Kendall Squared brings you dispatches from the world’s epicenter for biotechnology and drug discovery.

Nestlé, the global food behemoth known for selling chocolate and frozen pizza, has been acting a lot like a big drug company lately.

Its Nestlé Health Science subsidiary, which develops nutritional products to improve health, is pouring money into companies targeting conditions like gut infections, muscle loss, and Alzheimer’s disease. It just opened an outpost in the biotech hub of Kendall Square.

And CEO Greg Behar, who took charge of the subsidiary in 2014 after more than a decade in the pharmaceutical industry, spent three days last week in the Boston area last week, in part to scout biotech companies as investment targets. He said he’s looking for startups with strong management and good science in fields such as brain and gastrointestinal health.

advertisement

“As long as we find those, we’ll continue to invest,” Behar told STAT in an interview during his trip.

So far, Nestlé Health Science has focused on bringing dietary supplements to market. They’re lightly regulated — no clinical trials needed — so they’re far quicker and cheaper to get on store shelves than traditional pharmaceuticals.

But federal regulators don’t let supplement makers advertise with specific health claims. So while Nestlé can say its shakes and powders boost brain health in a general sense, it can’t say they treat dementia or stave off Alzheimer’s.

That may change as the company begins to make moves into regulated products.

The health science subsidiary is in talks with the Food and Drug Administration as it maps out a path to regulatory approval for two of its experimental products. Nestlé got the green light from the FDA to start late-stage human trials for a medical food developed in-house targeting Crohn’s disease. And it’s submitted paperwork to the FDA about how it plans to conduct late-stage human testing for a drug compound licensed from a German biotech company to treat ulcerative colitis.

The new focus is turning heads.

“It definitely is a serious foray into the biotech arena,” said Noubar Afeyan, CEO of venture capital firm Flagship Ventures, which has a strategic and financial partnership with Nestlé Health Science.

Launched five years ago, Nestlé’s health science subsidiary employs 3,000 people globally and brings in annual revenue of about $2 billion. The big drivers: high-protein nutritional shakes sold under the Boost brand, and shakes and soups marketed under the Meritene brand as reducing “tiredness and fatigue,” among other benefits. Together, Boost and Meritene account for about a quarter of the subsidiary’s yearly revenue.

The health science subsidiary accounts for just a tiny fraction of the Swiss corporation’s overall sales. But executives say they want to eventually increase the subsidiary’s revenue by a factor of five.

To that end, the subsidiary has disclosed a collective $200 million in investments in and deals with biotechs Seres Therapeutics and Pronutria Biosciences, both Flagship companies based in Cambridge. Nestlé also made a “significant” investment, according to Afeyan, in a Flagship fund devoted to incubating new companies. And it took an 18 percent stake when Seres went public last summer.

A team from Seres, which is developing products to maintain a healthy microbiome and defeat infections such as C. difficile, updated Behar on its scientific progress during his tour of Cambridge last week.

“We look at them as a pharma company,” Seres CEO Roger Pomerantz said.

Nestlé’s increasing interest in health products comes at a time when dietary supplements are under increasing scrutiny from regulators.

In recent months, the FDA has created a new office devoted to regulating supplements, also called nutraceuticals. It has issued a slew of warning letters and recalls. Federal prosecutors, meanwhile, have filed a flurry of criminal charges against supplement makers for allegedly selling products they knew to be dangerous.

And both the Pentagon and the US Anti-Doping Agency have expressed concern about the widespread use of supplements that purport to improve well-being but don’t have evidence to back those claims.

Behar said a regulatory crackdown wouldn’t set Nestlé Health Sciences back. “We don’t see an impact for us because we are, I would say, much more conservative in general” than many supplement makers in terms of the claims it makes about its products, he said.

But Nestlé’s investment targets haven’t entirely escaped scrutiny: Nestlé is a major investor in the Colorado biotech Accera, which sells a shake aimed at Alzheimer’s patients. The FDA hit Accera with a warning in 2014 for making unfounded claims that it could treat certain stages of the disease. Accera is no longer actively promoting its shake and is now developing a more traditional drug aimed at Alzheimer’s by targeting brain metabolism.

Sign up to our Weekend Reads newsletter

Please enter a valid email address.

Behar said he doesn’t see any big competitors approaching the market for therapeutic nutrition the way Nestlé does. But that doesn’t mean the company has the field to itself.

Pharma giant Abbott Laboratories sells Ensure shakes to aging baby boomers. And at around the same time Nestlé launched its Health Science subsidiary, GlaxoSmithKline acquired a line of energy drinks and sports nutrition products, and Sanofi acquired more than 40 supplements from a company in India.

“I think you’re going to find Nestlé competing [with big pharmaceutical companies], both more directly in terms of product as well as for personnel” and for mergers and acquisitions, said Robert Waldschmidt, a financial analyst for the UK investment bank Liberum.

A previous version of this story imprecisely characterized the status of Nestlé Health Science. It’s a wholly owned subsidiary of Nestlé, with its own board of directors.

Leave a Comment

Please enter your name.
Please enter a comment.

Recommended Stories

Sign up for our
Daily Recap newsletter

A roundup of STAT’s top stories of the day in science and medicine — delivered straight to your inbox every weekday afternoon.