Nestlé and BioGaia have entered into a supplementary agreement to the original from February 2012 when Biogaia sold the rights for the use of Lactobacillus reuteri Protectis in infant formula to Nestle.

Under the original agreement in 2012, Biogaia received EUR 40 million up-front as well as a commitment to a further EUR 10.8 million between 2014 to 2017 upon achievement of certain milestones. In February 2014, the first milestone payment of EUR 3.6 million was received.

According to the new agreement, Biogaia will be provided with royalties of approximately SEK 92 million over a three-year-period starting during the second quarter of 2014, for which Biogaia will carry out specific clinical studies in the paediatric area. Also, Biogaia will develop new products for Nestlé in new areas. The development will include both pre-clinical and clinical studies as well as product development. If the development is successful, these products will be produced by Biogaia and sold to Nestlé, states Biogaia. Furthermore, the agreement also means that Biogaia will immediately receive the remaining milestone payments totalling EUR 7.2 million from the 2012 agreement. These payments as well as the milestone payment already received will be entered as income for the current quarter.

“We are of course very satisfied with this agreement, which gives us additional financial resources, improved profits and a great opportunity for us to develop a number of interesting products for Nestlé”, comments Peter Rothschild, President Biogaia in a press release.