Aimmune Therapeutics stated Wednesday the health science unit of Nestle SA will invest an additional $200 million, days after the drug manufacturer won U.S. license for its peanut allergy therapy, touted as a possible breakthrough.
The investment brings Nestle’s total investment to $473 million, increasing the Swiss firm’s stake to 19.9% of Aimmune’s outstanding stock and voting rights.
Aimmune shares soared 5.7% in early morning trading, after dropping 11% on Tuesday. Its therapy, Palforzia, was cleared Friday after markets close.
Nestle’s funding is an incremental positive for Aimmune’s shares, which have seen some weakness on account of investor worries over financing, Piper Sandler analyst Christopher Raymond wrote in a note.
Nestle has been attempting to become a “nutrition, health, and wellness” firm, with its Nestle Health Science unit playing a crucial role, as packaged food sales sluggish amid changing tastes.
The subsidiary spent $145 million in Aimmune in 2016, followed by $30 million as part of the drug manufacturer’s public offering in February 2018, and another $98 million in November 2018.
Aimmune would use the latest Nestle investment to fund the release of Palforzia, which is the first permitted remedy for reducing and potentially eradicating allergic reactions to peanuts in children.
Baird analyst Brian Skorney suspects a potential for short squeeze as some determine to cover rather than await the performance of Palforzia in the first couple of quarters against reasonable expectations.
Short interest, a measure of how much cash is betting on the stock to go lower, in Aimmune stood at almost 25% of the float, as of January 15, based on Refinitiv data.
Individually, California-based Aimmune stated it had received a worldwide license to an experimental therapy for allergic asthma from Xencor for an upfront payment of $5 million in cash and $5 million in equity.