The world’s only approved peanut allergy drug has so far proved a flop.
Nestlé SA said Tuesday it would explore strategic options for the treatment, effectively putting the drug up for sale, following lower-than-expected demand from doctors and patients. The move comes just two years after the packaged-food giant agreed to buy the developer of the drug, called Palforzia, in a $2.6 billion deal.
“We did have high hopes for this business,” Nestlé Chief Executive
Mark Schneider
said at an investor seminar. “Instead of the blockbuster, what this looks like more and more is a very potent and very successful niche therapy.”
Peanut allergy is one of the most common allergies in the world and can prove deadly. Some 1% to 2% of children in the U.S. and other Western nations suffer from it, according to studies.
Palforzia doesn’t aim to cure the allergy, but to lessen the frequency and severity of allergic reaction so that patients can tolerate small exposures. The treatment exposes the patient to gradually higher doses of peanut powder, starting with a tiny dose and gradually working up.
A clinical trial found that two-thirds of Palforzia-treated children and adolescents could cope with 600mg of peanut protein—equivalent to around two whole peanuts—compared with just 4% of those who had been given a placebo. At the start of the trial, none of the Palforzia-treated patients could tolerate more than 30mg of peanut protein.
Palforzia was approved by the Food and Drug Administration in early 2020, and Nestlé acquired its developer Aimmune Therapeutics Inc. shortly after, having built a stake in the business.
However, since then, sales of Palforzia have been modest. Mr. Schneider on Tuesday said the lackluster performance was likely linked to the laborious treatment process, which involves visits to an allergist every two weeks for four to five months.
Because of the risk of anaphylaxis that might require treatment by EpiPen patients must remain under medical supervision for at least one hour after taking the treatment. Mr. Schneider said allergists weren’t compensated for the extra time required to treat patients with Palforzia and that laws prevented the company from offering any payment to physicians to make up for that.
“When you put all of this together, clearly, it was much, much harder to get the patient take-up that we anticipated—and that we felt was expected because of the strong underlying medical need,” said Mr. Schneider.
The Nestlé CEO also blamed the Covid-19 pandemic for blunting the initial rollout of the drug, because it threw up more barriers to visiting the doctor for treatment.
Mr. Schneider said that continuing to sell Palforzia came with significant fixed costs for Nestlé that are harder to justify if the drug isn’t generating major sales. For instance, companies that sell FDA-approved drugs are required to continue collecting data on side effects of those products so that any potential safety issues can be identified.
Nestlé said its health-sciences division would instead focus on categories where it already holds a leading position, such as food supplements and vitamins. It said it expected the review of Palforzia to be completed in the first half of 2023.
The update on Palforzia came as part of a Nestlé investor seminar at which the company updated full-year guidance and set profit margin targets for 2025.
Nestlé said it now expects organic-sales growth of between 8% and 8.5% this year, up from its previous guidance of around 8%. The company also said it was targeting an underlying trading operating profit margin of 17.5% to 18.5% in 2025, compared with its expectation of a 17% margin this year.
—Giulia Petroni contributed to this article.
Write to Denise Roland at denise.roland@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The world’s only approved peanut allergy drug has so far proved a flop.
Nestlé SA said Tuesday it would explore strategic options for the treatment, effectively putting the drug up for sale, following lower-than-expected demand from doctors and patients. The move comes just two years after the packaged-food giant agreed to buy the developer of the drug, called Palforzia, in a $2.6 billion deal.
“We did have high hopes for this business,” Nestlé Chief Executive
Mark Schneider
said at an investor seminar. “Instead of the blockbuster, what this looks like more and more is a very potent and very successful niche therapy.”
Peanut allergy is one of the most common allergies in the world and can prove deadly. Some 1% to 2% of children in the U.S. and other Western nations suffer from it, according to studies.
Palforzia doesn’t aim to cure the allergy, but to lessen the frequency and severity of allergic reaction so that patients can tolerate small exposures. The treatment exposes the patient to gradually higher doses of peanut powder, starting with a tiny dose and gradually working up.
A clinical trial found that two-thirds of Palforzia-treated children and adolescents could cope with 600mg of peanut protein—equivalent to around two whole peanuts—compared with just 4% of those who had been given a placebo. At the start of the trial, none of the Palforzia-treated patients could tolerate more than 30mg of peanut protein.
Palforzia was approved by the Food and Drug Administration in early 2020, and Nestlé acquired its developer Aimmune Therapeutics Inc. shortly after, having built a stake in the business.
However, since then, sales of Palforzia have been modest. Mr. Schneider on Tuesday said the lackluster performance was likely linked to the laborious treatment process, which involves visits to an allergist every two weeks for four to five months.
Because of the risk of anaphylaxis that might require treatment by EpiPen patients must remain under medical supervision for at least one hour after taking the treatment. Mr. Schneider said allergists weren’t compensated for the extra time required to treat patients with Palforzia and that laws prevented the company from offering any payment to physicians to make up for that.
“When you put all of this together, clearly, it was much, much harder to get the patient take-up that we anticipated—and that we felt was expected because of the strong underlying medical need,” said Mr. Schneider.
The Nestlé CEO also blamed the Covid-19 pandemic for blunting the initial rollout of the drug, because it threw up more barriers to visiting the doctor for treatment.
Mr. Schneider said that continuing to sell Palforzia came with significant fixed costs for Nestlé that are harder to justify if the drug isn’t generating major sales. For instance, companies that sell FDA-approved drugs are required to continue collecting data on side effects of those products so that any potential safety issues can be identified.
Nestlé said its health-sciences division would instead focus on categories where it already holds a leading position, such as food supplements and vitamins. It said it expected the review of Palforzia to be completed in the first half of 2023.
The update on Palforzia came as part of a Nestlé investor seminar at which the company updated full-year guidance and set profit margin targets for 2025.
Nestlé said it now expects organic-sales growth of between 8% and 8.5% this year, up from its previous guidance of around 8%. The company also said it was targeting an underlying trading operating profit margin of 17.5% to 18.5% in 2025, compared with its expectation of a 17% margin this year.
—Giulia Petroni contributed to this article.
Write to Denise Roland at denise.roland@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8