Nestle Pays $145 Million for Stake in Biotech Firm Aimmune

(Bloomberg) -- Nestle SA's health unit is investing $145 million for a 15 percent stake in Aimmune Therapeutics Inc., a California maker of food-allergy therapies.

Nestle Health Science, a subsidiary of the Swiss food giant, will pay $19.20 a share for about 7.55 million newly issued shares of Aimmune, and the unit's Chief Executive Officer Greg Behar will join the biotech firm's board of directors, Aimmune said Friday in a statement. The purchase price represents a 17 percent premium over Aimmune's closing price on Thursday, and the companies expect to complete the transaction by year-end.

While Nestle doesn't automatically gain any rights to Aimmune's products, it will get exclusive rights of first negotiation on any licensing opportunities in the next two years.

Aimmune, based in Brisbane, California, is developing treatments to help desensitize patients to food allergens. It's pursuing the theory that through exposure to tiny amounts of allergens, patients can build up a tolerance. Its leading candidate, AR101 for peanut allergies, is being tested in a late-stage trial, with results expected in late 2017.

“Often people look for big pharma partners, and that's not what we need,” Aimmune CEO Stephen Dilly said in a telephone interview. “Our ideal partner would bring outside-the-box skills, and Nestle has a deep experience in pediatric products and understanding of food from a nutrition standpoint.”

Research Funding

The cash infusion will help fund more research and boost Aimmune's ability to bring other drug candidates into trials, Dilly said. For now, it's testing AR101 in patients aged 4 to 55, and wants to move to younger children, he said.

Nestle's global reach also could be beneficial, if AR101 is approved, by helping to market the drug around the world. While no agreement has yet been signed, “we don't have any presence outside of Europe and North America, so that's a logical conversation to have down the line,” Dilly said.

Aimmune gained 7.8 percent to $17.75 at 9:06 a.m. New York time before U.S. markets opened.

Some 250 million people suffer from food allergy globally, including about 6 million with peanut allergies in the U.S. and Europe, Behar said on a call with reporters. The company's treatment might be sold as a highly purified protein powder that's sprinkled on food over a period of 22 weeks, followed by maintenance therapy, he said.

“Allergy-fighting is a very strategic area of focus” for Nestle Health Science, Behar said. “It's a significant pillar.”

Nestle set up its health science unit in 2011, seeking to build a portfolio of health and wellness products. The division plans to make nutrition products and treatments in areas such as metabolic health, obesity and Alzheimer's disease.

In two deals over the past two years, Nestle Health Science also has invested $185 million in Seres Therapeutics Inc., a Cambridge, Massachusetts-based company developing drugs designed to improve the balance of microorganisms in the gut. In February, Nestle invested $43 million in Pronutria Biosciences, now called Axcella Health, a developer of proteins that target neurological diseases.

In a previous trial, Aimmune showed that the drug helped patients tolerate at least a peanut kernel's worth of peanut protein after treatment, though some patients dropped out due to gastrointestinal side effects. If approved, AR101 would be the first oral drug for peanut allergies, according to Aimmune.

--With assistance from Thomas Mulier and Corinne Gretler To contact the reporter on this story: Caroline Chen in San Francisco at cchen509@bloomberg.net. To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Thomas Mulier, John Lauerman