Sometimes quarterly financial results don't reflect the changes going on with a drug developer. This seems to be the case with Bristol-Myers Squibb (NYSE:BMY) after it announced its second-quarter financial results last week.

Since Bristol-Myers was successful last month in upholding patents on its lead drug, Plavix, it no longer has to worry about generic competition torpedoing sales of its top compound unless generic drugmaker Apotex has some success on appeals.

Even though overall revenue was up only a measly 1% versus the second quarter of 2006, sales of Plavix finally posted a year-over-year gain of 4% as the glut of generic versions of the drug on the market in the U.S. subsided. Net income was up 6% versus a year ago and GAAP earnings per share were $0.36 for the quarter.

Before being attacked by Apotex's generic version last year, Plavix accounted for 29% of Bristol's revenue in 2005; in this most recent quarter, it represented only 24% of revenue. Bristol is slowly diversifying away from its dependence on Plavix as other compounds, like its antipsychotic Abilify, experience double-digit rates of sales growth. In the most recent quarter Abilify grew at a 27% clip and became Bristol's second-highest grossing drug.

Barring an unexpected event like a setback in the courts with Plavix, Bristol is now guiding for GAAP earnings per share to be $1.35 to $1.45 in 2007 and $1.60 to $1.70 next year. On the conference call, CEO James Cornelius sounded like he was being conservative with these estimates when prodded by analysts and left open the potential for future additional cost-cutting measures.

With so much risk that was embedded in shares now out of the way thanks to the Plavix litigation taking a major turn for the better for BMY and partner Sanofi-Aventis (NYSE:SNY), investors should forgive a quarter of stagnant sales growth as the drugmaker tries to turn around its top compound and recover from the loss of patent exclusivity of another lead drug.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.