Bristol-Myers Squibb said yesterday it would pay $300 million (€249 million) to settle a shareholder class-action lawsuit stemming from a sales scheme that inflated profits, and problems in its development of a cancer drug with ImClone Systems Inc.

Bristol-Myers said the amount of the settlement, under which it admitted no wrongdoing, will be paid from legal reserves of $470 million it had previously set aside. The settlement, however, does not resolve pending government probes and other private litigation related to the scandal and other legal matters, the company said.

"This is more of a check-mark on the list of litigation facing them but every settlement, every resolution, is a modest positive," said Andrew Oh, an analyst at Leerink Swann. Shares of Bristol-Myers rose 0.8 per cent in afternoon trade.

Investors first sued Bristol over its experimental colon cancer drug Erbitux, which it was co-developing with ImClone, claiming Bristol mislead them about prospects for drug. In December 2001, US regulators refused to review the application for Erbitux because of sloppy clinical trial data - a big setback that sparked a sell-off in shares of Bristol and ImClone. Bristol previously had agreed to pay ImClone up to $2 billion for the right to co-market the medicine and share its profits.

The former chief executive of ImClone, Samuel Waksal, was later sent to prison on an insider trading scandal related to Erbitux, but the drug was finally approved earlier this year.

Investors again sued Bristol after the company in April 2002 acknowledged an inventory scam, sending its shares to a four-year low. Bristol-Myers routinely coaxed wholesalers to overstock its drugs from 1999 to 2001 as a means of boosting company profits. It said it had boosted sales by $2.5 billion from 1999 to 2001, artificially inflating profits by $900 million. Bristol-Myers last year restated all earnings for the three-year period.