Protein Design Labs and Morphotek Announce Broad, Multi-year Research Cross-license and Commercialization Agreement

Morphotek, Inc.

Protein Design Labs and Morphotek Announce Broad, Multi-year Research Cross-license and Commercialization Agreement

July 19, 2004

Fremont, Calif., and Exton, PA, July 19, 2004 - Protein Design Labs, Inc. (PDL) (Nasdaq: PDLI) and Morphotek, Inc. today announced a broad, multi-year research and commercialization agreement, providing PDL access to Morphotek's MORPHODOMA® and Suppressor of Immunoglobulin Production (SIP) technology, and Morphotek access to PDL's technology for antibody humanization.

Under terms of the worldwide, nonexclusive agreement, PDL will receive a research license to Morphotek's technologies, and a predetermined number of options to exercise commercial licenses for therapeutic antibodies in all therapeutic areas. Likewise, Morphotek will receive a research license to PDL's technology for antibody humanization, and options to exercise commercial licenses for humanized therapeutic antibodies. Additional financial details were not disclosed.

Dr. Mark P. Backer, Vice President, Technical Development, PDL, said, "We are pleased to establish this relationship with Morphotek. PDL intends to use these cutting edge technologies for antibody optimization and higher manufacturing yields for our promising portfolio of therapeutic antibody product candidates."

"PDL's humanization technology complements our MORPHODOMA® platform process for generating high-affinity humanized antibodies and high-titer manufacturing cell lines for scaleable manufacturing," said Dr. Nicholas C. Nicolaides, President and Chief Executive Officer of Morphotek. "This broad access to humanization technology will allow Morphotek to further expand its product portfolio to include humanized therapeutic antibodies to disease-associated antigens identified by our collaborative research network."

About Protein Design Labs

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. Further information on PDL is available at www.pdl.com.

About Morphotek

Morphotek is a biotechnology company specializing in the development of protein and antibody products through the use of a novel and proprietary gene evolution technology. The technology has been successfully applied to a broad variety of cell lines and organisms to yield genetically diverse offspring that are suitable for pharmaceutical product development in the areas of antibody therapeutics, protein therapeutics, product manufacturing, drug target discovery, and improved output traits for commercial applications. The company is currently focusing its platform on the treatment of cancer, inflammation and infectious disease. For further company information visit www.morphotek.com.

The foregoing contains forward-looking statements involving risks and uncertainties and PDL's actual results may differ materially from those in the forward-looking statements. Factors that may cause such differences are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, in its Quarterly Report on Form 10-Q for the three months ended March 31, 2004, and in other filings made with the Securities and Exchange Commission. In particular, there can be no assurance that PDL will be successful in utilizing Morphotek technology to achieve higher manufacturing yields or antibody optimization, or that Morphotek or PDL will exercise commercial licenses for therapeutic antibodies under the agreement.