Ulf Mark Schneider (AP)

The cen­tral fig­ure in Nestlé's $2.6B Aim­mune buy­out? Covid-19

Nestlé sur­prised few this sum­mer when they spent $2.6 bil­lion to buy­out Aim­mune. The Swiss But­terfin­gers-and-health con­glom­er­ate had long shown more in­ter­est in them and Pal­forzia, their re­cent­ly ap­proved peanut al­ler­gy treat­ment, than any of the tra­di­tion­al Big Phar­mas.

When talks be­gan, though, in the sec­ond quar­ter, Aim­mune was on­ly look­ing for a part­ner to help them com­mer­cial­ize the ther­a­py in Eu­rope. In fact, as part of its se­ries of in­vest­ments in the com­pa­ny, Nestlé had signed a “Stand­still Agree­ment,” that would pre­vent them from ac­quir­ing the biotech un­til No­vem­ber 202o.

That, though, was be­fore Covid-19 struck the US, shut­ting down much of the coun­try, re­shap­ing the med­ical sys­tem, and set­ting Aim­mune’s plans for a large com­mer­cial roll­out ablaze. The SEC’s in­sid­er ac­count of ne­go­ti­a­tions doesn’t di­rect­ly link the buy­out to the pan­dem­ic and its toll on Pal­forzia’s launch. But it does note the size of the of­fer com­pared to Aim­mune’s new­ly de­pressed stock price, grim worst-case sce­nario pro­jec­tions from man­age­ment at the height of ne­go­ti­a­tions, and the role the “po­ten­tial ef­fects of COVID-19 on Aim­mune’s busi­ness and the long-range plans of Aim­mune” played as the two sides tum­bled to­wards a deal that like­ly would have been re­ject­ed just 6 months pri­or.

By the time ne­go­ti­a­tions be­gan, Nestlé al­ready owned 25.6% of the Cal­i­for­nia biotech. They had first in­vest­ed in 2016 and 2018 and put an­oth­er $200 mil­lion in on Feb­ru­ary 4, buy­ing up shares for $31.97 five days af­ter Pal­forzia won ap­proval. The mon­ey was sup­posed to fi­nance Pal­foriza’s com­mer­cial de­but. Aim­mune had just hired a team of ex­pe­ri­enced 80 ac­count man­agers and laid out plans for ex­ten­sive ed­u­ca­tion plans, with pre­sen­ta­tions and work­shops for hun­dreds of physi­cians and al­ler­gists across the coun­try.

“Aim­mune man­age­ment demon­strat­ed that they have done their home­work on the launch strat­e­gy for Pal­forzia,” Baird an­a­lyst Bri­an Sko­r­ney, an Aim­mune bull, said in a note on Feb­ru­ary 3, “and we ex­pect their ex­ten­sive mar­ket re­search and plan­ning should in­crease the odds of com­mer­cial suc­cess.” He added on Feb­ru­ary 5 that the Nestlé in­vest­ment should be “more than enough to fund the launch of Pal­forzia.”

But on May 11, in their Q1 call, the com­pa­ny an­nounced Covid-19 had ground­ed com­mer­cial­iza­tion to a halt. Shares, mean­while, tum­bled to $11.48 in the Feb­ru­ary stock crash and nev­er re­cov­ered.

At the same time, Aim­mune was look­ing for a part­ner to com­mer­cial­ize in Eu­rope, where they were ex­pect­ing ap­proval by year’s end. Nestlé emerged as one of sev­er­al in­ter­est­ed par­ties.

Paul Bul­cke

Then in Ju­ly, the Nestlé board of di­rec­tors, re­view­ing the part­ner­ship, be­gan con­sid­er­ing a larg­er trans­ac­tion. They di­rect­ed chair­man Paul Bul­cke and CEO Ulf Mark Schnei­der to re­view an un­spec­i­fied rec­om­men­da­tion from the board. Three days lat­er, on a tele­con­fer­ence with Aim­mune’s di­rec­tors, the two ex­ec­u­tives raised the prospect of a buy­out, float­ing a price per share of $30 — which was $6 less than the com­pa­ny’s Jan­u­ary mar­ket peak.

The di­rec­tors passed it on­to man­age­ment in a meet­ing on Ju­ly 13. In ad­di­tion to the usu­al M&A dis­cus­sions, the Aim­mune team was faced with the ques­tion of whether the of­fer jus­ti­fied wav­ing the stand­still agree­ment that pre­clud­ed Nestlé from buy­ing the com­pa­ny. It did not.

Nestlé came back a week lat­er with an of­fer of $32.50, rough­ly dou­ble the stock price — not enough, Aim­mune di­rec­tors de­ter­mined, for a full waiv­er of the agree­ment but enough for a par­tial waiv­er that would al­low the Aim­mune team to give a half-day pre­sen­ta­tion and ex­plain fur­ther their Pal­forzia plans.

Greg Be­har

Af­ter a phone call be­tween Aim­mune chair­man Mark Mc­Dade and Nestlé Health CEO Greg Be­har, the two sides signed a con­fi­den­tial­i­ty pact. (Be­har, though a mem­ber of Aim­mune’s board through Nestlé’s pri­or in­vest­ments, did not take part in Aim­mune’s di­rec­tor dis­cus­sions).

Aim­mune gave the pre­sen­ta­tion and then, while they wait­ed to hear back from Nestlé, di­rec­tors and man­age­ment met on Au­gust 4 to iden­ti­fy ad­di­tion­al par­ties that could have in­ter­est at the pre­mi­um Nestlé was of­fer­ing. They al­so dis­cussed the toll Covid-19 was tak­ing on the com­pa­ny. Their Q2 earn­ings, an­nounced the same day as the Nestlé pre­sen­ta­tion, had shown ze­ro Pal­forzia sales. At the meet­ing, mean­while, man­age­ment gave new pre­sen­ta­tions. In a best-case sce­nario, sales would go back on track and they would sur­pass the $1.2 bil­lion in rev­enue by 2024 an­a­lysts had pro­ject­ed for Pal­forzia. But in a worst-case, rev­enue would be cut in half all the way through 2025.

Nes­tle re­turned with an of­fer of $34.00 to con­tin­ue dis­cus­sions. Aim­mune’s reps reached out to five dif­fer­ent com­pa­nies about a buy­out, four by email and one by phone. Over the next two weeks, all five said they had no in­ter­ests.

Over the next two weeks, Aim­mune would agree to par­tial­ly waive the stand­still and en­ter late-stage talks on a $34.00 ba­sis.

Mark Mc­Dade

Then on Au­gust 24, Nestlé said they had fur­ther con­cerns. Their re­view had turned up hard ques­tions over the cost of de­vel­op­ing the rest of Aim­mune’s pipeline, which in­cludes Pal­forzia-like treat­ments for egg and tree nut al­ler­gies and a Xen­cor-li­censed an­ti­body for food al­ler­gies, and they were wor­ried about the net rev­enue from Pal­foriza sales. Still, they said, they were will­ing to dis­cuss a deal at $34. “There were val­u­a­tion con­cerns,”

Aim­mune re­it­er­at­ed they were worth more, press­ing for $35 and told Mc­Dade to call back Be­har to say the board “were not in con­sen­sus as to the ad­vis­abil­i­ty of a po­ten­tial trans­ac­tion” at $34. The stock, mean­while, had fall­en to less than $13.

Nesté told Aim­mune the next morn­ing they were prepar­ing an of­fer for $34.50. Af­ter a “ro­bust” de­bate lat­er that same morn­ing, the di­rec­tors agreed to take it if it came. The of­fer came in writ­ing that night. They signed the deal and waived the stand­still. A press re­lease fol­lowed on the 31st.

Secretary of health and human services Alex Azar speaking in the Rose Garden at the White House (Photo: AFP)

Trump’s HHS claims ab­solute au­thor­i­ty over the FDA, clear­ing path to a vac­cine EUA

The top career staff at the FDA has vowed not to let politics overrule science when looking at vaccine data this fall. But Alex Azar, who happens to be their boss’s boss, apparently won’t even give them a chance to stand in the way.

In a new memorandum issued Tuesday last week, the HHS chief stripped the FDA and other health agencies under his purview of their rule making ability, asserting all such power “is reserved to the Secretary.” Sheila Kaplan of the New York Times first obtained and reported the details of the September 15 bulletin.

President Donald Trump (via AP Images)

Signs of an 'Oc­to­ber Vac­cine Sur­prise' alarm ca­reer sci­en­tists

President Donald Trump, who seems intent on announcing a COVID-19 vaccine before Election Day, could legally authorize a vaccine over the objections of experts, officials at the FDA and even vaccine manufacturers, who have pledged not to release any vaccine unless it’s proved safe and effective.

In podcasts, public forums, social media and medical journals, a growing number of prominent health leaders say they fear that Trump — who has repeatedly signaled his desire for the swift approval of a vaccine and his displeasure with perceived delays at the FDA — will take matters into his own hands, running roughshod over the usual regulatory process.

#ES­MO20: Push­ing in­to front­line, Mer­ck and Bris­tol My­ers duke it out with new slate of GI can­cer da­ta

Having worked in parallel for years to move their respective PD-1 inhibitors up to the first-line treatment of gastrointestinal cancers, Merck and Bristol Myers Squibb finally have the data at ESMO for a showdown.

Comparing KEYNOTE-590 and CheckMate-649, of course, comes with the usual caveats. But a side-by-side look at the overall survival numbers also offer some perspective on a new frontier for the reigning checkpoint rivals, both of whom are claiming to have achieved a first.

UP­DAT­ED: Two wild weeks for Grail end in $8B Il­lu­mi­na buy­out

Grail’s whirlwind two weeks have ended in the wealthy arms of its former founder and benefactors.

Illumina has shelled out $8 billion to reacquire the closely-watched liquid biopsy startup they spun out just 5 years ago and sold off much of its shares just 3 years ago. The deal comes nearly two weeks after the well-heeled startup filed for a potentially massive IPO — one that was disrupted just a week later when Bloomberg reported that Illumina was in talks to buy their former spinout for up to $8 billion.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 90,400+ biopharma pros reading Endpoints daily — and it's free.

Roche vaults to the front of the NL­RP3 clin­i­cal race, pay­ing $448M up­front to bag In­fla­zome

Roche is going all in on NLRP3.

The pharma giant is putting down $448 million (€380 million) upfront to snatch Novartis-backed Inflazome, which makes it a clinical player in the space overnight.

Dublin and Cambridge, UK-based Inflazome is the second NLRP3-focused biotech Roche has acquired in less than two years, and although no numbers were disclosed in the Jecure buyout, this is almost certainly a much larger deal.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 90,400+ biopharma pros reading Endpoints daily — and it's free.

#ES­MO20: Bris­tol My­ers marks Op­di­vo's sec­ond ad­ju­vant win — eye­ing a stan­dard of care gap

Moving into earlier and earlier treatment lines, Bristol Myers Squibb is reporting that adjuvant treatment with Opdivo has doubled the time that esophageal or gastroesophageal junction cancer patients stay free of disease.

With the CheckMate-577 data at ESMO, CMO Samit Hirawat said, the company believes it can change the treatment paradigm.

While a quarter to 30% of patients typically achieve a complete response following chemoradiation therapy and surgery, the rest do not, said Ronan Kelly of Baylor University Medical Center. The recurrence rate is also high within the first year, Hirawat added.

Clay Siegall (Life Science Washington via YouTube)

#ES­MO20: Seat­tle Ge­net­ics eyes 4th ap­proval with new da­ta in a crowd­ed field

Does Seattle Genetics have another approval on its hands?

The last 12 months, not so great for the world, has been great for Seattle Genetics. The company landed two separate FDA approvals, signed a $4.5 billion deal with Merck and watched antibody-drug conjugates — the technology they spent years developing to broad industry skepticism — emerge suddenly as one of the most popular approaches in oncology. And on Monday at ESMO, the company and their partners at Genmab unveiled the data behind the ADC it hopes will provide its next major FDA approval.

Jonathan Rigby, Immune Regulation group CEO

Im­mune Reg­u­la­tion, tak­ing two clin­i­cal pro­grams to 're­set' the im­mune sys­tem, nets $53M+ Se­ries B

A little under two years after a company rebranding, Immune Regulation is taking an even bigger step toward advancing its goals.

Formerly known as Peptinnovate, the British biotech announced a $53.4 million Series B early Monday morning, helping to further advance two clinical programs in rheumatoid arthritis and asthma. Though those are the two initial indications the company is focusing on, CEO Jonathan Rigby told Endpoints News he hopes the candidates can be applied to a broad swath of autoimmune disorders.

Israel Lowy (Regeneron)

#ES­MO20: 'As good as any PD-1 out there': Re­gen­eron flash­es PD-(L)1 lung can­cer da­ta to ri­val Mer­ck

Regeneron entered the PD-(L)1 game late, so they devised a two-pronged strategy to catch up with Big Pharma rivals: They would push it into cancers where PD-1s had yet been tested, and they would prove that it’s as powerful in the big indications as any other on the market.

They cleared a hurdle on the first goal Friday, showing a 31% response in patients with the rare skin cancer basal cell carcinoma. And with the data they’re rolling out Monday, Regeneron cancer chief Israel Lowy is ready to declare success on the second.