of Section 7.1
shall  apply  to  that  Precursor Antibody and the provisions of Section 7.2, if
applicable, shall apply to its Target.  [ * ] will generate Humanized Antibodies
for  each  Precursor  Antibody  selected  by  [ * ] and will conduct appropriate
preclinical testing, as determined by [ * ], for preparation of the IND.  If [ *
]  decides  not  to  file an IND for any particular Humanized Antibody, then the
provisions  of  Section  7.3  shall  apply  to  that  Humanized  Antibody.

     4.3  CONDUCT OF RESEARCH. Each Party shall use Diligent Efforts to conduct:
(i)  their  respective tasks, as contemplated under the Research Plan and by the
JSC  (the  "Research"),  and  (ii)  the  Collaboration  and the Research in good
scientific  manner,  and  in  compliance  in  all  material  respects  with  the
requirements  of  applicable laws, rules and regulations and all applicable good
laboratory  practices  to  attempt  to  achieve their objectives efficiently and
expeditiously.

     4.4 RECORDS. Each Party shall maintain complete and accurate records of all
work conducted by it or on its behalf under the Collaboration or pursuant to the
Research  and all Information generated in connection with its efforts under the
Collaboration  or  pursuant  to  the  Research.  Each  Party shall maintain such
records  for  a  period  of [ * ] after the later to occur of (a) the end of the
Research Term, or (b) the termination of all efforts to develop, license, market
or  sell the Product to which such records pertain. Such records shall fully and
properly  reflect all work done and all Information generated in the performance
of the Collaboration or the Research in sufficient detail and in good scientific
manner appropriate for patent and regulatory purposes. Each Party shall have the
right  to review and copy such records of the other Party at reasonable times to
the  extent  necessary  for  such  Party to conduct its research, development or
other  obligations  under  this  Agreement.

     4.5  REPORTS. [ * ], each Party shall report to the JSC not less than [ * ]
and  will  periodically submit to the other Party and the JSC a written progress
report  summarizing  the  Research.

     4.6  SHARING  OF BIOLOGICAL DATA. PDL shall provide EXEL with copies of all
Information  that  is Controlled by PDL and that is generated by or on behalf of
PDL  in the course of the Collaboration. EXEL may use such PDL Information for [
* ]. EXEL shall not [ * ]. EXEL shall provide PDL with copies of all Information
that  is Controlled by EXEL and that is generated by or on behalf of EXEL in the
course  of  the  Collaboration.  PDL  may  use  such  Information  for  [  *  ].

     4.7  RIGHT  TO  ENGAGE THIRD PARTIES FOR COLLABORATION EFFORTS. [ * ] shall
have  the right to grant licenses and sublicenses to Third Parties of its rights
with  respect  to  the  conduct of its portion of the Collaboration, as it deems
necessary  or  advisable,  provided  that  [  *  ].

5.     DEVELOPMENT  AND  MARKETING  OF  CO-FUNDED  PRODUCTS;  EXEL  PRODUCTS

     5.1  DEVELOPMENT  DECISION.  At  such  time  as  PDL  has  substantially
completed  the IND and Development Plan for a Product, PDL shall deliver to EXEL
(i)  such  IND  and  Development  Plan,  and  (ii)  documentation  of historical
Development Costs described in Section 5.2(a), and the budget for such costs, if
any, for that Product.  EXEL shall have [ * ] from the date of PDL's delivery of
the  IND  and  the  Development  Plan  to  review  and  comment  on  the IND and
Development  Plan  ("Opt-In  Period")  [  * ] and to determine whether EXEL will
elect  to co-fund the development and commercialization of that Product ("Opt-In
Decision").  If EXEL decides to co-fund such Product, EXEL shall provide written
notice  to  PDL of its Opt-In Decision, accompanied by the payments specified in
Section 5.2(a) prior to the expiration of the Opt-In Period. Effective as of the
date  of  such  notice,  such Product shall become a "Co-Funded Product" and the
Development  Plan  provided to EXEL shall be deemed agreed to by EXEL unless the
Parties  mutually  agree  in writing on a revised Development Plan.  The Parties
then shall establish a Joint Development Committee to oversee the Development of
the  Co-Funded  Product,  in  accordance  with Section 3.3.  If EXEL does not so
notify  PDL  and  make  such  payments  within  the  Opt-In  Period,  then  EXEL
immediately  shall  return  all  copies of the IND and Development Plan for that
Product  to  PDL.  Thereafter,  that  Product  shall be deemed a PDL Product, as
provided  in  Section  6.1.

     5.2  PAYMENTS FOR CO-FUNDED PRODUCTS. EXEL shall make the following
payments for  each  Co-Funded  Product:

          (A)  INITIAL  PAYMENTS.  [ * ] reimbursement of fifty percent (50%) of
the  Development  Costs  incurred  by PDL through the end of PDL's most recently
ended  fiscal quarter prior to PDL's delivery to EXEL of the IND and Development
Plan  for  that  Product  under  Section  5.1.

          (B) REIMBURSEMENT OF DEVELOPMENT COSTS. Following the initial payments
under  Section 5.2(a), EXEL shall reimburse PDL [ * ] for fifty percent (50%) of
the  Development  Costs  incurred  by  PDL  for each Co-Funded Product. All such
reimbursement  payments  shall be due within thirty (30) days after invoicing by
PDL.

     5.3  DEVELOPMENT PLAN FOR CO-FUNDED PRODUCTS. [ * ] shall provide [ * ] for
all Co-Funded Products. [ * ] shall [ * ] of each Co-Funded Product as described
in  the  [ * ]. [ * ] shall have the right to [ * ]. [ * ] shall have [ * ]. The
JDC  for  each  Co-Funded  Product  shall  carry  out  its  responsibilities, as
described  in  Section  3.3.

     5.4  COMMERCIALIZATION  PLAN FOR CO-FUNDED PRODUCTS. The marketing and sale
of  each  Co-Funded  Product  will  be  governed  by its Commercialization Plan,
prepared  as  described  in  Section  3.4.  PDL  shall  have  the  authority and
responsibility  to  implement  each  Commercialization  Plan.  The  JCC for each
Co-Funded  Product shall carry out its responsibilities, as described in Section
3.4.

     5.5  RIGHT  TO ENGAGE THIRD PARTIES FOR [ * ]. PDL may use Third Parties to
perform portions of its obligations relating to [ * ]. In any material agreement
with a Third Party relating to the Development of a Product, the Party retaining
such  Third  Party shall provide for terms that are consistent with the terms of
this  Agreement  and  the  Party  shall remain liable for the performance of any
obligations  hereunder which it delegates to Third Parties. [ * ] shall have the
right  to  grant  licenses  and  sublicenses to Third Parties of its rights with
respect  to  Co-Funded  Products  as  it  deems  necessary  or advisable for the
Development  and/or  commercialization of Co-Funded Products. [ * ] shall [ * ].

     5.6  INDS AND DRUG APPROVAL APPLICATIONS. [ * ] shall be responsible for
the preparation and filing of, and shall own all regulatory submissions relating
to,  [  *  ] filed in any regulatory jurisdiction. [ * ] shall keep the relevant
JDC  and  JCC informed regarding the schedule and process for the preparation of
Drug  Approval  Applications for Co-Funded Products. [ * ] shall provide a draft
copy  of the initial Drug Approval Application for each Major Market (as defined
in  Section 9.3), and all supplemental Drug Approval Applications for each Major
Market  (e.g.,  for  a  new  indication)  for each Co-Funded Product to EXEL for
review,  to  the  extent practical, prior to their submission to the appropriate
regulatory  authority,  provided,  however,  that  [  *  ]  shall be required to
promptly  review such submission and in any event shall have [ * ] to comment on
such  documents,  [  *  ].

     5.7  RECORDS. Each Party shall maintain complete and accurate records of
all  research  and  development work conducted by it or on its behalf related to
Co-Funded  Products  and  Pre-Opt-In Products, and all Information generated and
Development Costs incurred by it or on its behalf in connection with Development
under this Agreement with respect to Co-Funded Products and Pre-Opt-In Products.
Each  Party shall maintain such records for a period of [ * ] after the later to
occur of (a) the end of the Research Term, or (b) the termination of all efforts
to  develop,  license, market or sell the Product to which such records pertain.
Such  records  shall  fully  and  properly  reflect  all  work performed and all
Information  generated  in  sufficient  detail  and  in  good  scientific manner
appropriate  for patent and regulatory purposes. Each Party shall have the right
to  review  and  copy such records of the other Party at reasonable times to the
extent  necessary  for  such Party to conduct its research, development or other
obligations  under  this  Agreement.

     5.8  REPORTS.  During the term of the Agreement, [ * ] will provide reports
at  the  relevant  JDC  and  JCC meetings summarizing the recent Development and
commercialization  activities  relating  to  each  Co-Funded Product. [ * ] will
provide  [  * ] with summary reports for Pre-Opt-In Products through the JSC or,
after the Research Term, upon request by [ * ], but not more frequently than [ *
].

     5.9  TERMINATION  OF  CO-FUNDING;  OUT-LICENSE  OF  CO-FUNDED  PRODUCTS.

          (A)  VOLUNTARY  TERMINATION  BY  [  * ]. [ * ] shall have the right to
terminate  its  co-funding  obligation for any Co-Funded Product effective [ * ]
after  providing  irrevocable,  written  notice  to  [  *  ] of such election to
terminate.  Upon  the effective date of such termination: (i) such Product shall
be  deemed  a  [  * ] Product, rather than a Co-Funded Product, (ii) the JDC for
such Product shall be disbanded, and (iii) [ * ] shall no longer have any rights
pursuant  to  Section  9.9  to receive a share of Product Profit with respect to
such  Product  but  instead shall receive prospective milestones for events that
occur after the effective date of such termination and royalties on Net Sales of
such  Product  pursuant  to  Article  9.  [  *  ]

          (B)  COMPULSORY TERMINATION BY [ * ]. If [ * ] fails to make a payment
under  Section 5.2 and such payment is not received within [ * ] after notice of
failure  to  pay  by  [ * ], then at [ * ] option, [ * ] shall be deemed to have
terminated  co-funding  effective  [ * ] after the end of such [ * ] period. The
effect  of  such  termination  shall  be  as  described  in  Section  5.9(a).

          (C)  VOLUNTARY  TERMINATION BY [ * ]; [ * ] PRODUCTS. If [ * ] decides
to  terminate the development and/or commercialization of a particular Co-Funded
Product  and  not  to  attempt  to out-license such Co-Funded Product to a Third
Party,  [  *  ] shall have the right to terminate its obligations to develop and
commercialize  that  Co-Funded  Product  effective  [  *  ]  after  providing
irrevocable, written notice to [ * ] of such election to terminate. Within [ * ]
after receipt of such notice, [ * ] shall notify [ * ] in writing whether or not
it  elects  to assume sole responsibility for, and all costs and obligations of,
the  continued  development  and  commercialization of such Product. If [ * ] so
elects,  then  upon  the  effective  date of [ * ] termination: (i) such Product
shall  be  deemed  an  "[ * ]" rather than a Co-Funded Product, (ii) the JDC for
such  Product shall be disbanded, and (iii) promptly after [ * ] election, [ * ]
and  [  * ] shall work together to transfer and assign all regulatory documents,
contracts,  materials  and  Information  to [ * ] or its designees to the extent
necessary  for  [  *  ]  to  assume  such  responsibility.  [  *  ].

          (D) OUT-LICENSING DECISION FOR PRODUCTS AND DIAGNOSTIC PRODUCTS. [ * ]
shall provide [ * ] with written notice of its intent to out-license some or all
of  the  rights for a particular Co-Funded Product and/or its related Diagnostic
Product  to a Third Party (whether or not accompanied by a decision to terminate
the  development  and/or  commercialization  of  a  particular Co-Funded Product
and/or  its  Diagnostic  Product).  [  * ] shall have [ * ] from receipt of such
notice  to  notify  [  *  ]  in  writing that it wishes to exercise its right of
negotiation.  If  [  * ] exercises such right, the Parties shall negotiate for a
period  of  up  to  [  * ] to enter into a license agreement, the terms of which
shall  include  customary  terms  and conditions, including, without limitation,
appropriate signing and licensing fees, milestone payments and royalties. If [ *
] do not enter into a license agreement within such time, [ * ] thereafter shall
have  the  right  to out-license such rights to a Third Party, subject to [ * ].
Upon  [ * ] entering into such a license or sublicense with a Third Party, [ * ]
shall  have  [  * ] and [ * ] shall have [ * ]. All compensation received by the
Parties  from  such Third Party under such license or sublicense (including, but
not limited to, all license fees, milestone payments and royalty payments) shall
be  shared  as  [ * ] by the Parties in accordance with [ * ], provided that all
such  compensation  shall  be  calculated after deductions for Development Costs
incurred  by  either  Party  under  the  agreement  with  the  Third  Party.

6.     DEVELOPMENT  AND  MARKETING  OF  PDL  PRODUCTS

     6.1  PDL  PRODUCTS. If EXEL does not elect to co-fund a Product as provided
in  Article  5,  such Product shall be deemed a PDL Product. PDL shall have sole
control  and  responsibility  for  the  development and commercialization of PDL
Products, and EXEL shall have no further rights with respect to such PDL Product
except  (a)  the right to receive milestone and royalty payments as described in
Sections  9.3,  9.4  and  9.5,  and  (b)  [  *  ].

     6.2  REPORTS.  Upon  written  request by EXEL to PDL during the term of the
Agreement,  but not more frequently than once per calendar year, PDL will submit
to  EXEL  a  written progress report summarizing the status of each PDL Product.

     6.3  RIGHT  OF  NEGOTIATION.  [  *  ].

7.     COMMERCIALIZATION  OF  TARGETS  AND  EARLY-STAGE  PRODUCTS

     7.1  TARGETS  AND  PRECURSOR  ANTIBODIES.  In  the  event  that  (a) any
Targets result from the Collaboration for which Antibodies are not generated for
any reason, or (b) any Precursor Antibodies to a given Antibody Target Candidate
or  Antibody  Target  result  from  the Collaboration, but PDL determines not to
select  any  Precursor  Antibodies to that Antibody Target Candidate or Antibody
Target  for  humanization,  then  the  JSC  may  designate  such  Targets and/or
Precursor  Antibodies for out-licensing ("Out-Licensing Candidates"), [ * ]  [ *
]  shall have [ * ].  All consideration received or to be received from any such
license, including, without limitation, all license fees, milestone payments and
royalties  shall  be  treated  as  [  *  ].

     7.2  [ * ] REVERSION TARGETS. Each Target identified by [ * ] during the
[  *  ] that (a) [ * ] or (b) [ * ], shall revert to [ * ] ("Reversion Targets")
and  shall  not  be treated as Out-Licensing Candidates pursuant to Section 7.1.
Upon a Target becoming a Reversion Target, [ * ] shall have no further rights to
that  Reversion  Target,  it shall cease to be a Target and [ * ] licenses under
this  Agreement  to  that  Reversion  Target  shall  terminate.

     7.3  HUMANIZED ANTIBODIES NOT SELECTED BY [ * ] FOR IND. In the event that
[  *  ]  creates  a  Humanized  Antibody, but decides not to proceed with an IND
filing  for  such  Humanized  Antibody,  then  such  Humanized Antibody shall be
treated  in  the  same  manner  as  a  [  *  ]  Product  is treated under [ * ].

     7.4  GENERAL LICENSING. Subject to Sections 5.9(d) and 6.3, [ * ] shall
have  the  right  to enter into a license or sublicense with any Third Party for
any  or all rights to any Antibody Target Candidates, Antibodies or Products [ *
],  including without limitation any Out-Licensing Candidates. All consideration
received or to be received from any such license, including, without limitation,
all  license  fees,  milestone payments and royalties shall be treated as [ * ],
except  that  any  consideration  for  [  *  ] shall be allocated as provided in
Sections 5.9 and 6.3. Upon [ * ] or the Parties' entering into such a license or
sublicense with a Third Party with respect to any Target, Antibody or Pre-Opt-In
Product,  all  rights  under  Article  5  shall  terminate  with  respect to the
applicable  Product  licensed  to  the  Third  Party.

     7.5  [ * ] REVERSION. Effective [ * ], all [ * ] shall revert to [ * ]. [ *
]  shall  have  no  further  rights  with  respect  to  such  [  *  ].

8.     LICENSES  AND  RELATED  RIGHTS

     8.1  LICENSES  TO  PDL.

          (A)  RESEARCH.  Subject  to  the  terms of this Agreement, EXEL hereby
grants  PDL  a  non-exclusive, worldwide, non-transferable, royalty-free license
for  internal  use  under the EXEL Patents, EXEL Know-How and EXEL's interest in
the  Joint  Patents  to  the  extent  necessary (i) to permit PDL to conduct its
obligations under Article 4 and (ii) to use and characterize Targets, including,
without  limitation,  the  Overlap Targets. The license set forth above includes
the  right  to  sublicense,  subject  to  Sections  4.7  and  5.5.

          (B) PRE-OPT-IN PRODUCTS AND PDL PRODUCTS. Subject to the terms of this
Agreement,  EXEL hereby grants PDL a worldwide, exclusive license, including the
right  to  sublicense, under the EXEL Patents, EXEL Know-How and EXEL's interest
in  the  Joint Patents (i) to use the Targets [ * ] for the purpose of creating,
developing  and  marketing  antibodies  for  commercial  purposes,  (ii)  to use
Antibody Target Candidates and Antibody Targets to make, have made, use, develop
and  test  Antibodies,  and  (iii) to make, have made, use, develop, test, sell,
offer  to  sell, have sold and import Pre-Opt-In Products and PDL Products. Such
license  shall  include  all  human prophylactic and therapeutic indications for
Pre-Opt-In  Products and PDL Products and shall be milestone and royalty-bearing
as set forth in Article 9. The exclusivity of the license set forth in 8.1(b) is
subject  to  EXEL's  retained  rights  under  Sections  8.2  (a)  and  8.5.

          (C)  CO-FUNDED  PRODUCTS. Subject to the terms of this Agreement, EXEL
hereby  grants  PDL a worldwide, co-exclusive license (with EXEL), including the
right  to  sublicense, under the EXEL Patents, EXEL Know-How and EXEL's interest
in  the  Joint  Patents  to  make, have made, use, develop, test, sell, offer to
sell,  have  sold  and import Co-Funded Products. Such license shall include all
human  prophylactic and therapeutic indications and shall involve profit-sharing
with  respect  to  any  such  Product in lieu of royalties and milestones as set
forth  in  Article  9.

          (D)  PDL  DIAGNOSTIC PRODUCTS. Subject to the terms of this Agreement,
EXEL hereby grants PDL a worldwide, co-exclusive license, including the right to
sublicense,  under  the  EXEL  Patents, EXEL Know-How and EXEL's interest in the
Joint  Patents to make, have made, use, develop, test, sell, offer to sell, have
sold  and  import  PDL  Diagnostic  Products. At the time PDL identifies a Third
Party  manufacturer  for  any  such  PDL Diagnostic Product, PDL may request the
co-exclusive  license  be  converted  to  an  exclusive  license.  [  *  ].

          (E)  ANTIBODY INVENTIONS. Subject to the terms of this Agreement, EXEL
hereby  grants  PDL  a  worldwide,  exclusive  license,  including  the right to
sublicense,  under  the Antibody Patents that claim Antibody Inventions invented
solely  or jointly by PDL to practice such Antibody Inventions for all purposes.

     8.2  LICENSES  TO  EXEL.

          (A)  RESEARCH.  Subject  to  the  terms  of this Agreement, PDL hereby
grants  EXEL  a non-exclusive, worldwide, non-transferable, royalty-free license
(without  the  right  to sublicense) for internal use under the PDL Patents, PDL
Know-How  and PDL's interest in the Joint Patents to the extent necessary (i) to
permit  EXEL to conduct its obligations under the Research Plan, and (ii) [ * ].

          (B)  EXEL  PRODUCTS. Subject to the terms of this Agreement, effective
upon  a Product becoming an EXEL Product pursuant to Sections 5.9(c) or 12.2(b),
PDL  hereby  grants to EXEL, a worldwide, license (with the right to sublicense)
under  the  PDL Patents, PDL Know-How and PDL's interest in the Joint Patents to
develop,  make,  have  made, use, sell, offer to sell, have sold and import such
EXEL  Products.  This  license  shall  be subject to any licenses or sublicenses
granted  by  PDL  in accordance with Section 5.9 prior to the license under this
Section  8.2(b)  becoming  effective.  Such  license  shall  include  all  human
prophylactic  and  therapeutic indications and any Diagnostic Products developed
for  use  in  connection  with such prophylactic and therapeutic indications and
shall  be  milestone  and  royalty-bearing  as set forth in Section 5.9(c). Such
license shall be exclusive to the extent of PDL's interest in an Antibody Patent
covering  the  EXEL  Product  and  to  the extent any PDL Patent or Joint Patent
relates  solely  to  such  EXEL  Product;  otherwise  such  license  shall  be
non-exclusive.

          (C)  EXEL DIAGNOSTIC PRODUCTS. Subject to the terms of this Agreement,
effective  upon a Product becoming an EXEL Product pursuant to Section 5.9(c) or
12.2(b),  and  to  the  extent  PDL then has rights to a EXEL Diagnostic Product
developed for use with such EXEL Product, PDL hereby grants to EXEL, a worldwide
license  (with  the right to sublicense) under the PDL Patents, PDL Know-How and
PDL's  interest  in  the  Joint  Patents to develop, make, have made, use, sell,
offer  to  sell, have sold and import such EXEL Diagnostic Product. This license
shall  be  subject  to any licenses or sublicenses granted by PDL, in accordance
with  Section  5.9,  prior  to  the  license  under this Section 8.2(c) becoming
effective. Such license shall include all human diagnostic indications and shall
be  milestone  and  royalty-bearing as set forth in Section 5.9(c). Such license
shall  be  consistent  with  the license granted pursuant to Section 8.2(b) with
respect to the EXEL Product for which the EXEL Diagnostic Product is intended to
be  used.

     8.3  NEGATIVE  COVENANTS.  Each  Party hereby covenants that it will not
practice any technology licensed to it under this Agreement outside the scope of
the  licenses  granted  herein.  Specifically and without limitation, EXEL shall
not, unless expressly permitted elsewhere in this Agreement [ * ], provided that
this  covenant  shall  not  be  interpreted  to  prevent  EXEL  from  [  *  ].

     8.4  EXCLUSIVITY.  EXEL  shall  not  research,  develop  or  commercialize
Products,  except  under  the  terms of this Agreement. Specifically and without
limitation, unless expressly permitted elsewhere in this Agreement, neither EXEL
nor  its  Affiliates  shall: (a) [ * ]; (b) make, have made, use, sell, offer to
sell,  have  sold  or  import such [ * ]; or (c) develop, make, have made, sell,
offer  to sell, have sold or import, a [ * ] until the earlier of either (i) [ *
],  or  (ii)  if  at  any  time  [  * ] following the selection of [ * ]. [ * ].

     8.5  INDEPENDENT  RESEARCH. The Parties acknowledge and agree that EXEL may
use  Information  and  materials that EXEL generates in the course of performing
its  obligations under this Agreement that constitutes general know-how relating
to [ * ] for Independent Research. For clarification, EXEL may use the following
Information  generated by EXEL in the course of performing its obligations under
this  Agreement, for Independent Research: [ * ] EXEL shall have no rights under
this  Agreement  to use PDL Information or materials, or to use or operate under
any  rights  licensed by PDL from Third Parties, for Independent Research or for
development or commercialization of any product or for any purpose other than as
expressly  provided  under  this  Agreement.

9.     COMPENSATION

     9.1  LOAN.  Concurrently  with  the  execution  of  this  Agreement, the
Parties are entering into a Note Purchase Agreement of even date herein pursuant
to  which  PDL will loan EXEL thirty million dollars ($30,000,000) pursuant to a
Convertible  Note.  The  terms  of  such  Convertible  Note  shall  be  governed
exclusively  by  the  Note  Purchase  Agreement  and  related documents executed
pursuant  thereto.

     9.2  RESEARCH FUNDING. Subject to Sections 12.2 and 12.3, for the first two
(2)  years  of  this  Agreement,  PDL  shall  make  research funding and license
payments  totaling  four  million  dollars  ($4,000,000)  per year. This initial
Research  Term  shall  be  deemed  to  begin on [ * ]. Research Funding shall be
payable in equal [ * ] installments within [ * ] after the beginning of each [ *
]  during  the  term of the Research Funding. The annual Research Funding at the
rate  of  four  million  dollars  ($4,000,000)  per  year shall be [ * ]. If the
Research  Term has been [ * ], then the research funding shall [ * ] at the rate
of  [  *  ]  for  the  following  [  * ]. The Research Term and Research Funding
thereafter  shall  be [ * ] at the rate of four million dollars ($4,000,000) per
year  for  the  [  *  ].

     9.3  MILESTONE  PAYMENTS.  For  each  PDL  Product,  PDL shall pay EXEL the
following  amounts  within  thirty (30) days after each PDL Product achieves the
stated  milestone:

          (A)  [  *  ]  [  *  ]
          (B)  [  *  ]  [  *  ]
          (C)  Upon  first  filing  of  a  BLA  for  the  PDL  Product  [  *  ]
          (D)  Upon  first  Regulatory  Approval  of  the PDL Product in a Major
          Indication  in  a  Major  Market  [  *  ]
          (E)  If  the  PDL Product has not achieved Milestone 9.3(d), upon such
          PDL  Product  achieving sales resulting in cumulative royalty payments
          from  PDL  to  EXEL  under  this  Agreement  of  at  least [ * ] [ * ]

     [ * ] as used in (b) above shall occur at such time as a draft final report
for  the  trial  has  been  written  [  *  ].

     Milestone  payments  shall  be  payable only once, which shall be the first
time  a  milestone  is  achieved. If a milestone for a PDL Product is skipped or
avoided  by  advancing  to  what  would  normally  be  expected  to  be  a later
development  or  regulatory  step, then the milestone that was expected to occur
earlier  shall  be  deemed  to have been achieved at the same time as such later
milestone  is  achieved, and the corresponding payment for both milestones shall
be  due.  For the purposes of milestone payments, all dosage forms, formulations
and  constructs containing an Antibody against the same Antibody Target shall be
deemed  a  single  Product.

     "Major Indication" as used in (d) above means the following: cancers in any
of the following: [ * ]; provided, however, that the PDL Product is [ * ] in the
target  cancer.

     "Major  Market"  as  used  in  (d)  above  means  the United States, United
Kingdom,  Germany,  France,  Italy  or  Japan.

     9.4  Royalty  Payments. For sales of each PDL Product for a prophylactic
or  therapeutic indication by PDL, its Affiliates or sublicensees, PDL shall pay
EXEL  royalties  at  the  following  rates:

            Annual Net Sales of a given PDL Product     Royalty Rate
            ---------------------------------------     ------------
                                      [ * ]

Except  as  set  forth  in Section 9.6, the foregoing royalty rates shall not be
subject  to adjustment or reduction for any reason.  For the purposes of royalty
payments,  all  dosage  forms,  formulations  and constructs containing the same
Antibody  shall be deemed a single Product.  The measure of annual Net Sales set
forth  in  this  Section  9.4  shall be the sum of Net Sales of a particular PDL
Product  in  all  countries  for  each  fiscal  year  of  PDL.

By  way  of example, if in a particular fiscal year, PDL sells two PDL Products,
with  one PDL Product having [ * ] in annual Net Sales and the other PDL Product
having  [  * ] in annual Net Sales, then PDL shall make royalty payments to EXEL
during  that year totaling [ * ] with respect to the first PDL Product and [ * ]
with  respect  to  the  second  PDL  Product  for  that fiscal year, assuming no
adjustments  are  required  pursuant  to  Section  9.6.

     9.5  ROYALTY  PAYMENT  FOR PDL PRODUCT FOR A DIAGNOSTIC INDICATION.  For
sales  of  each  Diagnostic  Product by PDL, its Affiliates or sublicensees, PDL
shall  pay  EXEL  royalties  at  a  rate  equal  to [ * ] of the rate that would
otherwise  apply  under  Sections  6.3  or  9.4 after all adjustments under this
Agreement  to  such  rates.

     9.6  ROYALTY  CREDITS  AND  ADJUSTMENTS.

          (A)  The milestone payments set forth in Section 9.3(b) - (d) shall be
[  *  ].  In  addition,  the amount of [ * ] shall be creditable against royalty
payments  beginning  in the quarter of the [ * ] as set forth in Section 9.4 and
Section  9.5  as  provided  in  Section  9.6(b).

          (B)  [  *  ].  Amounts  paid  by PDL to Third Parties for intellectual
property  applicable to products in addition to PDL Products shall be reasonably
allocated  among  the  products covered under the applicable licenses from Third
Parties. In any event, royalty credits shall not apply to license fees and other
amounts  paid  under  Third  Party licenses prior to the Effective Date. Royalty
credits  may  be  applied against royalties due under Section 9.4 or Section 9.5
with  respect  to  PDL Products, provided that the royalty paid by PDL after the
application  of  any  credit under this Section 9.6(b) shall not, as a result of
such  adjustment,  be  less than [ * ] of the royalty rate which would otherwise
apply  under  Section  9.4  or  Section  9.5  to  such  Products.

          (C)  [  *  ].

          (D)  In  no  event  shall the royalty rate under Section 9.4 for a PDL
Product  be  reduced  pursuant  to  this  Section  9.6  to  less  than  [  *  ].

     9.7  TERM OF ROYALTIES. EXEL's right to receive royalties under Section 9.4
and Section 9.5 shall expire on a country-by-country basis upon the later of (i)
[  *  ]  from  the First Commercial Sale of such PDL Product in such country, or
(ii)  the expiration of the last to expire issued patent within the EXEL Patents
or  Joint  Patents  in such country covering the PDL Product or the manufacture,
use  or  sale  of  such  PDL  Product.

     9.8  ROYALTY  PAYMENT  REPORTS.  All  royalty payments under this Agreement
shall  be  made to EXEL or its designee quarterly within [ * ] following the end
of  each  calendar  quarter  for  which  royalties  are  due  or, in the case of
royalties  from the sales of sublicensees, within [ * ] following the end of the
quarter  in  which  PDL  receives  the royalty report from the sublicensee. Each
royalty  payment  shall  be accompanied by a statement stating the Net Sales, by
country,  of  each  PDL  Product  sold  during  the  relevant  calendar quarter.

     9.9  PROFIT  SHARING  FOR  CO-FUNDED  PRODUCTS.

          (A) SHARE OF PROFITS. PDL shall be entitled to [ * ] of Product Profit
from  the sale of Co-Funded Products and EXEL shall be entitled to [ * ] of such
Product  Profit  until  such  time  as,  and so long as, [ * ] of the cumulative
Product  Profit  for  all  Co-Funded Products equals [ * ] of the amount paid to
EXEL under Section 9.2 (i.e., [ * ]). Whenever cumulative Product Profit exceeds
such  amount,  each  Party  shall be entitled to [ * ] of the subsequent Product
Profit  from  the  sale  of Co-Funded Products. The respective shares of Product
Profit  are  referred  to  below  as  the  "PDL Share" and the "EXEL Share." The
respective  profit  sharing described in this Section 9.9(a) may be adjusted for
particular  Co-Funded  Products  pursuant  to  Section  3.7(b).

          (B)  DETERMINATION  OF  PRODUCT  PROFIT. Within [ * ] after the end of
each  calendar  quarter  following  the  First  Commercial  Sale  of a Co-Funded
Product,  PDL  shall provide EXEL with a statement detailing (i) PDL's Net Sales
and  the  Product  Profit  incurred  or received, as applicable, in the previous
calendar  quarter  with  respect  to each Co-Funded Product, (ii) the cumulative
Product  Profit  for all Co-Funded Products and (iii) the PDL Share and the EXEL
Share  for  that  quarter  (the  "Quarterly  Report").  Such  statement shall be
accompanied  by  appropriate  supporting  information.

          (C)  PAYMENTS.  If  the  Product  Profit for such calendar quarter was
negative,  then  EXEL shall pay the EXEL Share to PDL within [ * ] after receipt
of  the  Quarterly  Report.  If the Product Profit for such calendar quarter was
positive,  then  PDL shall pay the EXEL Share to EXEL within [ * ] after sending
the  Quarterly  Report  to  EXEL.

     9.10  NONREFUNDABLE  PAYMENTS.  Except  as  expressly  provided  in this
Agreement, all payments made by a Party to the other shall be non-refundable and
non-creditable.

     9.11  PAYMENT METHOD. All payments due under this Agreement to a Party
shall be made by bank wire transfer in immediately available funds to an account
designated  by  the  receiving  Party.  All  payments hereunder shall be made in
United  States  dollars.

     9.12  TAXES. Each Party shall pay any and all taxes levied on account of
all  payments  it  receives under this Agreement. If laws or regulations require
that  taxes  be  withheld,  the Party required to withhold will (i) deduct those
taxes  from  the  remittable  payment,  (ii)  pay the taxes to the proper taxing
authority,  and (iii) send evidence of the obligation together with proof of tax
payment  to  the  other  Party  within  [  *  ]  following  that  tax  payment.

     9.13  BLOCKED CURRENCY. In each country where the local currency is blocked
and  cannot  be  removed  from  the  country, royalties or profit share payments
accrued  in  that country shall be paid to the receiving Party in the country in
local  currency  by  deposit  in a local bank designated by the receiving Party,
unless  the  Parties  otherwise  agree.

     9.14  SUBLICENSES. In the event PDL grants licenses or sublicenses to
others  to  sell  PDL Products which are subject to royalties under Section 9.4,
such  licenses  or  sublicenses  shall include an obligation for the licensee or
sublicensee to account for and report its sales of Products on substantially the
same  basis  as  if such sales were Net Sales by PDL, and PDL shall pay to EXEL,
with  respect  to  such  sales,  royalties  as  if such sales of the licensee or
sublicensee were Net Sales of PDL. With respect to such sales of PDL Products by
licensees  or  sublicensees,  PDL  shall be required only to include information
regarding  Net  Sales  reflected  in reports received by PDL during the calendar
quarter  in question. PDL shall use commercially reasonable efforts to cause its
sublicensees to report sales of PDL Products in a manner that will enable PDL to
report  such  Net  Sales  by  licensees  and  sublicensees on a quarterly basis.

     9.15  FOREIGN EXCHANGE. Conversion of sales recorded in local currencies to
United States dollars will be performed in a manner consistent with PDL's normal
practices  used  to  prepare  its  audited financial statements for internal and
external  reporting  purposes,  which  uses  a  mutually  agreed  upon generally
accepted  source  of  published  exchange  rates. It is agreed that the exchange
rates  published by Citibank or the Wall Street Journal for the last banking day
of the quarter shall be acceptable exchange rates; provided that, in the case of
sales  by  sublicensees, the Parties will use the exchange rates provided in the
agreements  between  PDL  and  such  sublicensees.

     9.16  RECORDS; INSPECTION. Each Party shall keep complete and accurate
books  of  account  and  records  for  PDL Products, EXEL Products and Co-Funded
Products,  to be made under this Agreement. Such books and records shall be kept
for at least [ * ] following the end of the calendar year to which they pertain.
Such  records  will  be  open  for  inspection  during such three year period by
independent  accountants, solely for the purpose of verifying payment statements
hereunder.  Such inspections shall be made no more than once each calendar year,
at  reasonable  times and on reasonable notice. Inspections conducted under this
Section  9.16  shall  be  conducted  by  an  independent  Third Party reasonably
acceptable  to  both  Parties.  The  audit  shall be at the expense of the Party
requesting  the  audit, except in the event that the results of the audit reveal
that the audited Party underpaid the Party requesting the audit by [ * ] or more
for  any  period  covered  by  the  audit, in which case the audit fees, and any
unpaid  amounts (plus interest) that are discovered will be paid promptly by the
audited  Party,  and  in any event no later than [ * ] following delivery of the
audit  results  to  the  audited  Party.

     9.17  LATE  PAYMENTS.  Any overdue payments under this Agreement shall bear
interest  at the rate of [ * ], or the highest rate allowed by law, whichever is
less,  commencing  on  the  date  such  payment  is  due  until  paid.

10.     INTELLECTUAL  PROPERTY

     10.1  OWNERSHIP.

          (A)  Except  as otherwise described herein and subject to the licenses
granted  under  this Agreement, each Party shall own the entire right, title and
interest in and to any and all of its Sole Inventions, and Patents covering such
Sole Inventions, except that all Antibody Inventions initially shall be assigned
to  EXEL.  The  Parties intend that during patent prosecution [ * ] (such patent
applications  and any patents that issue with respect to such applications being
referred  to  as  "Antibody Patents"). At the time PDL notifies EXEL pursuant to
Section  5.1  and  thus  commences  the  Opt-In  Period for a particular Product
containing  a particular Antibody, EXEL shall assign to PDL the Antibody Patents
that  cover  that  Antibody.  Following  such  assignment  to  PDL, the assigned
Antibody  Patents  shall  be  treated  as  PDL Patents under this Agreement. (B)
Subject  to  Section  10.1(a) and the licenses granted under this Agreement, PDL
and  EXEL  shall  each  own an undivided one-half interest in and to any and all
Joint  Inventions  and  Joint Patents. The Parties shall have the right to grant
licenses under such Joint Patents only to the extent provided in this Agreement.

     10.2  STRATEGY;  DISCLOSURE.  During  the  Research  Term, each Party shall
submit  a  written  report to the JPC within [ * ] after the end of each quarter
describing any Sole Invention or Joint Invention or Antibody Inventions of which
it became aware during the prior quarter that it believes may be patentable. The
JPC,  in  consultation  with  the  JSC,  shall  decide  whether to file a patent
application for each such Joint Invention, as discussed in Section 10.3. The JPC
shall  establish  the  patent  strategy  for  all  Joint  Inventions,  Antibody
Inventions  and Inventions pertaining to Antibody Target Candidates and Antibody
Targets  arising  from  the  Collaboration,  considering  in  good  faith EXEL's
obligations  to  PDL  and Third Parties relating to patent strategy for Targets.

     10.3  PATENT  PROSECUTION  AND  MAINTENANCE;  ABANDONMENT.

          (A)  SOLE  INVENTIONS. Each Party shall direct the filing, prosecution
and  maintenance  of  all  Patents  covering  its Sole Inventions, to the extent
possible  consistent  with  the  strategy  established  by  the  JPC  for  Joint
Inventions  and consistent with the remaining provisions, as applicable, of this
Section  10.3.

          (B) EXEL PRODUCT PATENTS. EXEL shall prosecute and reasonably maintain
all  of  the patents and applications that qualify as EXEL Patents that claim or
cover  any  Co-Funded  Product or PDL Product or the Antibody Target of any such
Product  ("EXEL  Product  Patents").  If  EXEL  decides  not  to  continue  the
prosecution  or  maintenance  of an EXEL Product Patent in any country, it shall
promptly  advise  PDL  thereof  and,  at  the request of PDL, EXEL and PDL shall
negotiate  in  good  faith  to  determine an appropriate course of action in the
interests  of  both Parties. If the Parties determine that it would be [ * ] for
PDL to assume responsibility for such prosecution or maintenance, then PDL shall
have the right but not the obligation to assume such prosecution or maintenance.
If  the  Parties  do  not  determine  that  it  would be [ * ] for PDL to assume
responsibility for such prosecution or maintenance, then, at PDL's request, EXEL
shall  continue  such  prosecution  or  maintenance,  provided  that,  [  *  ].

          (C)  PDL  PRODUCT PATENTS. PDL shall prosecute and reasonably maintain
all  of  the  patents and applications that qualify as PDL Patents that claim or
cover  any  Co-Funded Product or EXEL Product or the Antibody Target of any such
Product  ("PDL Product Patents"). If PDL decides not to continue the prosecution
or  maintenance of a PDL Product Patent in any country, it promptly shall advise
EXEL  thereof  and, at the request of EXEL, PDL and EXEL shall negotiate in good
faith  to  determine  an  appropriate  course of action in the interests of both
Parties.  If  the  Parties  determine  that it would be [ * ] for EXEL to assume
responsibility  for  such  prosecution  or maintenance, then EXEL shall have the
right  but  not the obligation to assume such prosecution or maintenance. If the
Parties  do  not  determine  that  it  would  be  [  *  ]  for  EXEL  to  assume
responsibility for such prosecution or maintenance, then, at EXEL's request, PDL
shall  continue  such  prosecution  or  maintenance,  provided  that,  [  *  ].

          (D) JOINT INVENTIONS. Each Party will use reasonable efforts to advise
the other of a Joint Invention as provided in Section 10.2 or promptly upon such
Party  becoming  aware  of such Joint Invention. If the Invention is an Antibody
Invention,  it  shall  be  assigned  as provided in Section 10.1(a) and shall be
prosecuted  as  provided  in  Section  10.3(e).  As  soon  as one of the Parties
concludes  that  it  wishes  to  file  a  patent  application  covering  a Joint
Invention,  it  immediately  shall inform the other Party thereof, consult about
the  filing  procedures concerning such patent application, and file such patent
applications  for  the Joint Inventions in such countries as the JPC determines.
For this purpose, such Party will provide the other Party with the determination
of  inventors and scope of claims as early as possible. If a Party is faced with
possible  loss  of  rights  resulting  from  the  delay  necessary  for  such
communication,  such  communications  may  take  place  promptly  after filing a
provisional or convention application. PDL will have the first right of election
to file patent applications for Joint Inventions in any country in the world. If
PDL  declines  to  file  any  such  application  within [ * ] after receipt of a
written  request  to  do  so from EXEL, then EXEL may do so. Regardless of which
Party  files  a  patent  application,  however,  any  claims  covered  by  such
applications  shall be considered as part of the Joint Patents. If the Party who
initially  files  a patent application covering a Joint Invention decides not to
continue  the prosecution or maintenance of such patent application or patent in
general  or  in any particular country, it promptly shall notify the other Party
in  writing  in  reasonably  sufficient time for such other Party to assume such
prosecution  and maintenance, and shall take the necessary steps and execute the
necessary  documents  to  permit  such other Party to assume such prosecution or
maintenance.  The  other  Party  shall  have the right but not the obligation to
assume  such  prosecution  or  maintenance.

          (E)  ANTIBODY  INVENTIONS.  Antibody  Inventions  initially  shall  be
assigned  to  EXEL  as  provided  in  Section  10.1(a). Unless the Parties agree
otherwise,  EXEL  shall  file patent applications for the Antibody Inventions in
such  countries  as  the  JPC  determines.  If  EXEL  declines  to file any such
application  within  [ * ] after receipt of a written request to do so from PDL,
then  PDL  may  do  so. At the time that an application constituting an Antibody
Patent  is  filed,  EXEL  shall  promptly  notify  PDL  in writing in reasonably
sufficient  time  for  PDL  to  assume  the  prosecution and maintenance of that
Antibody  Patent,  and  shall take the necessary steps and execute the necessary
documents  to  permit  PDL  to  assume  such  prosecution or maintenance. If PDL
subsequently  decides  not  to  continue  the  prosecution  or maintenance of an
Antibody  Patent  directed  to  a  Pre-Opt-In  Product,  in  general  or  in any
particular  country,  it  promptly  shall  notify  EXEL in writing in reasonably
sufficient  time  for EXEL to assume such prosecution and maintenance, and shall
take  the  necessary steps and execute the necessary documents to permit EXEL to
assume  such  prosecution  or maintenance. EXEL shall have the right but not the
obligation  to  assume  such  prosecution  or  maintenance.

          (F)  COOPERATION.  At  the  request  of  the  Party  performing  the
prosecution  of  any patent application under this Section 10.3, the other Party
will  cooperate,  in all reasonable ways, in connection with the prosecution and
maintenance  of all such patent applications. Each Party shall make available to
the  other  Party  or  its  respective  authorized  attorneys,  agents  or
representatives  such  of its employees or consultants as the other Party in its
reasonable judgment deems necessary in order to assist such other Party with the
prosecution  and  maintenance  of  such  patents.  Each  Party shall sign or use
commercially  reasonable  efforts to have signed at no charge to the other Party
all  legal  documents  necessary  in  connection  with  such  prosecution  and
maintenance.

          (G)  UPDATES  ON DEVELOPMENTS. The Party performing the prosecution of
any  patent  application under this Section 10.3 shall advise the other Party of
any  substantial  action  or  development  in  the  prosecution  of  such patent
applications and patents, in particular those involving the question of scope or
the  issuance,  rejection,  or  revocation,  of an interference involving, or an
opposition  to  any  such  patent  application or patent. In addition, the Party
filing  a  patent application on a Joint Invention shall provide the other Party
with  (a)  a  draft  of  such  new  patent  application  prior  to  filing  that
application, allowing adequate time for review and comment by the other Party if
possible;  provided,  however,  the filing Party shall not be obligated to delay
the  filing of any patent application; and (b) copies of material correspondence
from patent offices concerning patent applications covering such Joint Invention
and a reasonable opportunity to comment on any material responses, amendments or
submissions  to  be  made to such patent offices. Notwithstanding the foregoing,
PDL  (with  respect  to  PDL  Patents  directed  to PDL Products) and EXEL (with
respect  to  EXEL Patents directed to EXEL Products) shall have no obligation to
advise  or  confer  with  the other Party with respect to such Patents and shall
prosecute,  maintain  or  abandon  such  Patents  in  their  sole  discretion.

          (H)  EXPENSES.  For  any  Patents  that  relate  solely  to  Co-Funded
Products,  all  costs  and  expenses  for the filing, prosecution (including any
interferences,  reissue  proceedings and reexaminations) and maintenance of such
Patents shall be [ * ]. For any other Patents, all such costs and expenses shall
be  [  *  ].

     10.4  ENFORCEMENT  OF  PATENT  RIGHTS.

          (A)  ENFORCEMENT  OF  PDL  PRODUCT  PATENTS.

               (I)  ENFORCEMENT  BY PDL. In the event either Party becomes aware
of  a  suspected  infringement  of  a PDL Product Patent or the institution by a
Third Party of any proceedings for the revocation of, or to invalidate or render
unenforceable,  any PDL Product Patent due to the Third Party having an antibody
product  against the same target as a Co-Funded Product or an EXEL Product, such
Party  shall  notify  the other Party promptly, and following such notification,
the  Parties shall confer. PDL shall have the right, but shall not be obligated,
to  bring  an  infringement  action  or  to  defend  such proceedings at its own
expense,  in its own name and entirely under its own direction and control. EXEL
will  reasonably  assist PDL in such actions or proceedings if so requested, and
will  lend  its  name  to  such  actions  or  proceedings if requested by PDL or
required  by  law  [  *  ].  EXEL  shall  have  the  right to participate and be
represented  in  any  such  suit  by  its  own  counsel  at  its own expense. No
settlement  of  any  such action or defense which restricts the scope or affects
the  enforceability  of  a PDL Product Patent that covers an EXEL Product may be
entered  into  by PDL without the prior consent of EXEL, which consent shall not
be  unreasonably  withheld.

               (II)  ENFORCEMENT  BY EXEL. If PDL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(a)(i) and
so  notifies  EXEL,  then, subject to the rights of any Third Party licensors of
such  Patent to PDL, EXEL may bring such action or defend such proceeding at its
own  expense,  in its own name and entirely under its own direction and control.
PDL  will reasonably assist EXEL in any action or proceeding being prosecuted or
defended by EXEL, if so requested by EXEL or required by law at [ * ]. PDL shall
have  the  right  to  participate and be represented in any such suit by its own
counsel  at  its  own expense. No settlement of any such action or defense which
restricts  the scope or affects the enforceability of PDL Patents may be entered
into  by  EXEL  without  the  prior  consent  of PDL, which consent shall not be
unreasonably  withheld.

          (B)  ENFORCEMENT  OF  EXEL  PRODUCT  PATENTS.

               (I)  ENFORCEMENT BY EXEL. In the event either Party becomes aware
of  a  suspected  infringement of an EXEL Product Patent or the institution by a
Third Party of any proceedings for the revocation of, or to invalidate or render
unenforceable, any EXEL Product Patent due to the Third Party having an antibody
product  against  the  same target as a Co-Funded Product or a PDL Product, such
Party  shall  notify  the other Party promptly, and following such notification,
the Parties shall confer. EXEL shall have the right, but shall not be obligated,
to  bring  an  infringement  action  or  to  defend  such proceedings at its own
expense,  in  its own name and entirely under its own direction and control. PDL
will  reasonably assist EXEL in such actions or proceedings if so requested, and
will  lend  its  name  to  such  actions  or proceedings if requested by EXEL or
required  by  law  [  *  ].  PDL  shall  have  the  right  to participate and be
represented  in  any  such  suit  by  its  own  counsel  at  its own expense. No
settlement  of  any  such action or defense which restricts the scope or affects
the  enforceability of an EXEL Product Patent that covers a Co-Funded Product or
PDL  Product may be entered into by EXEL without the prior consent of PDL, which
consent  shall  not  be  unreasonably  withheld.

               (II)  ENFORCEMENT  BY PDL. If EXEL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(b)(i) and
so  notifies  PDL,  then,  subject to the rights of any Third Party licensors of
such  Patent to EXEL, PDL may bring such action or defend such proceeding at its
own  expense,  in its own name and entirely under its own direction and control.
EXEL  will reasonably assist PDL in any action or proceeding being prosecuted or
defended  by  PDL,  if  so requested by PDL or required by law [ * ]. EXEL shall
have  the  right  to  participate and be represented in any such suit by its own
counsel  at  its  own expense. No settlement of any such action or defense which
restricts the scope or affects the enforceability of EXEL Patents may be entered
into  by  PDL  without  the  prior  consent  of EXEL, which consent shall not be
unreasonably  withheld.

          (C)  ENFORCEMENT  OF  JOINT  PATENTS.

               (I)  ENFORCEMENT  BY PDL. In the event either Party becomes aware
of  a  suspected  infringement  of  a Joint Patent or the institution by a Third
Party  of  any  proceedings  for  the  revocation of, or to invalidate or render
unenforceable,  any  Joint  Patent,  such  Party  shall  notify  the other Party
promptly,  and  following such notification, the Parties shall confer. PDL shall
have  the right, but shall not be obligated, to prosecute an infringement action
or  to  defend such proceedings at its own expense, in its own name and entirely
under  its  own  direction  and control. EXEL will reasonably assist PDL in such
actions  or  proceedings if so requested, and will lend its name to such actions
or proceedings if requested by PDL or required by law [ * ]. EXEL shall have the
right  to  participate and be represented in any such suit by its own counsel at
its own expense. No settlement of any such action or defense which restricts the
scope  or  affects  the  enforceability  of  a  Joint Patent that covers an EXEL
Product  may  be  entered  into  by PDL without the prior consent of EXEL, which
consent  shall  not  be  unreasonably  withheld.

               (II)  ENFORCEMENT  BY EXEL. If PDL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(c)(i) and
so  notifies  EXEL, then EXEL may bring such action or defend such proceeding at
its  own  expense,  in  its  own  name  and entirely under its own direction and
control.  PDL  will  reasonably  assist  EXEL  in any action or proceeding being
prosecuted  or  defended by EXEL, if so requested by EXEL or required by law [ *
].  PDL  shall have the right to participate and be represented in any such suit
by  its  own  counsel  at  its  own expense. No settlement of any such action or
defense  which  restricts  the  scope  or  affects the enforceability of a Joint
Patent  that  covers  a  Co-Funded Product or PDL Product may be entered into by
EXEL  without  the prior consent of PDL, which consent shall not be unreasonably
withheld.

          (D)  GENERAL  PROVISIONS  RELATING  TO  ENFORCEMENT  OF  PATENTS.

               (I)  WITHDRAWAL. If either Party brings such an action or defends
such  a  proceeding under this Section 10.4 and subsequently ceases to pursue or
withdraws  from  such  action  or proceeding, it shall promptly notify the other
Party  and the other Party may substitute itself for the withdrawing Party under
the  terms  of  this  Section  10.4  at  its  own  expense.

               (II)  RECOVERIES.  In the event either Party exercises the rights
conferred  in  this  Section 10.4 and recovers any damages or other sums in such
action,  suit or proceeding or in settlement thereof, such damages or other sums
recovered  shall  first  be  applied  to  all  out-of-pocket  costs and expenses
incurred  by  the  Parties in connection therewith, including attorneys fees. If
such  recovery  is  insufficient  to  cover  all such costs and expenses of both
Parties,  it  shall be shared [ * ]. If after such reimbursement any funds shall
remain  from  such  damages  or other sums recovered, such funds shall be [ * ].

          (E)  EXCLUDED  PATENTS.  Certain patents as identified in Exhibits D-1
and  D-2 relating to background technologies of either EXEL or PDL, shall not be
subject  to  the  provisions  of  Sections  10.3  and  10.4  (a-d).

     10.5  TRADEMARKS;  PRODUCT  PRESENTATION.

          (A)  CO-FUNDED PRODUCTS. PDL shall own all right title and interest in
and  to  all trademarks, trade names, service marks and trade dress specifically
developed  for  and  used  on  or in connection with all Co-Funded Products. PDL
shall  be  responsible for all decisions regarding the trademarks, service marks
and  trade  dress used on and in connection with all Co-Funded Products. PDL and
EXEL  shall each retain sole and exclusive ownership of their own respective and
independently  developed and pre-existing trademarks, trade names, service marks
and  trade  dress,  regardless  of whether such trademarks, trade names, service
marks  and  trade dress are used on or in connection with any Co-Funded Product.
The  JCC shall approve all trademarks and service marks used on or in connection
with  any Co-Funded Products. Subject to applicable laws, rules and regulations,
any  written  or visual promotional or educational materials intended for use in
conjunction  with  Co-Funded  Products  shall  refer  to  both  Parties  (where
practical)  with  substantially  equal  prominence, and all product labeling and
promotional  material  regarding  the  detailing  and promoting of such Products
shall  display  the  names  and  logos  of  PDL  and EXEL (where practical) with
substantially  equal  prominence.

          (B) PDL PRODUCTS. PDL shall own all right title and interest in and to
all  trademarks, service marks and trade dress specifically developed by PDL for
and used on or in connection with all PDL Products. PDL shall be responsible for
all decisions regarding the trademarks, service marks and trade dress used on or
in  connection  with  all  PDL  Products.

          (C)  EXEL PRODUCTS. EXEL shall own all right title and interest in and
to  all trademarks, service marks and trade dress specifically developed by EXEL
for  and  used  on  or  in  connection  with  all  EXEL  Products. EXEL shall be
responsible  for all decisions regarding the trademarks, service marks and trade
dress  used  on  or  in  connection with all EXEL Products. PDL agrees to assign
promptly  any  trademark  rights  for  an  EXEL  Product  to  EXEL.

11.     CONFIDENTIALITY

     11.1  NONDISCLOSURE  OF  CONFIDENTIAL  INFORMATION.  All  written  and oral
Information disclosed by one Party to the other Party pursuant to this Agreement
and  characterized as confidential to the receiving Party shall be "Confidential
Information."  The Parties agree that during the term of this Agreement, and for
a  period of [ * ] after this Agreement expires or terminates, a Party receiving
Confidential Information of the other Party will (i) maintain in confidence such
Confidential  Information  to  the  same  extent  such  Party  maintains its own
proprietary  information  of similar kind and value (but at a minimum each Party
shall  use commercially reasonable efforts), (ii) not disclose such Confidential
Information to any Third Party without prior written consent of the other Party,
and  (iii)  not  use  such Confidential Information for any purpose except those
permitted  by  this  Agreement.

     11.2  EXCEPTIONS.  The  obligations  in  Section  11.1 shall not apply with
respect  to any portion of the Confidential Information that the receiving Party
can  show  by  competent  written  proof:

          (A)  Is  publicly  disclosed by the disclosing Party, either before or
after  it  is  disclosed  to  the  receiving  Party  hereunder;  or

          (B)  Was  known  to the receiving Party, without obligation to keep it
confidential,  prior  to  disclosure  by  the  disclosing  Party;  or

          (C)  Is subsequently disclosed to the receiving Party by a Third Party
lawfully  in  possession thereof and without obligation to keep it confidential;
or

          (D)  Has  been  published  by  a  Third  Party;  or

          (E)  Has  been  independently developed by the receiving Party without
     the  aid,  application  or  use  of  Confidential  Information.

     11.3  AUTHORIZED  DISCLOSURE.  A  Party  may  disclose  the  Confidential
Information  belonging  to  the  other  Party  to  the extent such disclosure is
reasonably  necessary  in  any  of  the  following  instances:

          (A)  Filing  or prosecuting Patents relating to Sole Inventions, Joint
Inventions  or  Products;

          (B)  Regulatory  filings  relating  to  Products;

          (C)  Prosecuting  or  defending  litigation;

          (D)  Complying  with  applicable  governmental  regulations;  or

          (E)  Disclosure, in connection with the performance of this Agreement,
to  Affiliates,  sublicensees,  prospective  licensees,  research collaborators,
employees,  consultants,  or  agents,  each  of whom prior to disclosure must be
bound  by similar obligations of confidentiality and non-use at least equivalent
in  scope  to  those  set  forth  in  this  Article  11.

     The  Parties  acknowledge that the terms of this Agreement shall be treated
as  Confidential  Information of both Parties.  Such terms may be disclosed by a
Party to investment bankers, investors, prospective business partners (including
potential  acquirers  or  acquisition  targets) and potential investors, each of
whom prior to disclosure must be bound by similar obligations of confidentiality
and  non-use at least equivalent in scope to those set forth in this Article 11.
In  addition, if required, a copy of this Agreement may be filed by either Party
with  the  Securities  and  Exchange  Commission.  In  connection  with any such
filing,  the  filing  Party  shall  endeavor to obtain confidential treatment of
economic  and  trade  secret  information and shall consult with the other Party
prior  to  such  filing  with  respect  to  determining  for  which  information
confidential  treatment  should  be  sought.

     11.4  PUBLICITY.  The  Parties  agree  that  the public announcement of the
execution  of  this  Agreement  shall  be substantially in the form of the press
release attached as Exhibit C. Any other news release relating to this Agreement
or  to  the  performance hereunder, shall first be reviewed and approved by both
Parties;  provided,  however,  that  any  disclosure which is required by law as
advised  by the disclosing Party's counsel may be made without the prior consent
of the other Party, although the other Party shall be given prompt notice of any
such legally required disclosure and to the extent practicable shall provide the
other  Party  an  opportunity  to  comment  on  the  proposed  disclosure.

     11.5  PUBLICATIONS.  Neither  Party shall publish or present the results of
studies  carried  out  under  this  Agreement  without the opportunity for prior
review by the other Party. Subject to Section 11.3, each Party agrees to provide
the other Party the opportunity to review any proposed abstracts, manuscripts or
presentations  (including  verbal  presentations)  which  relate  to any Target,
Antibody  or  Product  (excluding  any Product that has become a PDL Product) at
least  [  *  ] prior to its intended submission for publication and agrees, upon
request, not to submit any such abstract or manuscript for publication until the
other Party is given a reasonable period of time to secure patent protection for
any  material  in  such  publication  which  it  believes to be patentable. Both
Parties  understand  that  a reasonable commercial strategy may require delay of
publication  of information for filing of patent applications. The Parties agree
to  review  and  consider delay of publication and filing of patent applications
under  certain  circumstances.  The  JSC  and  JPC will review such requests and
recommend  subsequent  action.  Neither Party shall have the right to publish or
present  Confidential  Information of the other Party that is subject to Section
11.1.  Nothing  contained  in  this Section 11.5 shall prohibit the inclusion of
information  necessary  for  a  patent  application,  except  for  Confidential
Information  of  the  nonfiling  Party,  provided the nonfiling Party is given a
reasonable  opportunity  to  review  the  information  to  be  included prior to
submission  of  such  patent  application.  Any  disputes  between  the  Parties
regarding  delaying  a  publication  or  presentation  to permit the filing of a
patent application shall be referred to the JSC or, for a Co-Funded Product, the
relevant  JDC.

12.     TERM  AND  TERMINATION

     12.1  TERM. This Agreement shall become effective on the Effective Date and
shall  remain  in  effect  until  the  expiration  of the last royalty or profit
sharing  payment  obligation  with  respect  to any Product, as provided in this
Agreement.

     12.2  TERMINATION  FOR  MATERIAL  BREACH.

          (A) ENTIRE AGREEMENT. If either Party breaches any material agreement,
condition  or  covenant  of  this  Agreement, the Note Purchase Agreement or the
Note,  or makes any materially false report to the other Party, the Party not in
breach  may  terminate  this  Agreement  at  its option on [ * ] written notice,
subject to the remaining provisions of this Section 12.2; provided however, that
any  breach  that  relates  only  to  a  particular  Product(s)  or  only to the
activities  under the Collaboration shall be governed by Section 12.2(b) instead
of  this  Section  12.2(a).

          (B) PARTICULAR PRODUCTS OR COLLABORATION. In the case of a breach that
relates  only  to  a  particular  Product(s) or only to the activities under the
Collaboration,  the  non-breaching  Party, at its option on [ * ] written notice
and subject to the remaining provisions of this Section 12.2, may terminate this
Agreement  as  to  the  particular  Product(s)  to  which  such  breach relates,
(provided,  however, that after such time as the breaching Party has first filed
for  Regulatory Approval of a Product, the non-breaching Party may terminate the
breaching  Party's  rights to such Product only in those countries to which such
breach relates) or in the case of a breach relating only to the activities under
the Collaboration, the non-breaching Party may terminate the Collaboration under
this  Agreement, but this Agreement shall continue in full force and effect with
respect  to  all  Products.  In  the  event of a breach by PDL with respect to a
particular  Co-Funded  Product,  then EXEL, as an alternative to terminating the
Agreement  as to such Product as provided above, may instead, on providing [ * ]
written notice to PDL, elect to terminate PDL's rights to such Co-Funded Product
on  the  same  terms  as  if  PDL  had voluntarily terminated its rights to such
Co-Funded  Product  under  Section  5.9(c).

          (C)  RIGHT  TO  CURE. In any notice of breach under this Section 12.2,
the  non-breaching  Party  shall identify the actions or conduct that such Party
considers  to  be  a  material  breach  and  specify conduct or actions that the
notifying  Party  would  consider  to  be  an acceptable cure of such breach. No
termination  of  this  Agreement or the Collaboration or of rights relating to a
particular  Product  or  country pursuant to Section 12.2(a) or (b) shall become
effective unless such breach shall not have been remedied, or steps initiated to
remedy the same to the non-breaching Party's reasonable satisfaction, within [ *
] after written notice thereof to the breaching Party, or, in case the breach is
a  failure  to  make  any  payment  when  due,  within  [ * ] after such notice.

          (D)  DISPUTES.  If  a  Party  gives  notice  of termination under this
Section  12.2  and the other Party disputes whether such notice was proper, then
the  issue  of  whether  this Agreement has been terminated shall be resolved in
accordance with Section 15.1. If, as a result of such dispute resolution process
it  is  determined  that  the  notice  of  termination  was  proper,  then  such
termination  shall be deemed to have been effective on the effective date of the
notice  of  termination. If as a result of such dispute resolution process it is
determined  that  the  notice  of  termination was improper, then no termination
shall  have  occurred  and  this  Agreement  shall  have  remained  in  effect.

     12.3  TERMINATION  OR EXPIRATION OF RESEARCH FUNDING/COLLABORATION. PDL and
EXEL  shall  have  their  respective  rights  to  terminate  Research Funding as
described  in  Section  9.2,  which  shall  have  the  effect of terminating the
Research  Term.  Upon  such termination or upon expiration of the Research Term,
the Collaboration under this Agreement shall terminate, but all other rights and
obligations  under this Agreement shall continue. If either Party terminates the
Collaboration pursuant to Section 12.2, any Research Funding paid by PDL for any
time  period  beyond the effective date of such termination shall be immediately
refunded  by  EXEL  to  PDL.  The termination or expiration of the Collaboration
shall  not  affect  any  rights  of  PDL  to any Targets, Antibodies or Products
resulting  from  the  Collaboration  prior  to  its  termination  or expiration.

     12.4  EFFECT  OF  TERMINATION  OF  ENTIRE AGREEMENT OR RIGHTS TO PARTICULAR
PRODUCT.  Upon termination of this Agreement in its entirety pursuant to Section
12.2(a),  all licenses granted to the breaching Party under this Agreement shall
terminate  and  the  breaching Party shall return to the non-breaching Party all
materials  and  Information  delivered under this Agreement by the non-breaching
Party  to  the  breaching  Party,  except  as  provided  in  Section  12.5. Upon
termination  of  this  Agreement  pursuant  to Section 12.2(b) with respect to a
particular  Product,  all  licenses  granted  to  the breaching Party under this
Agreement  with  respect to that Product (for the countries in which such rights
are  being  terminated)  shall  terminate  and,  if  such termination is for all
countries,  the  breaching  Party  shall  return  to the non-breaching Party all
materials  and  Information  delivered under this Agreement by the non-breaching
Party  to  the  breaching  Party relating to that Product, except as provided in
Section  12.5.

     12.5  INVENTORY. Upon termination of this Agreement in its entirety or with
respect to a particular Product for which Regulatory Approval has been obtained,
the breaching Party shall have all rights necessary to sell within [ * ] of such
termination  any  such  Product  in  its  or  its  Affiliates'  or sublicensee's
inventory  on  the date of such termination, which have not previously been sold
("Inventory");  provided,  however  that  the  breaching  Party  shall  pay  the
royalties  due  on such Inventory and provide related reports in the amounts and
manner  provided  for  in  Article  9.

     12.6  SURVIVAL.

          (A) In the event of termination of this Agreement for any reason other
than  material  breach  pursuant  to Section 12.2, in addition to those Sections
which  by  their terms survive, the following provisions of this Agreement shall
also survive: Articles 1, 5, 6, 7, 8 10, 11, 12, and 15 and Sections 9.3 - 9.17,
14.1  and  14.2.

          (B)  In the event of termination of this Agreement pursuant to Section
12.2,  the  provisions  of  this  Agreement  referenced in Section 12.6(b) shall
survive,  provided,  however,  that any licenses granted under this Agreement in
favor  of  the  breaching Party shall terminate. In such case, the non-breaching
Party  shall  continue  to  hold  the licenses granted hereunder, subject to the
royalties  set  forth  herein.

          (C)  In any event, termination of this Agreement shall not relieve the
Parties  of  any  liability  or  obligation which accrued hereunder prior to the
effective  date of such termination, nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect to
any  breach  of  this  Agreement,  nor  prejudice either Party's right to obtain
performance  of  any  obligation.

13.     REPRESENTATIONS  AND  COVENANTS

     13.1  MUTUAL  AUTHORITY.  EXEL  and PDL each represents and warrants to the
other  that  (a)  it  has the authority and right to enter into and perform this
Agreement and (b) its execution, delivery and performance of this Agreement will
not  conflict  in  any material fashion with the terms of any other agreement to
which  it  is  or  becomes  a  party  or  by  which  it  is  or  becomes  bound.

     13.2  REPRESENTATIONS  BY  EXEL.

          (A)  EXEL  [  *  ].

          (B)  To  its  knowledge, EXEL, as of the Effective Date, owns or has a
valid  license  to use all technology it anticipates using in the Collaboration.

     13.3  RIGHTS  IN  TECHNOLOGY. During the term of this Agreement, each Party
will  use Diligent Efforts not to diminish the rights under its Patents or Joint
Patents  granted  to  each  other  herein,  including  without limitation by not
committing  or  permitting any acts or omissions which would cause the breach of
any  agreements  between itself and Third Parties which provide for intellectual
property  rights  applicable  to  the  development,  manufacture, use or sale of
Products.  Each  Party agrees to provide promptly the other Party with notice of
any  such  alleged breach. As of the Effective Date, each Party is in compliance
in  all material respects with any aforementioned agreements with Third Parties.

     13.4  PERFORMANCE BY AFFILIATES. The Parties recognize that each may
perform  some or all of its obligations under this Agreement through Affiliates,
provided,  however, that each Party shall remain responsible and be guarantor of
the  performance by its Affiliates and shall cause its Affiliates to comply with
the  provisions  of  this  Agreement  in  connection  with  such  performance.

14.     INDEMNIFICATION  AND  LIMITATION  OF  LIABILITY

     14.1  INDEMNIFICATION.

          (A)  PDL  PRODUCTS. PDL hereby agrees to defend and hold harmless EXEL
and  its  agents  and  employees  from  and  against  any and all suits, claims,
actions,  demands, liabilities, expenses and/or loss, including reasonable legal
expenses  and  reasonable  attorneys'  fees  ("Losses")  resulting  directly  or
indirectly  from the manufacture, use, testing, handling, storage, sale or other
disposition  of  PDL  Products  by PDL or its Affiliates, agents or sublicensees
except  to  the  extent  such Losses result from the negligence or wrongdoing of
EXEL.

          (B)  EXEL PRODUCTS. EXEL hereby agrees to defend and hold harmless PDL
and  its  agents  and  employees  from  and against any and all Losses resulting
directly  or  indirectly  from the manufacture, use, testing, handling, storage,
sale  or other disposition of EXEL Products by EXEL or its Affiliates, agents or
sublicensees  except  to  the  extent  such Losses result from the negligence or
wrongdoing  of  PDL.

          (C)  GENERAL  INDEMNIFICATION PROVISIONS. In the event that a Party is
seeking indemnification under this Section 14.1, it shall inform the other Party
of  a  claim  as  soon as reasonably practicable after it receives notice of the
claim,  shall  permit  the  other  Party  to assume direction and control of the
defense  of  the  claim  (including  the  right  to  settle the claim solely for
monetary consideration), and shall cooperate as requested by the other Party (at
the  expense  of  the  other  Party)  in the defense of the claim.

          (D)  CO-FUNDED  PRODUCTS.  In  the event of any Losses to either Party
resulting  directly  or indirectly from the manufacture, use, testing, handling,
storage,  sale  or  other  disposition  of Co-Funded Products by either Party or
their  Affiliates,  agents  or  sublicensees,  such  [  *  ] or if no Regulatory
Approval  has  occurred  for  the  Co-Funded  Product,  then such [ * ] for that
Co-Funded  Product.

     14.2  LIMITATION  OF  LIABILITY. EXCEPT AS SPECIFICALLY PROVIDED IN SECTION
14.1, IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR  AFFILIATES  BE  LIABLE  TO  THE  OTHER  PARTY  FOR ANY INDIRECT, INCIDENTAL,
SPECIAL,  EXEMPLARY  OR  CONSEQUENTIAL  DAMAGES,  WHETHER  BASED UPON A CLAIM OR
ACTION  OF  CONTRACT,  WARRANTY,  NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR
OTHERWISE,  ARISING  OUT  OF  THIS  AGREEMENT.  For clarification, the foregoing
sentence  shall  not  be  interpreted  to  limit or to expand the express rights
specifically  granted  in the sections of this Agreement.

     14.3  PRODUCT  LIABILITY  INSURANCE.  Any  Party developing a Product shall
carry product liability insurance of not less than [ * ]. Such product liability
insurance  shall  be  in  effect  not  later  than the first administration of a
Product  in  humans.  Notwithstanding the foregoing, a Party may self-insure for
product liability claims if the Party then has current assets of at least [ * ].

15.     MISCELLANEOUS

     15.1  DISPUTE  RESOLUTION. In the event of any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement, other
than  a  dispute  addressed  in  Sections  3.7 or 15.3, the Parties shall try to
settle  their  differences  amicably  between themselves first, by referring the
disputed  matter  to  an appropriate Vice President (or higher level officer) of
each  Party  and,  if  not  resolved by such officers, by referring the disputed
matter  to  the  respective Chief Executive Officers of each Party. Either Party
may  initiate  such informal dispute resolution by sending written notice of the
dispute to the other Party, and, within twenty (20) days after such notice, such
representatives of the Parties shall meet for attempted resolution by good faith
negotiations. If such personnel are unable to resolve such dispute within thirty
(30)  days of their first meeting of such negotiations, either Party may seek to
have  such  dispute  resolved  in  any  United States federal court of competent
jurisdiction  and  appropriate venue. The Parties hereby consent to jurisdiction
in  the  United  States federal courts. If, notwithstanding such consent, United
States  federal  courts  would not have proper jurisdiction over a dispute, then
such  dispute  may  be  submitted  to  any state court in the United States with
proper  jurisdiction  and  venue.  The Parties agree that, except as provided in
Section 15.3, any dispute under this Agreement shall be submitted exclusively to
a  state  or  federal  court  in  the  United  States.

     15.2 GOVERNING LAW. Resolution of all disputes arising out of or related to
this  Agreement  or  the performance, enforcement, breach or termination of this
Agreement  and any remedies relating thereto, shall be governed by and construed
under  the substantive laws of the State of California, as applied to agreements
executed  and  performed entirely in the State of California by residents of the
State  of  California,  without  regard  to  conflicts  of  law  rules.

     15.3  PATENTS AND TRADEMARKS. Any dispute, controversy or claim relating to
the  scope,  validity,  enforceability  or  infringement  of  any  Patent rights
covering  the manufacture, use or sale of any Product or of any trademark rights
related  to  any Product shall be submitted to a court of competent jurisdiction
in the territory in which such Patent or trademark rights were granted or arose.

     15.4  ENTIRE  AGREEMENT; AMENDMENT. This Agreement sets forth the complete,
final  and  exclusive  agreement  and  all  the covenants, promises, agreements,
warranties,  representations,  conditions and understandings between the Parties
hereto  and  supersedes  and  terminates all prior agreements and understandings
between  the  Parties. There are no covenants, promises, agreements, warranties,
representations,  conditions  or understandings, either oral or written, between
the  Parties  other  than  as  are  set  forth herein and therein. No subsequent
alteration,  amendment,  change  or  addition to this Agreement shall be binding
upon  the  Parties unless reduced to writing and signed by an authorized officer
of  each  Party.

     15.5  EXPORT  CONTROL.  This  Agreement is made subject to any restrictions
concerning  the  export  of  products  or  technical information from the United
States  or  other  countries which may be imposed upon or related to EXEL or PDL
from  time  to  time.  Each  Party  agrees  that it will not export, directly or
indirectly,  any  technical information acquired from the other Party under this
Agreement or any products using such technical information to a location or in a
manner  that  at  the  time  of  export  requires  an  export  license  or other
governmental approval, without first obtaining the written consent to do so from
the  appropriate  agency  or  other  governmental  entity.

     15.6  BANKRUPTCY.

          (A)  All  rights  and  licenses  granted  under  or  pursuant  to this
Agreement,  including  amendments  hereto, by each Party to the other Party are,
for all purposes of Section 365(n) of Title 11 of the United States Code ("Title
11"),  licenses  of rights to intellectual property as defined in Title 11. Each
Party  agrees  during  the term of this Agreement to create and maintain current
copies  or,  if  not  amenable  to  copying,  detailed  descriptions  or  other
appropriate  embodiments,  to  the  extent  feasible,  of  all such intellectual
property.  If  a  case  is  commenced  by or against either Party (the "Bankrupt
Party")  under  Title  11,  then, unless and until this Agreement is rejected as
provided  in  Title  11,  the  Bankrupt  Party  (in  any  capacity,  including
debtor-in-possession)  and  its  successors  and  assigns  (including,  without
limitation,  a  Title  11  Trustee) shall, at the election of the Bankrupt Party
made  within  sixty (60) days after the commencement of the case (or, if no such
election is made, immediately upon the request of the non-Bankrupt Party) either
(i) perform all of the obligations provided in this Agreement to be performed by
the Bankrupt Party including, where applicable and without limitation, providing
to  the  non-Bankrupt  Party  portions  of such intellectual property (including
embodiments  thereof) held by the Bankrupt Party and such successors and assigns
or  otherwise  available  to  them or (ii) provide to the non-Bankrupt Party all
such  intellectual  property  (including  all  embodiments  thereof) held by the
Bankrupt  Party  and such successors and assigns or otherwise available to them.

          (B)  If  a Title 11 case is commenced by or against the Bankrupt Party
and  this  Agreement  is  rejected  as provided in Title 11 and the non-Bankrupt
Party  elects  to  retain its rights hereunder as provided in Title 11, then the
Bankrupt  Party  (in  any  capacity,  including  debtor-in-possession)  and  its
successors  and  assigns  (including,  without  limitations, a Title 11 Trustee)
shall  provide  to  the  non-Bankrupt  Party  all  such  intellectual  property
(including  all  embodiments  thereof)  held  by  the  Bankrupt  Party  and such
successors  and  assigns  or  otherwise  available  to them immediately upon the
non-Bankrupt  Party's  written  request therefor. Whenever the Bankrupt Party or
any  of  its successors or assigns provides to the non-Bankrupt Party any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this  Section  15.6,  the non-Bankrupt Party shall have the right to perform the
obligations  of  the  Bankrupt Party hereunder with respect to such intellectual
property,  but  neither  such provision nor such performance by the non-Bankrupt
Party shall release the Bankrupt Party from any such obligation or liability for
failing  to  perform  it.

          (C) All rights, powers and remedies of the non-Bankrupt Party provided
herein  are in addition to and not in substitution for any and all other rights,
powers  and  remedies  now or hereafter existing at law or in equity (including,
without  limitation,  Title  11)  in the event of the commencement of a Title 11
case  by  or  against the Bankrupt Party. The non-Bankrupt Party, in addition to
the  rights,  power and remedies expressly provided herein, shall be entitled to
exercise  all other such rights and powers and resort to all other such remedies
as  may  now  or  hereafter  exist  at  law  or  in  equity  (including, without
limitation,  under  Title  11) in such event. The Parties agree that they intend
the  foregoing  non-Bankrupt  Party  rights  to  extend  to  the  maximum extent
permitted  by law and any provisions of applicable contracts with Third Parties,
including  without  limitation for purposes of Title 11, (i) the right of access
to any intellectual property (including all embodiments thereof) of the Bankrupt
Party  or  any  Third Party with whom the Bankrupt Party contracts to perform an
obligation  of  the Bankrupt Party under this Agreement, and, in the case of the
Third  Party,  which  is  necessary  for  the  development,  registration  and
manufacture  of Products, and (ii) the right to contract directly with any Third
Party  described  in  Section  15.6(c)(i)  to  complete the contracted work. Any
intellectual  property  provided pursuant to the provisions of this Section 15.6
shall  be  subject  to  the licenses set forth in this Agreement and the payment
obligations  of  this  Agreement,  which  shall  be  deemed  to be royalties for
purposes  of  Title  11.

     15.7  FORCE  MAJEURE. Both Parties shall be excused from the performance of
their  obligations  under  this Agreement to the extent that such performance is
prevented  by force majeure and the nonperforming Party promptly provides notice
of  the prevention to the other Party. Such excuse shall be continued so long as
the  condition  constituting force majeure continues and the nonperforming Party
takes  reasonable  efforts  to  remove  the  condition.  For  purposes  of  this
Agreement,  force  majeure  shall  include  conditions beyond the control of the
Parties,  including  without limitation, an act of God, voluntary or involuntary
compliance  with  any  regulation,  law  or  order of any government, war, civil
commotion,  labor  strike  or  lock-out,  epidemic, failure or default of public
utilities  or common carriers, destruction of production facilities or materials
by  fire,  earthquake, storm or like catastrophe; provided, however, the payment
of invoices due and owing hereunder shall not be delayed by the payer because of
a  force  majeure  affecting  the  payer.

     15.8  NOTICES.  Any  notice  required  or  permitted to be given under this
Agreement  shall  be  in writing, shall specifically refer to this Agreement and
shall  be  deemed  to  have  been sufficiently given for all purposes if sent by
express  delivery service or personally delivered, or by facsimile or electronic
mail  and  confirmed by first class mail. Unless otherwise specified in writing,
the  mailing  addresses  of  the  Parties  shall  be  as  described  below.

     For  EXEL:                   Exelixis, Inc.
                                  170 Harbor Way
                                  P.O. Box 511
                                  South San Francisco, CA  94083-0511
                                  Attention:  Chief  Executive  Officer

     With  a  copy  to:           Cooley  Godward  LLP
                                  Five  Palo  Alto  Square
                                  3000  El  Camino  Real
                                  Palo  Alto,  CA  94306-2155
                                  Attention:  Robert  L.  Jones,  Esq.

     For  PDL:                    Protein  Design  Labs,  Inc.
                                  34801  Campus  Drive
                                  Fremont,  CA  94555-3606
                                  Attention:  Chief  Executive  Officer

     With  a  copy  to:           Protein  Design  Labs,  Inc.
                                  34801  Campus  Drive
                                  Fremont,  CA  94555-3606
                                  Attention:  General  Counsel

     15.9  CONSENTS  NOT UNREASONABLY WITHHELD OR DELAYED. Whenever provision is
made in this Agreement for either Party to secure the consent or approval of the
other,  that  consent or approval shall not unreasonably be withheld or delayed,
and whenever in this Agreement provisions are made for one Party to object to or
disapprove  a  matter,  such  objection or disapproval shall not unreasonably be
exercised.

     15.10  UNITED  STATES DOLLARS. References in this Agreement to "Dollars" or
"$"  shall  mean  the  legal  tender  of  the  United  States.

     15.11  NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall  not  be  strictly  construed  against  either  Party.

     15.12  ASSIGNMENT.  Neither  Party may assign or transfer this Agreement or
any  rights  or  obligations  hereunder without the prior written consent of the
other,  except  a  Party  may  make such an assignment without the other Party's
consent  to  an Affiliate or to a successor to substantially all of the business
of  such  Party,  whether  in  a  merger, sale of stock, sale of assets or other
transaction.  Any  permitted  successor or assignee of rights and/or obligations
hereunder  shall, in writing to the other Party, expressly assume performance of
such rights and/or obligations. Any permitted assignment shall be binding on the
successors  of  the  assigning  Party. Any assignment or attempted assignment by
either  Party  in violation of the terms of this Section 15.12 shall be null and
void  and  of  no  legal  effect.

     15.13  ELECTRONIC  DATA  INTERCHANGE.  If  both Parties elect to facilitate
business  activities  hereunder  by electronically sending and receiving data in
agreed  formats  (also  referred  to as Electronic Data Interchange or "EDI") in
substitution for conventional paper-based documents, the terms and conditions of
this  Agreement  shall  apply  to  such  EDI  activities.

     15.14  COUNTERPARTS.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  each  of  which  shall  be  deemed  an original, but all of which
together  shall  constitute  one  and  the  same  instrument.

     15.15  FURTHER  ACTIONS.  Each  Party  agrees  to  execute, acknowledge and
deliver  such  further  instruments,  and  to  do all such other acts, as may be
necessary  or  appropriate in order to carry out the purposes and intent of this
Agreement.

     15.16  SEVERABILITY. If any one or more of the provisions of this Agreement
is  held  to  be invalid or unenforceable by any court of competent jurisdiction
from  which  no  appeal  can  be  or is taken, the provision shall be considered
severed  from  this  Agreement  and  shall not serve to invalidate any remaining
provisions  hereof.  The  Parties  shall make a good faith effort to replace any
invalid  or  unenforceable  provision with a valid and enforceable one such that
the  objectives  contemplated by the Parties when entering this Agreement may be
realized.

     15.17  AMBIGUITIES.  Ambiguities,  if  any,  in this Agreement shall not be
construed  against  any Party, irrespective of which Party may be deemed to have
authored  the  ambiguous  provision.

     15.18 HEADINGS. The headings for each article and section in this Agreement
have  been  inserted  for  convenience of reference only and are not intended to
limit  or  expand  on  the  meaning  of the language contained in the particular
article  or  section.

     15.19  NO  WAIVER.  Any  delay  in  enforcing  a  Party's rights under this
Agreement  or  any  waiver  as to a particular default or other matter shall not
constitute  a  waiver  of  such  Party's rights to the future enforcement of its
rights  under this Agreement, excepting only as to an express written and signed
waiver  as  to  a  particular  matter  for  a  particular  period  of  time.

     IN  WITNESS  WHEREOF, the Parties have executed this Agreement in duplicate
originals  by their proper officers as of the date and year first above written.

PROTEIN  DESIGN  LABS,  INC.          EXELIXIS,  INC.
By:  /s/  Laurence  Jay  Korn          By:  /s/  George  Scangos
     ------------------------               --------------------
     Laurence  Jay  Korn                    George  A.  Scangos
Chairperson  and  Chief                     Chief  Executive  Officer
Executive  Officer


[  *  ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT  TO  RULE  24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.


<PAGE>
                                LIST OF EXHIBITS
Exhibit  A       -  Research  Plan
Exhibit  B       -  Product  Profit  Calculation
Exhibit  C       -  Form  of  Press  Release
Exhibit  D-1     -  EXEL  Background  Patents
Exhibit  D-2     -  PDL  Background  Patents


<PAGE>

     D-2.

     A-1.
                                    EXHIBIT A
                                  RESEARCH PLAN
                                      [ * ]
<PAGE>

     A1
                                   EXHIBIT A1
Entrypoints  for  Genetic  Screens  -
Proposed  or  Initiated  in  Oncology  Program
                                      [ * ]



<PAGE>
                                    EXHIBIT B
                           PRODUCT PROFIT CALCULATION
                                      [ * ]


<PAGE>
                                    EXHIBIT C
     For  Immediate  Release
     -----------------------

Contacts:  Robert  L.  Kirkman,  M.D.                 Glen  Y.  Sato
           Vice  President,  Business  Development    Chief  Financial  Officer
           and  Corporate  Communications             Exelixis,  Inc.
           Protein  Design  Labs,  Inc.               (650)  837-7565
           (510)  574-1419,  rkirkman@pdl.com         gsato@exelixis.com

                    PROTEIN DESIGN LABS AND EXELIXIS ANNOUNCE
                 ONCOLOGY ANTIBODY DRUG DISCOVERY COLLABORATION

     FREMONT  and  SOUTH SAN FRANCISCO, CA - May 22, 2001 - Protein Design Labs,
Inc. (Nasdaq: PDLI) (PDL) and Exelixis, Inc. (Nasdaq: EXEL) (Exelixis) announced
today  a  collaboration  to  discover  and  develop humanized antibodies for the
diagnosis,  prevention  and treatment of cancer.  The collaboration will utilize
Exelixis'  model  organism  genetics  technology  for  the identification of new
cancer  drug  targets,  and PDL's antibody and clinical development expertise to
create and develop new antibody drug candidates.  PDL will provide Exelixis with
$4.0 million in annual research funding for two or more years, and has purchased
a  $30.0 million note convertible after the first year of the collaboration into
shares  of  Exelixis  common  stock.

     George  A.  Scangos,  Ph.D.,  President  and  Chief  Executive  Officer  of
Exelixis,  said,  "We're  pleased  to  be  working  with  PDL,  a  leader in the
development  of  humanized  antibodies, and are already in a position to deliver
our  first  targets under this collaboration. PDL is committed to a high-quality
pipeline  of  anti-cancer  antibody  products,  and  I  am  pleased that PDL has
recognized  the value in our oncology target portfolio. The direct cash value to
Exelixis  is  substantial,  and  there  is  considerably  more  value  in  the
co-development  rights  that  Exelixis has in this program, and in the resources
that  PDL  will bring to the collaboration. This relationship is consistent with
Exelixis'  strategy  of moving towards the market and capturing increasing value
from  the  results  of  our research, and is a strong complement to our internal
efforts  directed  towards  finding  small  molecule  therapeutics  for cancer."

     Laurence  Jay  Korn,  Ph.D.,  Chief  Executive  Officer  and Chairperson of
Protein  Design  Labs,  said, "PDL has seven antibodies in clinical development,
including  Zamyl  (anti-CD33)  and  Remitogen (anti-HLA-DR) for potential cancer
indications,  and  Nuvion  (anti-CD3)  for  the  treatment  of graft versus host
disease.  This  collaboration  provides  PDL  with  an opportunity to expand our
pipeline  of  oncology  drugs  with  new  antibodies that specifically block the
initiation  or  progression of cancer, using the model organism genetic approach
of  Exelixis  to  identify novel targets. The Exelixis technology is designed to
provide  information about the function of a target at an early stage, which mav
be  quite  valuable, as we believe antibodies for cancer are likely to work best
when  they interfere with a function necessary for cell growth or proliferation,
or  when  they  induce  apoptosis."

     Under  the  terms  of  the  collaborative  agreement,  PDL  will receive an
exclusive,  worldwide  license  to  develop  antibodies  against certain targets
identified  by Exelixis that are involved in cell growth, apoptosis (cell death)
and  proliferation.  This  approach may provide potential targets for developing
novel  humanized  antibodies for the treatment of cancer using PDL's proprietary
SMART  antibody  technology.  Exelixis  will  have  the  right  to  co-fund  and
co-develop  antibodies  resulting  from the collaboration. For antibody products
developed  by  PDL  that  Exelixis  elects  not  to co-develop, Exelixis will be
entitled  to  specified  milestone  payments and royalty payments on any product
sales.

     Protein  Design  Labs,  Inc.  is  a  leader in the development of humanized
antibodies  to  prevent  or  treat various disease conditions. PDL currently has
antibodies  under development for autoimmune and inflammatory conditions, asthma
and  cancer. PDL holds fundamental patents in the U.S., Europe and Japan for its
antibody  humanization  technology.  Further  information  is  available  at
www.pdl.com.

     Exelixis,  Inc. is a leading life sciences biotechnology company focused on
product  development  through  its  expertise  in comparative genomics and model
system  genetics.  These  technologies  provide  a  rapid,  efficient  and
cost-effective  way  to  move  from  DNA  sequence  data  to knowledge about the
function  of  genes  and  the proteins that they encode. Exelixis' technology is
broadly  applicable  to  all  life  science industries including pharmaceutical,
diagnostic,  agricultural  biotechnology  and  animal  health.  Exelixis  has
partnerships  with  Aventis,  Bayer,  Pharmacia,  Bristol-Myers  Squibb  and Dow
AgroSciences  and  is  building  its internal development program in the area of
oncology.  For  more  information,  please  visit  Exelixis'  web  site  at
www.exelixis.com.

     This press release contains certain forward-looking statements that involve
risks and uncertainties that may affect our business, as more fully discussed in
the  "Risk Factors" section of our filings with the U.S. Securities and Exchange
Commission.  These  risks and uncertainties include, but are not limited to, our
ability  successfully  to  collaborate  and  identify  novel targets and develop
potential products from the collaboration. Exelixis and PDL direct the reader to
our respective SEC filings, including our respective Annual Reports on Form 10-K
for  the  year ended December 31, 2000. The information in this press release is
current  as  of its release date. Neither party assumes responsibility to update
the  information.


Exelixis  and the Exelixis logo are registered U.S. trademarks of Exelixis, Inc.
Protein  Design  Labs, the PDL logo and SMART are registered U.S. trademarks and
Zamyl,  Remitogen  and  Nuvion  are U.S. trademarks of Protein Design Labs, Inc.



<PAGE>
                                   EXHIBIT D-1
                             THIRD PARTY TECHNOLOGY
                                      [ * ]



<PAGE>
                                   EXHIBIT D-2
                              PDL EXCLUDED PATENTS


                                      [ * ]








[  *  ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT  TO  RULE  24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.