The Swiss group will pay DBV Technologies 10 million euros upfront for rights to its skin patch test for cow's milk protein allergy (CMPA), with the balance depending on successful development, the two companies said on Tuesday.
Shares in the French biotech company rose 5 percent on the news.
The deal underscores Nestle's ambitions for its Health Science division, which it believes could eventually generate more than 10 billion Swiss francs ($10 billion) in annual sales.
It also complements the company's market-leading infant formula business and could help lift sales of products designed for babies with food intolerance.