Protein Design to acquire ESP Pharma.

Protein Design Labs, Inc. (Fremont, CA) , a leading developer of humanized monoclonal antibodies, and ESP Pharma, Inc. (Edison, NJ), a leading privately held, hospital-focused pharmaceutical company, have entered into a definitive agreement under which PDL will acquire ESP Pharma for $300 million in cash and approximately $175 million in PDL common stock, or an aggregate value of approximately $475 million, plus the assumption of net debt of approximately $14 million. ESP Pharma was founded in April 2002 around the acquisition of several therapeutics from Wyeth, including ESP Pharma's leading product, Cardene IV. ESP Pharma generated total net product sales in excess of $90 million in 2004, a significant increase over 2003.

Mark McDade, Chief Executive Officer, PDL, said, "With this transaction, we have filled the void in the one major functional expertise PDL lacked, namely commercialization capabilities. Upon closing, we will have created an exciting new, fully integrated, hospital-focused biopharma company with best-in-class marketed products, a growing and diverse revenue base, and a broad, wholly-owned proprietary pipeline. In addition to significant commercial expertise, ESP Pharma will contribute several additional clinical-stage compounds. This combination will also dramatically accelerate our path to operational profitability, as we expect to become cash flow positive in 2006 with the completion of the transaction.

"Significant to our commercialization strategy," Mr. McDade said, "we add ESP Pharma's 75-person, experienced hospital-focused sales and sales management team and New Jersey-based marketing, medical affairs, sales operations and supply chain infrastructure for the United States market and Canada. We believe this strategic move will permit us to maximize the potential value of Zenapax and Nuvion, as we are building significant competence ahead of our hoped for product introductions in 2007 and beyond. Importantly, the transaction expands our therapeutic focus into the cardiovascular arena, with Cardene IV, an intravenous anti-hypertensive used extensively in cardiac- and neuro-surgery. In the hospital setting, ESP's IV Busulfex is marketed as a preconditioning chemotherapeutic agent in bone-marrow transplant, and is a natural fit in view of our right to potentially reacquire the rights to Zenapax in the transplant indication by 2007."

John T. Spitznagel, Chairman and Chief Executive Officer, ESP Pharma, said, "ESP Pharma has established a record of success in identifying, acquiring, marketing and developing innovative therapeutics. Our flagship product, Cardene IV, is indicated for the short-term treatment of hypertension when oral therapy is not feasible or desirable. IV Busulfex is used in combination with cyclophosphamide as a conditioning regimen prior to allogeneic hematopoietic progenitor cell transplantation for chronic myelogenous leukemia. We believe this strategic combination with PDL will enable us to successfully market PDL's proprietary product candidates, and acquire or in-license additional products or product candidates."

PDL expects to provide additional information regarding the financial effect of the transaction as part of its news release and conference call to discuss full-year 2004 results and forward-looking guidance for 2005. This conference call is not yet scheduled, but is expected to occur not later than March 15, 2005. PDL does not require financing to complete the transaction, but may consider additional financing transactions now or in the future.

The Boards of Directors of PDL and ESP Pharma, and the shareholders of ESP Pharma have approved the acquisition. The closing of the transaction is subject to various conditions, including the receipt of antitrust and other regulatory approvals. The initial number of PDL shares to be issued is approximately 8,870,000 and the actual number of PDL shares to be issued in the transaction is subject to upward adjustment of up to approximately 985,000 shares and to downward adjustment of up to approximately 806,000 shares based on the price of PDL stock in the period prior to the closing of the transaction. ESP Pharma and PDL have also reached an agreement as to a United States-marketed product acquisition under negotiation between ESP Pharma and a third party. That transaction has not been finalized and the potential financial and other terms remain confidential.

ESP Pharma was founded in April 2002 and began operations in May 2002 with the acquisition of four in-market therapeutics from Wyeth, including the flagship product, Cardene IV. ESP Pharma's "Buy and Build, Search and Develop" business plan for creating asset value focuses on selectively acquiring approved and late-stage development products addressing the needs of the acute-care hospital market. ESP Pharma has concentrated its acquisition programs on products and compounds representing strong returns on investment, driven by high growth potential.

In support of its business plan to revitalize the promotion of acquired products and to fuel near- and intermediate-term growth, ESP Pharma established its own hospital sales force of experienced pharmaceutical representatives in September 2002. Through the efforts of its sales team, ESP Pharma has planned to drive revenue growth while adding to its revenue base and realizing synergistic benefits from additional acquisitions of acute-care specialty products. ESP Pharma's key marketed products are:

-- Cardene IV (nicardipine hydrochloride injection). Indicated for the short-term treatment of hypertension when oral therapy is not feasible or desirable. Cardene is a patent -protected intravenous preparation of nicardipine, a dihydropyridine calcium channel blocker.

-- IV Busulfex (busulfan) Injection. Indicated for use in combination with cyclophosphamide as a conditioning regimen prior to allogeneic hematopoietic progenitor cell transplantation for chronic myelogenous leukemia. A patent -protected, potent cytotoxic drug and intraveneous formulation of the alkylating agent busulfan.

In addition to ESP Pharma's key marketed products, ESP Pharma has several products in clinical development targeted to the acute-care hospital market.

Protein Design Labs 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 for its antibody humanization technology.

Protein Design Labs

[phone]

www.pdl.com