Bristol-Myers Squibb

(BMY) - Get Report

said Thursday that profits rose in the fourth quarter on strong sales of drugs not yet affected by generic competition.

And finally, after 27 days of silence, the drugmaker spoke out about the serious problems with its partner

ImClone Systems


and its experimental cancer drug Erbitux. CEO Peter Dolan did not sound pleased.

"We couldn't be more disappointed," he said, referring to the Food and Drug Administration's decision to reject the Erbitux approval application on Dec. 28. Dolan made it very clear that responsibility for the shocking rejection lay fully in ImClone's lap, although Bristol-Myers was now offering assistance to fix the problems.

The drugmaker posted fourth-quarter operating earnings, before charges, of $1.58 billion, or 59 cents a share, compared with operating earnings of $1.45, or 54 cents a share, in the year-ago quarter.

Analysts were looking for fourth-quarter earnings of 59 cents a share, according to Thomson Financial/First Call.

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Bristol-Myers said it expects to earn $2.25 a share to $2.35 a share in 2002, in line with analyst expectations. The company also said first-quarter earnings will be between 10% and 15% lower than the 63 cents a share it earned in the first quarter of 2001.

Total sales reached $4.94 billion the fourth quarter, just a 3% increase over sales of $4.78 billion in the fourth quarter last year.

Bristol-Myers' top line was helped by strong sales of the diabetes drug Glucophage, which rose 34% to $660 million in the quarter. Sales of the cholesterol drug Pravachol rose 31% to $657 million, while sales of the antiplatelet drug Plavix jumped 43% to $351 million.

But the company didn't even bother to break out fourth-quarter sales for the cancer drug Taxol or the antianxiety drug Buspar because each has been severely affected by generic drug competition.

Bristol-Myers said full-year 2001 sales of Taxol fell 25% to $1.2 billion, while sales of Buspar dropped 52% to $338 million.

ImClone's Chaperone

Back to the ImClone situation, Dolan said the drugmaker will attend all FDA meetings with ImClone, as the two companies try to answer concerns that will get the Erbitux application accepted by the regulatory agency. Bristol-Myers is also cooperating fully with the congressional investigation currently under way.

In September, Bristol-Myers paid $1 billion to acquire 20% of ImClone, a stake that is now worth less than $300 million. The drugmaker also committed to pay another $1 billion to ImClone in milestone payments related to Erbitux's approval. Only $200 million of that has been paid so far. In exchange for the $2 billion commitment, Bristol-Myers gets 40% of Erbitux profits if the drug is approved.

Dolan didn't say whether the company was aware of the FDA concerns with Erbitux before Dec. 28, but Dolan did say the company conducted a normal course of due diligence before signing the ImClone deal -- including input from scientific groups within Bristol-Myers as well as advice from outside experts.

"Clearly, we're not happy with where we are," said Dolan. He did not echo the optimistic statements by ImClone executives, who have said that the drug could pass FDA muster with the information at hand.

In what sounded like a stern warning to ImClone, Dolan also said Bristol-Myers was "considering all options to pursue any actions to protect the interests of BMS shareholders."

Shares of Bristol-Myers have fallen more than 5% since Dec. 28, when the FDA sent its refuse-to-file letter to ImClone. Shares were off 73 cents, or 1.4%, to $48.65 in early Thursday trading.