Nestlé boosts investment: launch of peanut allergy drug

14 February 2020


Nestlé

Nestlé Health Sciences paid Aimmune Therapeutics $200 million to expand its investment in the allergy-drug specialist, buying another 1 million shares to take its stake to nearly 20%​. The investment comes as the company launches peanut allergy treatment Palforzia, which the Food and Drug Administration approved last week. The drug will cost patients about $11,000 a year​.
Separately, Aimmune also spent $10 million to in-license an experimental anti-allergenic biological drug from Xencor. That company has been focusing its pipeline on cancer-fighting treatments.

Dive Insight:
Now that the hard part is over for Aimmune, another hard part begins. Achieving FDA approval is challenging enough for a small biotech, but now Aimmune has to find a market for a treatment that still has its share of skeptics, not to mention the usual uphill battles fought when launching a drug without big pharma support.

Getting $200 million from shareholder Nestlé eliminates questions over long-term financing. Now it is up to Aimmune’s commercial and medical affairs teams to win over allergists and insurers.

The investment consists of 1 million new common shares in Aimmune, along with 525,634 shares of preferred stock that can convert to 10 common shares each. The new shares increase Nestlé’s stake in the company to slightly under 20%, and if the preferred shares convert, the stake will rise to 26%.

As of Sep. 30, 2019, Aimmune had $77 million in cash and $119 million in short-term investments. Thanks to FDA approval, the company also can access $85 million in loans from the investment firm KKR, company CFO Eric Bjerkholt said in an interview.

Piper Sandler analyst Christopher Raymond said the Nestlé investment is a good sign that further strategic milestones await Aimmune. “With this additional investment, we think the prospect of an outright take out by Nestlé (or anyone else for that matter) has to be factored in more than before,” he wrote in a Feb. 5 note to clients.

Palforzia, which consists of processed peanut flour, isn’t a cure for peanut allergies, but rather protects against accidental exposures. Patients must still practice avoidance to prevent allergic reactions.

The treatment course desensitizes patients by increasing exposure to peanut protein, beginning with the equivalent of 1/600th of a peanut and eventually reaching up to 300 mg of peanut protein.

Because anaphylactic reactions during clinical trials were more common in patients taking Palforzia, treatment will have to be under direct supervision of a physician on the initial dose and each time the dose is increased.

These drawbacks could help explain Aimmune’s interest in Xencor’s XmAb7195, a biological treatment that was being developed for allergic asthma. The drug candidate, now renamed AIMab7195, suppresses antibodies that are involved in an allergic response.

Aimmune sees AIMab7195 being used in combination with desensitizing drugs to deepen patient response and perhaps even achieve remission.

“We know that any kind of oral immunotherapy product not only desensitizes patients, but also a sizable portion of patients go on to long term remission,” chief medical officer Daniel Adelman said in an interview with BioPharma Dive. “With the addition of targeted response modifiers, we have the potential to accelerate the time to remission and perhaps increase the proportion of patients that might reach that long term remission.”

The $10 million transaction will consist of $5 million in cash and a $5 million investment in Xencor, which will be eligible for up to $385 million in milestones plus potential sales royalties. Aimmune shares were up 5% Wednesday to trade at $30.92 apiece.

Now that the hard part is over for Aimmune, another hard part begins. Achieving FDA approval is challenging enough for a small biotech, but now Aimmune has to find a market for a treatment that still has its share of skeptics, not to mention the usual uphill battles fought when launching a drug without big pharma support.

Getting $200 million from shareholder Nestlé eliminates questions over long-term financing. Now it is up to Aimmune’s commercial and medical affairs teams to win over allergists and insurers.

The investment consists of 1 million new common shares in Aimmune, along with 525,634 shares of preferred stock that can convert to 10 common shares each. The new shares increase Nestlé’s stake in the company to slightly under 20%, and if the preferred shares convert, the stake will rise to 26%.

As of Sep. 30, 2019, Aimmune had $77 million in cash and $119 million in short-term investments. Thanks to FDA approval, the company also can access $85 million in loans from the investment firm KKR, comapny CFO Eric Bjerkholt said in an interview.

Piper Sandler analyst Christopher Raymond said the Nestlé investment is a good sign that further strategic milestones await Aimmune. “With this additional investment, we think the prospect of an outright take out by Nestlé (or anyone else for that matter) has to be factored in more than before,” he wrote in a Feb. 5 note to clients.

Palforzia, which consists of processed peanut flour, isn’t a cure for peanut allergies, but rather protects against accidental exposures. Patients must still practice avoidance to prevent allergic reactions.

The treatment course desensitizes patients by increasing exposure to peanut protein, beginning with the equivalent of 1/600th of a peanut and eventually reaching up to 300 mg of peanut protein.

Because anaphylactic reactions during clinical trials were more common in patients taking Palforzia, treatment will have to be under direct supervision of a physician on the initial dose and each time the dose is increased.

These drawbacks could help explain Aimmune’s interest in Xencor’s XmAb7195, a biological treatment that was being developed for allergic asthma. The drug candidate, now renamed AIMab7195, suppresses antibodies that are involved in an allergic response.

Aimmune sees AIMab7195 being used in combination with desensitizing drugs to deepen patient response and perhaps even achieve remission.

“We know that any kind of oral immunotherapy product not only desensitizes patients, but also a sizable portion of patients go on to long term remission,” chief medical officer Daniel Adelman said in an interview with BioPharma Dive. “With the addition of targeted response modifiers, we have the potential to accelerate the time to remission and perhaps increase the proportion of patients that might reach that long term remission.”

The $10 million transaction will consist of $5 million in cash and a $5 million investment in Xencor, which will be eligible for up to $385 million in milestones plus potential sales royalties.

Aimmune shares were up 5% Wednesday to trade at $30.92 apiece.


Published by biopharmadive.com on February 5, 2020
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