- 1 -

Exhibit 10.3

July 27, 2009

PDL BioPharma, Inc.

932 Southwood Blvd.

Incline Village, NV 89451

Attention: Mr. Chris Stone, General Counsel

Re: Amendments to Product Licenses and Settlement Agreement.

Dear Mr. Stone:

The following three paragraphs provide background information for this letter agreement (this “Letter Agreement”) between Genentech, Inc. (“Genentech”) and PDL BioPharma, Inc. (“PDL”):

- 1 -

NOW THEREFORE, Genentech and PDL agree, effective as of June 29, 2009 (the “Effective Date”), as follows:

- 2 -

WHEREAS PDL and Genentech are parties to that certain Patent Licensing Master Agreement dated September 25, 1998, as amended by Amendment No. 1 To The Patent Licensing Master Agreement dated September 18, 2003 and Amendment No. 2 To The Patent Licensing Master Agreement dated December 18, 2003 and as amended and restated by the Amended and Restated Patent Licensing Master Agreement (Queen Patents) effective July 27, 2009 (such amended and restated agreement, the “PLMA”), and are parties to that certain PDL License Agreement dated November 3, 1998, as amended by Amendment No. 1 To The Herceptin License Agreement dated December 18, 2003 and the Letter Agreement between Genentech and PDL dated July 29, 2009 (collectively, the “Herceptin License Agreement”) under which PDL licensed the PDL Patents to Genentech for the Herceptin antibody product;

“Third Party” means a person or entity that is not Genentech or a Genentech Affiliate. For purposes of this Settlement Agreement, “Affiliate” means any corporation or other business entity controlled by, controlling, or under common control with another entity, with “control” meaning direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of such corporation, or more than a fifty percent (50%) interest in the decision-making authority of such other unincorporated business entity; and a corporation in which the maximum amount of stock permitted by law to be held by another entity is beneficially owned by such other entity. Notwithstanding the foregoing, for purposes of this Settlement Agreement, Roche Holdings, Inc. and its affiliates (other than GNE and its subsidiaries) shall not be deemed Affiliates of GNE unless and until GNE opts to include Roche Holdings, Inc. or such an affiliate as an Affiliate of GNE by giving written notice to PDL.

As of the Effective Date, each reference in a Product License, or the Settlement Agreement to “this Agreement,” “this Settlement Agreement,” “hereunder,” “hereof” or words of like import referring to such Product License or the Settlement Agreement shall mean and be a reference to such Product License or the Settlement Agreement, as applicable, as amended by this Letter Agreement. Each Product License and the Settlement Agreement, as amended by this Letter Agreement, is and shall continue to be in full force and effect.

- 3 -

If PDL is in agreement with the terms and conditions of this Letter Agreement, please have an authorized representative sign the originals in the space provided below, and return one signed original to the attention of Mr. Nicholas Galli, M/S 49, Genentech, Inc., 1 DNA Way, South San Francisco, CA 94080.

[SIGNATURE PAGE FOLLOWS]

- 4 -

- 5 -