raises stake in food allergy drug developer Aimmune
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[November 13, 2018]
By Tamara Mathias
(Reuters) - The health science arm of
Nestle SA will pay $98 million to raise its stake in Aimmune
Therapeutics Inc, the drug developer said, as it prepares to submit a
marketing application for its peanut allergy drug by the end of the
The deal raises Nestle's stake to about 19 percent from 14.5 percent
as of Feb. 26 and its total investment in Aimmune to $273 million.
The companies also extended their two-year strategic pact to develop
therapies for food allergies by another two years, Aimmune said on
"Some investors were worried that Nestle might sell their original
equity investment in Aimmune. However, to us, this suggests Nestle
views investment in Aimmune as long-term," Wedbush Securities
analyst Liana Moussatos said.
In the United States, there is no approved treatment for peanut
allergies, a medical condition that is becoming increasingly common
and could be fatal.
Analysts see huge opportunity for Aimmune's oral drug, AR101, which
could be one of the first to be made available to patients desperate
for treatment options.
Combined with the company's $255 million in cash as of Sept. 30, the
investment by Nestle finances Aimmune "well beyond" the anticipated
approval and launch of the drug in the United States, Chief
Executive Officer Jayson Dallas said.
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As packaged food sales slow amid changing tastes, Nestle has been
trying to become a "nutrition, health and wellness" company, with
its unit, Nestle Health Science, playing a pivotal role.
The unit invested $145 million in Aimmune in 2016, followed by $30
million as part of the company's public offering in February 2018.
Aimmune said Nestle Health Science Chief Executive Officer Greg
Behar will continue as a director on its board.
Nestle's per share price of $30.27 is slightly below Aimmune's close
on Friday at $30.29. The companies expect to close the equity
investment by the end of 2018.
Shares of Brisbane, California-based Aimmune were trading up 1
percent at $30.55 in early trading.
(Reporting by Tamara Mathias in Bengaluru; Editing by Arun Koyyur)
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