- Nestlé Health Science has agreed to acquire Aimmune Therapeutics, the developer of the peanut allergy treatment Palforzia, in a deal that values the California biotech at about $2.6 billion.
- NHS already owns about 25.6% of Aimmune's common and preferred stock through a series of investments since 2016. The Swiss firm will buy the rest of Aimmune's shares at $34.50 apiece, a roughly 174% premium to their $12.60 per share closing price on Friday. The deal should close in the fourth quarter.
- The deal leaves NHS, the nutritional science division of the food and drink conglomerate, in charge of a drug launch that has gotten off to a slow start. The Food and Drug Administration in January made Palforzia the first treatment specifically approved for peanut allergies, and later rejected a competing therapy from its chief rival. But Palforzia has its flaws, and didn't generate any net revenue last quarter as the coronavirus pandemic took hold in the U.S.
NHS, which specializes in consumer health products, medical foods and supplements, has made its interest in Aimmune clear over the years. The firm has put $473 million into the biotech since 2016, including most recently a $200 million sum in February, just after the FDA approved Palforzia.
Those investments caused Wall Street analysts to flag a potential buyout, and indeed, NHS has followed through. But it's doing so with Aimmune at a crossroads. At $12.60 apiece, Aimmune's shares are 60% cheaper than they were around Palforzia's January approval, settling in at their lowest levels since NHS made its first investment in the biotech four years ago. And Palforzia's highly anticipated launch has yet to get off the ground.
Palforzia is an immunotherapy meant to reduce the frequency of the potentially life-threatening allergic reactions in children and teens aged 4 to 17 by desensitizing them to peanut protein. Its approval was the first of its kind and a long-awaited victory for Aimmune, whose initial application was stuck in limbo during the shutdown of the federal government in 2019. Analysts have predicted close to $2 billion in yearly peak sales for the treatment.
But Palforzia's approval was controversial. Though patients in clinical testing were able to tolerate peanut protein better than those on a placebo, they were also more likely to stop treatment or have an allergic reaction. Initial and increased doses of Palforzia have to be given in certified healthcare settings, and patient have to have epinephrine around to guard against potential anaphylactic reactions. That, combined with its $11,000-per year list price, made for a difficult commercial argument versus avoiding peanuts altogether.
Palforzia's launch, then, would've been challenging under normal circumstances. But the pandemic has made it harder. Patients shied away from medical visits last quarter. Allergists closed offices, and then upon re-opening focused their attention on backlogs of existing patients, rather than starting new ones on Palforzia.
Aimmune recorded no net revenue from Palforzia over that time, surprising some analysts and causing them to rework their near-term financial projections. Piper Sandler analysts, for instance, forecasted just $2 million in revenue in the the third quarter and $8 million in the fourth, before jumping up to $150 million for all of 2021.
Yet, there have been some positive signs for Aimmune as well. During the company's last quarterly conference call in July, executives noted that allergists have begun enrolling patients on therapy and that progress has been made with payers, according to RBC Capital Markets analyst Kennen MacKay. The FDA has also since rejected a skin patch-based peanut allergy treatment from rival DBV Technologies.
Palforzia is now under review in Europe, and Aimmune has recently restarted testing of the treatment in younger patients.
"While we understand the uncertainty that COVID-19 disruption presents, we also think as pandemic-related disruption recedes and Palforzia’s true demand begins to manifest, it will be deemed that Nestle got itself a bargain here," Piper analyst Christopher Raymond wrote Monday morning.
Aimmune is also developing a therapy for egg allergies that NHS will now move forward.