Nestle may unload its peanut allergy drug

Nestle SA said Tuesday it would explore strategic options for the world's only approved peanut allergy drug treatment, effectively putting it up for sale, following slower than expected adoption by patients and doctors, according to the company.

The move comes just two years after the global food and beverage giant agreed to buy the drug's developer, Palforzia, for $2.6 billion.

Nestle CEO Mark Schneider on Tuesday told investors that Nestle is trying to correct mistakes quickly and "exploring strategic options" for Palforzia.

Schneider attributed the poor performance to the laborious treatment process, which requires doctor visits every two weeks for four to five months.

Palforzia, essentially peanut powder in a pill, became the first drug for peanut allergies in children to be approved by the US Food and Drug Administration (FDA) in early 2020. It aimed at consumers from the ages of 4 to 17 with a confirmed peanut allergy diagnosis.

The drug may alleviate some of the symptoms associated with the allergy such as constriction of airways, hives and swelling.

Analysts had expected the drug to generate more than $1 billion in sales. However, sales of Palforzia have been modest.

"We did have high hopes for this business," 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 affects approximately 1 million children in the US and only 1 out of 5 of these children will outgrow their allergy, Peter Marks, director of the FDA's Center for Biologics Evaluation and Research, said in 2020 when announcing Palforzia's approval.

"Because there is no cure, allergic individuals must strictly avoid exposure to prevent severe and potentially life-threatening reactions," Marks said.

Palforzia doesn't aim to cure the allergy. The idea of the drug is to expose patients to small but gradually increasing amounts of peanut powder to build up resistance to the allergen.

Clinical data showed that 67.2 percent of Palforzia recipients tolerated a 600 mg dose of peanut protein in the challenge, or about two whole peanuts, compared to 4 percent of placebo recipients.

While the Nestle CEO emphasized that the treatment is safe, the risk of anaphylaxis means patients must spend at least one hour in the doctor's office as doses are increased. He added that allergists weren't compensated for the extra time required to treat patients with Palforzia, resulting in lower-than-expected patient-retention rates and acceptance rates.