On March 1, 2017 PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) reported financial results for the fourth quarter and year ended December 31, 2016 including(Press release, PDL BioPharma, MAR 1, 2017, View Source [SID1234517953]) .

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Total revenues of $66.5 million and $244.3 million for the three and twelve months ended December 31, 2016, respectively.

GAAP diluted EPS of ($0.06) and $0.39 for the three and twelve months ended December 31, 2016, respectively.
GAAP net loss attributable to PDL’s shareholders of $10.3 million and net income of $63.6 million for the three and twelve months ended December 31, 2016, respectively.

Non-GAAP net loss attributable to PDL’s shareholders of $8.6 million and net income of $108.1 million for the three and twelve months ended December 31, 2016, respectively. A full reconciliation of all components of the GAAP to non-GAAP financial results can be found in Table 4 at the end of the release.

The loss attributable to the three months ended December 31, 2016 was a result of a $51.1 million impairment charge relating to our Direct Flow Medical note receivable investment.

"2016 was a transformational year for PDL; one in which we took advantage of opportunities in the specialty pharma space as another tool to increase shareholder value," said John P. McLaughlin, president and chief executive officer of PDL. "As we look to 2017, we will focus our efforts on Noden product commercialization, along with acquiring additional specialty pharma assets, to drive value creation for PDL and our shareholders."

Recent Developments
PDL announced today that the company’s board of directors has authorized the repurchase of up to $30 million of the company’s common stock through March 2018.
As a result of ARIAD Pharmaceuticals, Inc. being acquired by Takeda Pharmaceuticals Company Limited on February 16, 2017, PDL exercised its put option with ARIAD and will be repaid an estimated $110 million, which is 1.2 times the original investment less any sums paid to date. We received $9.3 million of royalty payments through December 31, 2016. The cash repayment is expected in late March or early April of 2017.
PDL received a royalty payment for the first quarter of 2017 in the amount of $14.2 million for royalties earned on sales of Tysabri. The duration of this royalty payment is based on the sales of product manufactured prior to patent expiry, the amount of which is uncertain.
In January 2017 PDL monetized $7.0 million of certain assets of Direct Flow Medical acquired through its foreclosure.
Revenue Highlights
Total revenues of $66.5 million for the three months ended December 31, 2016 included:
Royalties from PDL’s licensees to the Queen et al. patents of $15.5 million, which consisted of royalties earned on sales of Tysabri under a license agreement;
Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of $28.1 million, which consisted of the change in estimated fair value of our royalty right assets, primarily related to the Depomed, Inc., University of Michigan, ARIAD and AcelRx Pharmaceuticals, Inc.;
Interest revenue from notes receivable financings to kaléo and CareView Communications of $5.5 million; and
Product revenues of $17.5 million from sales of Tekturna and Tekturna HCT in the United States and Rasilez and Rasilez HCT in the rest of the world (collectively, the Noden Products).
Total revenues decreased by 63 percent for the three months ended December 31, 2016, when compared to the same period in 2015.
The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.
The decrease in royalty rights – change in fair value was primarily due to the $27.8 million decrease in fair value of the University of Michigan Cerdelga royalty right asset and the decrease in fair value of the AcelRx Zalviso royalty rights asset, partially offset by an increase in the fair value of the ARIAD Pharmaceuticals, Inc. royalty right asset.
PDL received $25.3 million in net cash royalty and milestone payments from its royalty rights in the fourth quarter of 2016, compared to $34.4 million for the same period of 2015.
The decrease in interest revenues was primarily due to the early repayment of the Paradigm Spine, LLC notes receivable investment.
Product revenues were derived from sales of the Noden Products.
Total revenues decreased by 59 percent for the twelve months ended December 31, 2016, when compared to the same period in 2015.
The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.
The decrease in royalty rights – change in fair value was primarily driven by a $36.6 million decrease in the fair value of the University of Michigan royalty rights Cerdelga asset, a $23.1 million decrease in the fair value of the Depomed royalty rights asset and a $3.0 million decrease in the fair value of the Viscogliosi Brothers, LLC royalty right asset, partially offset by a $14.8 million increase in the fair value of the ARIAD Pharmaceuticals, Inc. royalty right asset.
PDL received $72.6 million in net cash royalty payments and milestone payments from its acquired royalty rights in the twelve months ended December 31, 2016, compared to $43.4 million for the same period of 2015.
Product revenues and interest revenue variances were the same as the three months ended December 31, 2016.
Operating Expense Highlights
Operating expenses were $74.2 million for the three months ended December 31, 2016, compared to $16.5 million for the same period of 2015. The increase in operating expenses for the three months ended December 31, 2016, as compared to the same period in 2015, was primarily a result of a $51.1 million impairment charge relating to our Direct Flow Medical note receivable investment and $11.4 million in expenses related to the Noden operations.
Operating expenses were $114.9 million for the twelve months ended December 31, 2016, compared to $40.1 million for the same period of 2015. The increase in operating expenses for the twelve months ended December 31, 2016, as compared to the same period in 2015, was the result of the Direct Flow Medical impairment and $25.6 million in expenses related to the acquisition of the Noden Products and its operations.
Other Financial Highlights
PDL had cash, cash equivalents, and investments of $242.1 million at December 31, 2016, compared to $220.4 million at December 31, 2015.
Net cash provided by operating activities in the twelve months ended December 31, 2016 was $101.7 million, compared with $301.5 million in the same period in 2015.