MOODY’S HAS upgraded drug developer Elan’s credit rating following its $885 million deal with US healthcare giant, Johnson Johnson.

Johnson Johnson (JJ) recently paid $885 million for an 18.4 per cent stake in the Irish company and, through Janssen Alzheimer Immunotherapy, took control of an Elan programme researching treatments for Alzheimer’s disease in a joint venture with Wyeth. It has also committed to invest up to a further $500 million in that research.

As a result, Moody’s said yesterday that it is increasing the Elan corporate family rating to B2 from B3. Such a move means that the agency rates the company as a low risk for investors and lenders. Moody’s added that the outlook for Elan was positive.

“The cash inflow from JJ represents a significant liquidity infusion for Elan and a reduction in its net debt position, prompting Moody’s upgrade,” said Michael Levesque, senior vice-president at Moody’s.

The ratings agency said the recent focus on new cases of progressive multifocal leukoencephalopathy precluded it from considering a high credit rating.

The US regulator, the FDA, issued a safety alert on September 16th stating that PML risk appears to increase with the number of Tysabri treatments.