S&P lowers Celgene to stable

Standard & Poor’s said it affirmed the BBB+ corporate credit rating on Celgene Corp. and revised the outlook to stable from positive.

The affirmation is predicated on an expectation that Celgene will reduce leverage to 1.4x by the end of 2017 through EBITDA growth from its existing commercialized product portfolio, S&P said.

The company recently announced that it was acquiring Receptos Inc. for about $8 billion, the agency said.

While contribution from Receptos is not expected until at least 2018,Celgene’s financial performance continues to exceed expectations and has given the company capacity to fund this acquisition with up to 100% debt, the agency said.

Celgene’s conservative financial policy has kept leverage at less than 1.5x over the past five years, which boosts confidence that it will sustain leverage at 2x or less once that level is reached by the end of 2017, S&P said.

The outlook revision to stable reflects higher leverage following the acquisition, which will expand Celgene’s late-stage pipeline to include Ozanimod, a product that has three phase-III trials for ulcerative colitis and relapsing multiple sclerosis, the agency said.

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