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After seeing the PDL BioPharma (NASDAQ:PDLI) earnings release (see conference call transcript), and noticing the dramatic decline in the stock price -- around 20% -- I couldn't resist adding on to my position.

I first bought PDLI about a year ago after noticing them named as back-end participants in what I thought would be a boom market for Genentech's (DNA) Avastin and reading up on several good Motley Fool articles on the company. I wrote about my earlier purchases here and my feelings about the company remain the same.

Their earnings weren't as strong as I or the market might have liked, and their increased R&D costs going forward (and the resultant short-term hit to earnings) are clearly what moved the stock down ... but their lead drug candidates are still doing well and they still have royalty claims on a host of exciting drugs including Avastin, Tysabri, and many more. The last big dip I caught was when the Tysabri problems hit, and that was clearly an overreaction since Tysabri will never be a huge part of PDLI's business. I'm hoping that this large dip is going to turn out to have been an overreaction as well.

In the long term, PDLI has a varied pipeline, a lot of royalties coming in, and, at least for now, a reduction in partnership research money that has the market concerned. Since that doesn't impact their sales of their current drugs, or the potential of their pipeline, I'm not all that concerned this year about whether PDLI is making a few cents a share or losing a bit ... it was nice that they broke even on a non-GAAP basis, but this is still an early stage biotech story that I plan to follow for a long time.

Yesterday's purchase at $21 even moves my cost basis up a hair to $19.17 ... I wouldn't be surprised to see it dip further to the high teens, but I like this price.

PDLI 1-yr Chart

Source: Buying PDL BioPharma On The Dip (PDLI)