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Product line sale

Apollo Endosurgery sells Lap-Band system to ReShape Lifesciences

The 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

Apollo Endosurgery has 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. The definitive transaction agreements were signed and closed on 17 December 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,” stated Todd Newton, Apollo’s Chief Executive Officer. “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 US$10 million and ReShape’s intra-gastric balloon product line. Apollo will also receive payments of US$2 million each on the first and second anniversaries of the closing, and a final payment of US$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 US$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 US 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 US$10 million to pay down its borrowings under its senior secured credit facility.

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