Moody’s could drop Celgene

Moody's Investors Service said it placed the Baa1 senior unsecured long-term ratings of Celgene Corp. under review for downgrade.

This action follows the announcement that Celgene will acquire Receptos, Inc. (unrated) for about $7.2 billion, net of cash acquired. The deal is subject to regulatory review and is expected to close this year.

The review will focus on the higher financial leverage resulting from the transaction, offset by deleveraging prospects and new pipeline opportunities from the acquisition. Receptos is a development-stage pharmaceutical company that has not been profitable to date. Receptos' key pipeline product is ozanimod, an experimental oral drug that Receptos is testing in both multiple sclerosis and ulcerative colitis.

Moody's anticipates that the rating review will result in a one-notch downgrade to Baa2, all other factors being equal. This expectation results in the affirmation of Celgene's Prime-2 commercial paper rating, which Moody's is not placing under review for downgrade.

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