Moody's could cut Elan

Moody's Investors Service said it placed the ratings of Elan Corp. plc, including the Ba3 corporate family rating and Ba2-PD probability of default rating, under review for downgrade.

This action follows the announcement that Elan will purchase a royalty interest from Theravance Corp. (unrated) in Breo Elipta, a new respiratory product, and several other products in development.

Moody's said the review was prompted by recent transactions that have consumed Elan's cash without generating any significant, immediate EBITDA or cash flow.

These include Elan's recent $1 billion share repurchase transaction, as well as the Theravance royalty deal. Although Breo Elipta could become a blockbuster, its rate of market acceptance is not certain and substantial returns to Elan could be protracted, the agency said.

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