A Recipe for Growth in Food Allergy Prevention

An estimated 33 million Americans have a food allergy, including one-in-13 children. Health insurance claims data reveals food allergies are on the rise, too, meaning the total addressable market is larger than ever, with plenty of growth potential. Market research from Grand View estimates the current market to be worth $5.87 billion and forecasts an annual growth rate of nearly 10%, driven by both growth in food allergy prevalence and treatment innovation.

As there is no cure for a food allergy, prevention is critical. For those who have already developed food allergies, that means preventing an allergic reaction by avoiding allergenic foods. Analysts say investment and growth potential in this area is significant, particularly for food manufacturers looking to capitalize on an underserved market. “We expect the outperformers in the years ahead to include manufacturers that invest more in M&A and in-house innovation to introduce new, allergy-friendly products,” a 2020 report from consulting firm McKinsey & Company stated.

Yet a growing body of evidence reveals an opportunity for parents and caretakers to prevent the development of food allergies through the early introduction of allergenic foods to babies—if those allergens are introduced in the correct amounts at the right stages of development.

Lil Mixins launched in 2018 to remove the guesswork and risk of this often complicated process. Founder and CEO Meenal Lele spoke with Middle Market Growth about the science behind Lil Mixins’ solutions, and how potential investors across the consumer products, healthcare and biopharmaceutical landscapes can approach this industry.

Getting a Head Start

As a chemical engineer, Lele is professionally qualified to take on the scientific complexities of food allergy prevention. As a mother of a son who developed multiple food allergies, she is also personally motivated to tackle the issue.

Lil Mixins is one brand under the umbrella of Hanimune Therapeutics, a protein engineering company focused on the prevention and treatment of food allergies that was also founded by Lele. Lil Mixins makes purified, concentrated proteins that are highly soluble (easily mixed into liquids or other foods a child is already eating), and connects consumers to resources on how and when to feed the mix-ins to children.

With Lil Mixins, Lele knew she wasn’t pursuing a new solution to food allergy prevention. Clinical trials have already solved that problem by demonstrating how to prevent food allergies through a strategic, timed introduction of certain allergenic foods at key stages in an infant’s early life. Instead, the problem she set out to solve was how to make that process as convenient as possible.

“The obvious question is, why can’t my kid just eat peanut butter?” she acknowledges.

Once parents come to understand the importance of safely introducing allergens on a particular schedule, they can quickly become overwhelmed by some of the challenges they face (young children can choke on peanut butter, for instance). Lil Mixins, says Lele, aims to lower the barriers to this process as much as possible. “That is 100% what separates us from the competition,” she explains.

The Convenience of Consumer, the Long Game of Healthcare

Having grown about 2x for the first couple years, and currently growing organically at about 50% year-over-year, Lil Mixins has about 15-20 employees across the country.

In many ways, Lil Mixins is a consumer business. Products can be purchased online and in stores like Target. They are marketed directly to shoppers themselves. The CEO points out, however, that the company has no marketing spend, thanks to the company’s status as the number one pediatrician recommended brand in the sector. “If a pediatrician sees 100 new babies every year, and they make that recommendation to 100 new parents every year at zero cost to you, that’s the best return on ad spend you could possibly have,” she says.

Building trust with pediatricians reflects Lil Mixins position within the healthcare space, too. That reality heavily influences Lele’s growth strategy. “When you start a company and you think of yourself as a CPG company, it’s all about how fast you can grow, because everything in CPG is riding a trend,” she says. “But when you’re talking about medicine, that’s not a trend. We’re playing the long game.”

In addition to e-commerce and brick-and-mortar availability, Lil Mixins will soon be able to be prescribed by pediatricians. “What we’re trying to do is create products that are most trusted by pediatricians, that are guideline compliant, and therefore can be prescribed to children through their insurance, not just products that can be sold in front of the drugstore as a CPG product,” she explains.

A search within middle-market search engine Grata reveals how much industry overlap exists within the food allergy space. With a whopping 15,508 food allergy businesses listed, 9,583 operate as a B2C company, 7,746 are listed as a healthcare business, and 2,268 listed as biopharmaceutical. Many of these businesses consider themselves to be players in more than one of these spaces.

An Informed Investor

Understanding the industry overlap of the food allergy space is key for potential investors.

On the larger end of the market, food and beverage conglomerates have been active as strategic acquirers and early stage investors. In 2019 Nestle, the world’s largest food and beverage company, acquired Before Brands, which similarly makes childhood food allergy prevention products, via its nutritional science arm Nestle Health Science.

More recently, Nestle announced its divestiture of Palforzia to U.S.-based healthcare business Stallergenes Greer, which specializes in allergy immunotherapy products. Palforzia is the first FDA approved oral immunotherapy to reduce peanut allergic reaction severity, created by drugmaker Aimmune Therapeutics, which Nestle acquired in 2020 for $2.6 billion. (Lele emphasizes that Lil Mixins is not an immunotherapy business, which involves modifying an immune system response to a disease. Instead, the company’s products aim to prevent the disease of a food allergy from developing in the first place through early introduction.)

Private equity has been quieter in this space, though there have been some deals. In 2019, Chicago-based private equity firm Shore Capital Partners formed its SENTA platform, which stands for Southern Ear, Nose, Throat and Allergy Partners. It’s a healthcare provider that offers, among other services, allergy treatments. Across the pond, NVM Private Equity invested in YorkTest Laboratories, a U.K.-based food intolerance and allergy testing business that offers home-to-laboratory tests to consumers, in 2022.

Much of the recent investment activity in the sector has been concentrated in early-stage startups. Earlier this year, Amulet, which developed a portable sensor for consumers to detect allergens in food, raised $6 million in Series A funding led by HealthX Ventures, for example.

Hanimune Therapeutics has completed both a friends and family, as well as a seed funding round. All backing is funneled into research and development as well as IP investments for the company and its brands in support of protein sourcing, handling, manufacturing, packaging and beyond. “There has been a lot of interest recently from various clinical groups looking to partner with us on what we think will be the first oral immunotherapeutic product that has a close-to-zero adverse event rate,” notes Lele.

The biggest thing for investors to understand is that millions of Americans have food allergies. This is a massive market. Everybody wants to be rid of their food allergy.

Meenal Lele

Lil Mixins

It’s a feat that speaks to just how difficult tackling food allergies can be, she adds, as allergy immunotherapies like allergy shots come with the risk of dangerous systemic reactions.

Mitigating that risk would be immensely valuable to the market, but preventing the risk from existing (by preventing allergies from developing in the first place) is what makes a company like Lil Mixins and its Hanimune Therapeutics parent so effective. “The way medicine is typically looked at is, we try to create products that handle symptoms, not the underlying root cause of the disease,” Lele says. “Food allergies is one area where symptom treatment is inadequate. It’s why inventors have struggled, because they approach it from symptom management, rather than getting to the root.”

For potential investors, she says, understanding how an acquisition target approaches the issue of food allergies must be top-of-mind.

“The biggest thing for investors to understand is that millions of Americans have food allergies. This is a massive market. Everybody wants to be rid of their food allergy,” Lele continues. “But we can’t deal with food allergies the way we’ve dealt with other things.”

Carolyn Vallejo is Middle Market Growth’s digital editor.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.