Austin's Apollo Endosurgery to merge with San Diego company

Posted September 12th, 2016

Austin-based medical device company Apollo Endosurgery says it will become a publicly traded company by merging with a San Diego biotechnology firm.

Apollo, which makes the Lap-Band gastric bypass device, is merging with Lpath Inc., a publicly traded company that develops treatments for illnesses such as cancer and brain injuries.

Under the terms of the deal, Apollo investors would own about 96 percent of Lpath, and the company’s name will become Apollo Endosurgery Inc. The combined company will apply for listing on the Nasdaq under a new trading symbol, company executives said.

Founded in 2006, Apollo makes medical devices that can be used in place of less invasive surgery to treat obesity and other gastrointestinal disorders. In 2013, Apollo bought the Lap-Band, a stomach restricting band used to treat obesity, from Allergan for about $110 million.

Apollo, which has about 200 employees worldwide, had revenue of $68 million for 2015, according to the company.

Investors in Apollo, which include PTV Healthcare Capital and H.I.G. BioHealth Partners, have agreed to invest $29 million in the combined company. Apollo also has about $11.6 million in cash on hand and long-term debt of about $50 million as of June 30.

Apollo CEO Todd Newton said the reverse merger was an efficient way to enter the public market and access additional capital.

“Executing this transaction with Lpath is an expedient way to introduce our company to the public market,” Newton said. “With the additional equity support we will receive from Apollo’s major investors as part of this transaction, we will have the resources to meet our near-term business needs.”

The combined company would be based in Austin, led by Apollo executives and advised by a board appointed by Apollo.

Lpath, which has 14 employees, has a market capitalization of $6.55 million. Shares of Lpath were trading at $2.76 a piece, up 2.99 percent in mid-day trading on Monday.

The boards of both companies have approved the deal and it is pending shareholder approval. The transaction is expected to close during the fourth quarter of 2016.