Apollo and Reshape play pass the parcel

Apollo Endosurgery and Reshape Lifesciences have swapped obesity devices – one to grow sales, and the other to shut sales down. Apollo, which bought the Lap-Band gastric band from Allergan back in 2014 for $90m, has now sold its entire surgical devices segment, of which Lap-Band is the mainstay, on to Reshape for just $10m up front. Apollo’s surgical segment is forecast to decline 7% per year to 2024; Reshape seems to believe that it can wring more value from the segment than Apollo could, saying that Lap-Band would “significantly enhance our financial profile”. Apollo will retain a secured interest in the assets of Reshape until either $7m in milestones is paid over the next three years or Reshape conducts an equity raise of at least $15m. Apollo will also make the surgical products for Reshape for up to two years, and distribute them outside the US for up to one year. In return Apollo has acquired Reshape’s gastric balloon – so it can shelve it, thereby boosting uptake of its own balloon, Orbera. Both gastric balloons have been linked with patient deaths, first in August 2017 and then again in June this year.

Bands, balloons and more: sales of obesity devices 
    Global sales ($m)  
Company Product line 2018 2020e 2022e 2024e CAGR
Apollo Endosurgery Endo-bariatric, including Orbera 45 63 79 94 +13%
Apollo Endosurgery Surgical, including Lap-Band 19 13 12 12 -7%
Johnson & Johnson Bands 66 70 74 79 +3%
Reshape Lifesciences ReShape and Maestro 5 18 53 88 +63%
Source: EvaluateMedTech.

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