Nestle signs $120 million deal with Seres for 'healthy gut' drugs

Reuters
A Nestle logo is pictured on a van outside the company headquarters in Vevey February 19, 2015. REUTERS/Denis Balibouse

ZURICH (Reuters) - Nestle is investing in U.S.-based Seres Therapeutics for a third time in a year, this time injecting $120 million to develop and commercialize medicines aimed at restoring a healthy bacteriological balance in the human digestive system. The deal announced on Monday for so-called "healthy gut" products will give Nestle's Health Science division exclusive rights to sell Seres' experimental treatments for Clostridium difficile infection (CDI) and inflammatory bowel disease outside the United States and Canada. Nestle's payments to Seres from the products, which are in development, could reach up to $1.9 billion after factoring in royalty and milestone installments over the next 15 years. The investment furthers food giant Nestle's healthcare push and could lead its five-year-old Health Science unit to lift ambitions of annual sales to beyond the 10 billion Swiss francs ($10 billion) it previously projected, unit head Greg Behar said. "(It) really brings breakthrough solutions into our pipeline in a field that's very much up and coming," Behar said. "It's a new health frontier." Behar said the drug would soon be going into clinical trial in Europe and could be expected to reach the market in a couple of years. Other markets expected to be of significant value include Japan, China, Russia and Brasil. The Health Sciences unit, which formed in 2011, has revenue of more than 2 billion francs, Nestle said in October. Behar is targeting new products as well as expanding sales to more countries to lift revenue. This marks Nestle's third investment in Seres within 12 months. It invested $65 million last January in the Cambridge, Massachusetts-based start-up and took an 18 percent stake in when the company went public last summer. Seres' treatments target disorders of the microbiome, the 100 trillion microorganisms living in the human gut, leading to conditions such as ulcerative colitis, Crohn's disease and CDI, the potentially fatal cause of diarrhea and intestinal swelling. This latest transaction includes two pipeline candidates for treating clostridium difficile and two treating inflammatory bowel disease, the first of which, SER 109, is currently in phase 2 trials. Delivered through a pill ingested twice daily, SER 109 has been granted orphan drug and breakthrough therapy designations by the U.S. Food and Drug Administration for targeting multiple recurrent clostridium difficile, according to Seres' release. ($1 = 0.9990 Swiss francs) (Reporting by Brenna Hughes Neghaiwi, editing by David Evans)