Frederick Schiff, who faces two felony counts of conspiracy and securities fraud for his role in an alleged channel stuffing scheme to inflate the drugmaker’s earnings between 2002 and 2002, just got his second break in as many weeks. You may recall that last week, US District Court Judge Faith Hochberg issued a ruling that scaled back the federal case. And so the US Attorney in Newark, NJ, Christopher Christie, has decided to appeal, which will cause an unspecified delay, The New York Times reports.

In a ruling dated March 19, Judge Faith Hochberg sided with Schiff and limiting the scope of what prosecutors can argue against him and criticizing them for repeatedly changing their theory of the crime they say he committed. “The court will permit no further ‘legal theory morphs’ in this case,” the judge said, noting that the charges against Schiff had been lingering for three years, the paper writes.

One part of her order prevents the prosecution from linking Schiff’s activities to a plunge in the price of Bristol-Myers Squibb stock during 2002, after inventory problems were disclosed. The prosecutors had hoped to use that approach to tie Schiff’s actions to investor losses. Meanwhile, the case against Rick Lane, the former Bristol-Myers pharma head, will remain in limbo since the cases are being tried separately.

The duo were indicted three years ago in connection with allegations that Bristol-Myers Squibb had artificially inflated sales through channel stuffing, a process in which a company uses financial incentives to encourage wholesalers to buy excess inventory. The indictment contended that they used the inflated sales to mislead investors about the financial results so that revenue lived up to analysts’ expectations, even though the revenue levels were unsustainable, the Times explains.

Schiff, 60, and Lane, 57, who both pleaded not guilty, were the only corporate execs indicted. The same charges, however, led to a deferred prosecution agreement between Christie’s office and Bristol-Myers Squibb, effectively putting the company under probation for two years. The drugmaker also paid $300 million in fines and penalties, the Times reminds us.

The original indictment contended Schiff imposed accounting procedures that underreported rebate liabilities to wholesalers, resulting in company sales and earnings that appeared stronger than they were by more than $500 million over two years. But prosecutors removed those and various other contentions that Schiff had manipulated books and violated accepted accounting principles.

As of last week, the remaining charges included accusations that Schiff had made misstatements during conference calls with analysts and omitted disclosures from filings with the Securities and Exchange Commission. The ruling, however, precludes prosecutors from discussing suspected omissions in SEC reports, generally narrowing attacks against any actions Schiff may have taken to mislead investors.

The judge said that the case would go forward on legal theories related to conspiracy, misstatements and omissions during analyst calls, such as a statement Schiff made during a call on April 25, 2001, that there were “no unusual items” in wholesale inventories.