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Nestle to start strategic review of peanut allergy treatment

By Scott Kanowsky

Investing.com -- Nestle SA (SIX:NESN) has announced that it will begin exploring "strategic options" for its peanut allergy treatment following slower-than-anticipated take-up by patients and healthcare professionals.

In a statement released ahead of an investor seminar on Tuesday, the Swiss consumer goods company said that the review of the medicine, known as "Palforzia," is expected to be completed in the first half of 2023.

The group acquired Palforzia in 2020 when it bought California-based pharmaceutical firm Aimmune, which specialized in developing treatments for people with potentially life-threatening food allergies. Analysts at Stifel noted that, at the time of the acquisition, Palforzia was projected to eventually reach sales of CHF 1 billion (CHF 1 = $1.0503).

Nestle added that, going forward, its health science division will "sharpen its focus" on consumer care and medical nutrition.

The Stifel analysts argued that Nestle's share price performance will likely be dictated by how that unit's acquisitions can bolster future growth, particularly after the $2.1B Aimmune purchase "seems to miss expectations."

Shares were slightly lower on Tuesday, as investors also considered Nestle's latest financial targets.

The Vevey-based company now projects organic sales growth of between 8% to 8.5% in 2022, up from its prior outlook at the "higher end" of the 6% - 8% band. Full-year income margin guidance of around 17.0% was also confirmed.

Meanwhile, it sees underlying trading operating profit margin in the range of 17.5% to 18.5% by 2025, warning that this figure will be impacted by a sharp recent increase in cost inflation. Annual underlying earnings per share growth is also set to be in the range of 6% to 10% in constant currency over the 2022 - 2025 period.

Nestle backed its ongoing CHF 20B share repurchase program from 2022 - 2024, and said it aims to maintain its practice of increasing its dividend year-on-year in Swiss francs.

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