Apollo Endosurgery (APEN) announced 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 (RSLS). The definitive transaction agreements were signed and closed simultaneously yesterday, December 17. 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. 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 two 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.
