Developer of medical devices and endoscopic surgical procedures Apollo Endosurgery has entered into a definitive agreement to acquire the obesity intervention division of Allergan for up to $110m.
Under the deal, expected to close by year's end, Apollo Endosurgery will pay $75m up front, plus a minority equity interest of $15m and around $20m in milestone payments.
The obesity intervention division is responsible for manufacturing and marketing the Lap-Band adjustable gastric band system and the Orbera intra-gastric balloon system.
With the acquisition, Apollo gains products including the Lap-Band, an adjustable gastric banding system with both US Food and Drug Administration (FDA) approval and broad-based insurance coverage and Orbera, an intragastric balloon system with international regulatory approval.
Apollo Endosurgery president and CEO Dennis McWilliams said the acquisition would enable the company to expand investment in innovative solutions that focus on improving patient outcomes in both the bariatric and endoscopic spaces.
"The addition of these devices will complement Apollo's portfolio to include less invasive bariatric product offerings, while expanding our domestic sales channel and increasing our global reach into more than 40 countries," McWilliams said.
Lap-Band helps patients gradually lose weight and keep it off without any cutting, stapling or amputation of the stomach.
Orbera intragastric balloon is designed to be inserted into the stomach and inflated to a volume which will restrict the amount of food intake and reduce hunger.
It is approved for sale outside the US in more than 40 countries.
Allergan chairman and CEO David E I Pyott said: "We are confident that Apollo Endosurgery has the management expertise, industry experience and commitment to innovation that will be essential to the continued clinical development and future advancement of the Lap-Band and Orbera franchises."
Apollo investors PTV Sciences, HIG BioVentures, Remeditex Ventures, Novo A/S and CPMG provided the equity financing for the acquisition.
Oxford Capital Partners, MidCap Financial, LLC and EastWest Financial Services led the debt financing and Piper Jaffray & Co served as exclusive financial advisor, and Cooley LLP served as legal counsel to Apollo Endosurgery.