On Friday, biopharmaceutical royalty company PDL BioPharma Inc. (NASDAQ:$PDLI) saw its shares soar. It all started after the Nevada-based company reported positive second-quarter earnings. A quarterly net profit that was 827% higher than PDL BioPharma recorded during the first three months of 2017 prompted the market to boost the stock 15.7% higher as of 12:38 p.m. EDT.

What Does This Mean?

When looking at a longer timeline, one can say the Q2 results weren’t fantastic. However, they were much better than the disappointing figures PDL BioPharma recently produced. In regards to the 12-month period that ended in March, PDL BioPharma posted a measly $15 million in net income.

Taking those numbers into consideration, it’s no wonder investors are applauding the $60.4 million in net income reported August 3. However, if you glance below the headline figures, you will see that PDL BioPharma isn’t set to return to its glory days.

What Does the Future Hold?

Throughout the first quarter, the company revalued previously acquired royalty rights. For instance, PDL BioPharma holds the rights to royalties on sales of Glumetza brand extended release metformin tablets. They are also entitled to royalties on sales of combination diabetes treatments that contain slow-release metformin sold by numerous pharmaceutical behemoths.

The success that the biotech outfit has endured in 2017 is almost entirely due to the management team changing its estimated value of Glumetza and other royalty streams $96.9 million higher in the first half of the year. If you take away estimated changes in fair value of royalty assets – PDL BioPharma reports this as revenue – you will see the company’s top line has dropped from $152.1 million during the first half of last year, to $92.4 million during the first half of this year.

Overall, until PDL BioPharma is able to show signs that it can return to growth, this is a drug stock investors should avoid.

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