AP NewsBreak: Nestle gets stake in US-based Accera

AP News
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Posted: Jul 18, 2012 1:55 PM
AP NewsBreak: Nestle gets stake in US-based Accera

GENEVA (AP) — Making what it calls its first big move into "brain health" products, Swiss food and drinks giant Nestle SA has acquired a stake in a privately held U.S. healthcare company that makes a vanilla milkshake prescribed to Alzheimer's patients, a Nestle executive told The Associated Press on Wednesday.

The Vevey, Switzerland-based company's undisclosed stake gives it status as the biggest minority shareholder in Accera, Inc., the Broomfield, Colo., company that makes the milkshake, said Luis Cantarell, president and CEO of Nestle Health Science SA, a wholly owned subsidiary. Exact terms of the transaction were not disclosed.

Cantarell said the acquisition could eventually help expand the Nestle line of medical food products.

"If you look from a financial point of view, this is a very small investment. If you look from a strategic point of view, which is why we created Nestle Health Science, this is a big hallmark towards promoting medical food as a source of an element to present and to help people manage chronic conditions like Alzheimer's," Cantarell told AP in an interview.

Cantarell's division was created almost two years ago to pioneer what Nestle calls an emerging industry that combines food and pharmaceuticals. The company is looking to expand its nutritional food product line through research and acquisitions such as with four previous companies, Vitaflo, CM&D Pharma Ltd., Prometheus Laboratories and Vital Foods.

Already, Accera's calorie packets, branded as "Axona" are prescribed to some 30,000 Alzheimer's patients. The U.S. company says the milkshake, sold in vanilla and strawberry flavors, contains a compound made from coconut oil that is metabolized in a way that can serve as fuel for the brain, which in Alzheimer's patients isn't able to convert glucose into energy as efficiently as possible.

The deal will give Cantarell a seat on Accera's newly expanded board of directors, on which Nestle already has one representative. Nestle will then have two of six board seats on Accera, in which Nestle's venture capital fund first invested in 2004.

A spokesman for Accera could not immediately be reached Wednesday.

Since it is sold as medical food, the Axona milkshake must meet truth-in-labeling requirements but doesn't need U.S. Food and Drug Administration approval.

Accera has been paying for clinical trials to try to overcome some skepticism among medical experts and prove the milkshake is effective, Cantarell said, adding that Nestle's aim is to provide its expertise and guidance for the research.

"We do this because we believe this will be a big thing. We're trying to plant a seed to create a future," he said.

"From this new untapped territory of nutrition and the brain, that's the first, and that's why we're very much excited."