Apollo Endosurgery Inc, a global leader in less invasive medical devices for bariatric and gastrointestinal procedures, announces the sale of its Surgical product line, which consists of the Lap-Band adjustable gastric banding system and other accessories used in laparoscopic bariatric surgery, to ReShape Lifesciences Inc.
The definitive transaction agreements were signed and closed simultaneously on December 17, 2018.
This transaction will allow Apollo to focus all its efforts on growing the clinical adoption of its Endo-bariatric product offerings, which consists of its OverStitch Endoscopic Suturing Systems and the Orbera Intragastric Balloon technologies.
“Our Surgical product line has served an important purpose for us, but it is no longer a strategic fit with our focus on our Endo-bariatric products and therapies,” states Todd Newton, Apollo’s chief executive officer, in a media release.
“The future for therapeutic endoscopy is very promising, especially due to flexible endoscopic suturing delivered by our OverStitch technology. By allowing physicians to suture with precision and assurance from a flexible endoscope, OverStitch enables many improved core gastrointestinal and bariatric therapy options for physicians and their patients.
“We also remain very bullish on the potential of the intra-gastric balloon market. We believe it is in the best interest of Apollo’s customers and shareholders that we direct our attention exclusively to the growth opportunities being afforded to us from these products.”
At closing Apollo received cash of $10 million and ReShape’s intra-gastric balloon product line. Apollo will also receive payments of $2 million each on the first and second anniversaries of the closing, and a final payment of $3 million on the third anniversary of the closing.
As part of the transaction, Apollo retains a secured interest in the assets of ReShape until the earlier of a) satisfaction of the payments due, or b) the completion by ReShape of a qualifying equity raise of at least $15 million.
Apollo and ReShape also entered into a set of transition services agreements under which Apollo will continue to manufacture the Surgical product line for ReShape for up to 2 years, continue distributing the products in markets outside the United States for up to 12 months, and other specified services.
While the ReShape intra-gastric balloon will remain available for the near term, Apollo intends to focus its commercial efforts exclusively on its Orbera intra-gastric balloon products.
Apollo used the upfront cash proceeds from ReShape of $10 million to pay down its borrowings under its senior secured credit facility.
[Source(s): Apollo Endosurgery Inc, Business Wire]