Moody's placed the Thousand Oaks, Calif.- based company's A2 long-term and Prime-1 short term ratings -- approximately $11.2 billion of rated debt -- under review for possible downgrade on Monday.
Last week an FDA advisory panel recommended that anemia drugs such as Aranesp and Johnson & Johnson's (JNJ - Get Report) Procrit be further limited in their use in cancer patients, based on evidence of negative side effects.
The panel determined the drugs should not be used in patients with metastatic breast cancer or cancer of the head and neck, and voted to bar the use of anemia drugs in cancer patients with "curative" disease. The panel did vote against entirely restricting the use of anemia drugs in cancer, and also voted down a suggestion that the drug only be used in patients with small cell lung cancer.The ruling has the potential to weigh most heavily on Amgen, which counts on Aranesp as its top-selling drug. "Although the panel recommendation does not represent a worst-case scenario, Moody's has previously stated that Amgen's key credit ratios may not have sufficient cushion to absorb any further decline in Aranesp sales at the current rating level," according to a Moody's press release. Moody's said concern about Amgen's late-stage pipeline, emerging competitive pressures, and Amgen's history of share repurchases and acquisitions that have stressed its credit ratios also played into the decision for a rating review. It will consider the anticipated decline in Aranesp sales, potential of cost saving initiatives, opportunities for revenue growth (such as osteoperosis candidate denosumab) and the company's financial policies. Moody's revised its ratings outlook for Amgen to negative from stable in May of last year. Amgen's shares closed down 3.1% at 43.08 on Monday.