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Why Aimmune Therapeutics Stock Jumped by 159% in August

By George Budwell – Sep 8, 2020 at 10:30AM

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Nestle is buying the small-cap biotech, and it's paying a high premium.

What happened

Shares of the peanut allergy drugmaker Aimmune Therapeutics (AIMT) jumped by a jaw-dropping 159% during August, according to data provided by S&P Global Market Intelligence. The biopharma's shares took flight last month after the announcement of a $2.6 billion merger agreement with multinational food and drink giant Nestle's (NSRGY -1.57%) health science division. 

Through this acquisition, Nestle will gain access to the groundbreaking peanut allergy medicine Palforzia, indicated for children ages 4 through 17. Palforzia was approved by the Food and Drug Administration on Jan. 31, but its commercial launch has gotten off to a rocky start so far because of the social distancing demanded by the COVID-19 pandemic. In fact, Aimmune recorded a paltry $575,000 in net product revenue during the drug's first quarter on the market. 

A businessman throwing U.S. dollars into the air.

Image Source: Getty Images.

So what

The core reason for Palforzia's shockingly poor launch was logistical. The drug has to be administered in certified healthcare settings due to the potential for it to cause a serious allergic reaction. Unfortunately, the pandemic forced numerous allergy clinics to close their doors earlier this year, which clearly had a detrimental impact on Palforzia's initial rollout. 

Despite its poor commercial debut, the treatment is still widely expected to achieve peak sales of around $2 billion per year by the middle of the decade. Nestle, in turn, appears to have hit upon one of the best bolt-on acquisitions in biopharma in quite some time. 

Now what

The two companies plan to complete the proposed merger in the fourth quarter. While some Aimmune shareholders have raised concerns about the agreed-upon price for the buyout, the deal will more than likely go through as originally planned. As such, this might be a good time to consider buying Nestle's stock.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Nestle. The Motley Fool has a disclosure policy.

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Aimmune Therapeutics, Inc. Stock Quote
Aimmune Therapeutics, Inc.
Nestle S.A. Stock Quote
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