Aimmune Therapeutics (NASDAQ:AIMT) recently announced a $200 million cash injection from Nestle (OTC:NSRGY), the world's largest food and beverage company. The company that produces heaps of peanut-containing products will buy enough common and preferred shares to raise its voting power to 19.9%, according to Aimmune.
Turning the corner
Since its inception, Aimmune's been focused solely on drug development at the expense of investors. Following the recent FDA approval of its peanut allergy therapy, Palforzia, the biotech is about to turn the commercial-stage corner. Debut drug launches generally don't go well, but a big cash injection from Nestle will give Aimmune a lot more room for error.
Aimmune set the list price of Palforzia at $890 per month, which is enough to cause end payers to think twice about reimbursement of a drug that isn't as remarkable as its price tag suggests. Palforzia treatment won't allow children with severe allergies to enjoy peanut butter and jelly sandwiches again. Instead, it can reduce the severity of anaphylactic shocks caused by accidental exposure to a small amount of peanut protein, or prevent them altogether.
A shared stake
Nestle will purchase 1 million shares of Aimmune common stock plus preferred stock that could be converted to another 5.3 million shares without voting rights in the future. The transaction will raise the number of Aimmune shares entitled to Palforzia's profits about 10% higher.
While Nestle's additional investment gives Aimmune Therapeutics more room for error, the company still can't afford to botch Palforzia's commercial launch. The biotech company finished September with $195 million in cash and securities after operations burned through a frightening $181 million during the first nine months of 2019.