Bristol-Myers Squibb

(BMY) - Get Report

and partner

Otsuka Pharmaceuticals

said Tuesday that U.S. drug regulators issued an approvable letter for the schizophrenia drug Abilify.

Final approval for Abilify, also known by the medical name aripiprazole, is contingent upon final negotiations with the Food and Drug Administration, the companies said.

Otsuka, a privately held Japanese drugmaker, submitted an approval application for Abilify in October 2001.

Bristol-Myers is hoping to use Abilify's approval as a springboard for recovery from a host of woes over the last year, including well-publicized setbacks with its

ImClone Systems


partnership, inventory problems that are now the subject of a formal

Securities and Exchange Commission

query, and competition from generic drugs that has cut earnings 50% this year.

In clinical studies, Abilify has proven to cause fewer side effects than other drugs for the treatment of schizophrenia. If approved, Abilify would compete with drugs like Zyprexa from

Eli Lilly

(LLY) - Get Report

and Risperdal from

Johnson & Johnson

(JNJ) - Get Report

. Several analysts see Abilify as a billion-dollar seller.

Bristol-Myers shares closed Friday at $24.95.