Bristol-Myers Matches Forecast

Abilify, Erbitux and Pravachol post higher sales.
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Update from 7:52 a.m. EDT

Bristol-Myers Squibb

(BMY) - Get Report

revealed first-quarter results that met Wall Street's expectations, and the drugmaker also reaffirmed predictions for the rest of the year.

The company said Thursday that it earned $714 million, or 36 cents a share, in the quarter, compared with $533 million, or 27 cents a share, last year. Adjusted for items, the company earned $637 million, or 32 cents a share, for the three months ended March 31, matching the consensus estimate compiled by Thomson First Call.

Sales rose 3% to $4.67 billion, beating the forecast of $4.61 billion. By region, U.S. sales rose 14% to $2.7 billion, while international sales fell 8% to $2 billion. About half the decline was attributable to currency effects.

For the full year, the company predicts an EPS in the range of $1.15 and $1.25. Various one-time gains and losses will offset each other. The Thomson First Call consensus estimate is $1.19.

By early afternoon, the stock was up 19 cents to $25.16.

Among the major products, sales of the anticoagulant Plavix rose 21% in the first quarter to $986 million, while sales of the schizophrenia medication Abilify jumped 51% to $282 million.

Sales of blood pressure treatment Avapro/Avalide rose 19% from last year to $233 million. Cancer drug Erbitux produced sales of $138 million in the quarter, up 59% from last year. Sales of the cholesterol treatment Pravachol rose 3% from a year ago to $536 million, while sales of HIV treatment Reyataz rose 39% to $207 million.

Pravachol lost its U.S. patent protection last week. The company said the impact of generics on drugs having lost patent protection since 2004 will cost it $1.4 billion to $1.5 billion in revenue this year. That amount should be "more or less offset" by growth in existing products and sales from new products, the company said.

However, Plavix remains a wild card for generic competition.

A recent settlement with a company challenging Plavix's patent still must be approved by the Federal Trade Commission, various state attorneys general and a federal court. The deal was made by Bristol-Myers and its partner

Sanofi-Aventis

(SNY) - Get Report

with Canada's

Apotex

last month.

Bristol-Myers warned investors that the agreement isn't a sure thing. "There is a significant risk the required antitrust clearance will not be obtained," the company said Thursday, repeating comments made last month. Bristol-Myers faces similar Plavix patent challenges from three other generic drugmakers.

Additionally, the company faces skepticism from at least one FTC commissioner. "What was gained from this settlement? Well, for the companies, it was a good deal," said Commissioner Jon Leibowitz in a speech in Philadelphia on Monday.

"Apotex obtained a date certain to enter a huge market," he said. " Bristol-Myers Squibb and Sanofi-Aventis gained several years' protection against potential early entry" of a generic competitor.

Maintaining that "I have no preconceived notions about the Plavix agreement," Leibowitz said the deal blocking a generic form of this drug until 2011 will cost consumers "hundreds of millions of dollars." He said the agreement is an example of what happens when generic companies accept truces with brand-name companies rather than fighting to enter the market.

Plavix plays a big role in how analysts view Bristol-Myers Squibb. "We continue to be optimistic that the FTC will not object to the proposed settlement," says Chris Shibutani of JP Morgan. He upheld his outperform rating after the company's earnings report. If the Apotex deal is rejected and if Bristol-Myers can't negotiate similar deals with the other generic companies, the company would be facing a serious problem, he said.

Last month's agreement prompted Shibutani and

several other analysts to raise their ratings on the company. Shibutani doesn't own shares. His firm has had a recent investment-banking relationship.

Analysts will also be tracking the newest drugs and some experimental products to see if they can help reignite Bristol-Myers' sales and earnings growth in 2007, as has been forecast by CEO Peter Dolan.

The drugs include the arthritis medication Orencia, the cancer drug Erbitux and Emsam, a skin patch that delivers an antidepressant. The company collaborates with

ImClone Systems

(IMCL)

on Erbitux and with

Mylan Laboratories

(MYL) - Get Report

and

Watson Pharmaceuticals

on Emsam.

Two other products are awaiting FDA decisions. Last month, the company submitted an application for Dasatinib, a leukemia treatment. The FDA may act by late June. On Thursday, the company and

Gilead Sciences

(GILD) - Get Report

asked the FDA to approve a new HIV/AIDS pill that combines Bristol-Myers' Sustiva and Gilead's Truvada.