Aimmune Therapeutics (NASDAQ:AIMT) won approval from the U.S. Food and Drug Administration for its first drug -- and there are two more important firsts.

Aimmune's Palforzia is the first approved drug to treat peanut allergies, and the first approved treatment for any kind of food allergy, giving it a home run that the company, patients, and investors can all celebrate. Since Aimmune's pipeline is all about treating food allergies, this approval may be viewed as a positive sign showing the company's method can deliver.

No Peanuts Allowed is written in red crayon on a piece of paper, next to a slice of bread spread with peanut butter and a jar of peanut butter.

Image source: Getty Images.

Why is everyone going nuts?

Any nod from the FDA is good news for a company, but some investors might be wondering why the Palforzia approval has stirred up so much excitement. From both medical and financial perspectives, the opportunity is significant. Clearly, with the lack of approved treatments prior to Palforzia, therapy for peanut allergy was an unmet need. And as the following statistics show, it's not a small niche market.

Peanut allergies are the most prevalent among children in the U.S., affecting about 1.6 million adolescents, a 2018 study in the journal Pediatrics showed. And a GlobalData report indicates the market is rapidly expanding: The global peanut allergy market is expected to grow at a compound annual growth rate of 111% to reach $4.5 billion in sales by 2027, and the U.S. will make up 88% of this market. All of this supports the idea that Palforzia could attain blockbuster status. An EvaluatePharma consensus predicts that Palforzia sales will reach $1.3 billion by 2024.

Patients on board

Like any biopharmaceutical company, Aimmune will face the challenges of bringing doctors and patients on board, and working with payers that will make decisions regarding the therapy's coverage. Aimmune has set the drug's list price at $890 per month.

There's also competition waiting in the wings: An FDA decision on DBV Technologies' (NASDAQ:DBVT) peanut allergy treatment is expected in August. Still, Aimmune is the first to win approval, so it has at least a few months with the entire market to itself. This is a huge advantage because, if doctors and patients adopt the treatment and are satisfied, new rivals might find it difficult to dethrone Palforzia.

As for winning over the peanut allergy community and payers, there are no guarantees, but the unmet-need factor should weigh in Palforzia's favor.

Validation of Aimmune's approach

There's an additional reason to be optimistic. The FDA's decision applies only to Palforzia, of course, but the approval may be viewed by some as a validation of Aimmune's approach in the treatment of food allergies. Aimmune's focus is on oral immunotherapy, which desensitizes the patient to the substance that causes a bad reaction. The idea of desensitization has been used in the past by certain doctors, but any such method lacked regulatory approval. In the case of Palforzia, the treatment, which contains doses of a peanut protein, is to be taken daily as a powder that can be mixed with unheated food. (Palforzia only lessens allergic reactions to accidental exposure to peanuts, so patients are still told to stay on a peanut-free diet.)

Aimmune has two more treatments in the pipeline: One for egg allergies that is in phase 1/2 studies, and a therapy for tree-nut allergies in preclinical research. Since Aimmune's therapies are based on foods with no toxicology issues, the company isn't required to conduct phase 1 trials. That's a positive, as it could decrease the time to market.

So what does this mean for investors?

Aimmune's shares rose 6.3% on news of the approval. That's not a huge increase, and it may be due to some investors, who perhaps bought shares earlier in the Palforzia story, locking in gains.

Wall Street expects 50% upside from this point, which seems reasonable considering the size of the peanut allergy market and Palforzia's potential sales figures. Aimmune's shares might not reward investors immediately; the process will be slower and hopefully steadier as results of Palforzia sales show up in earnings reports. Now is a reasonable time to add the shares to a biotech portfolio -- or at least to put the stock on a watch list, with the idea of making a buying decision after the first Palforzia sales figures become available.