Apollo Endosurgery raises $50M to pay debt for flagging Lap-Band

An illustration of the Lap-Band and the stomach--Courtesy of Apollo

Apollo Endosurgery has raised $50 million from private equity investor Athyrium Capital Management mostly to repay debt it accrued when it acquired the Lap-Band from Allergan ($AGN) in December 2013 for up to $110 million. As part of that deal, Apollo also gained the intra-gastric balloon system Orbera, which isn't approved in the U.S.

Last year, the company rolled out an advertising campaign and a financing program to aid in promoting the Lap-Band. But the Lap-Band has been struggling in recent years after a 2011 study found that about one in three Lap-Band patients experienced band erosion with almost half of them requiring surgical removal of their bands. In addition, weight loss is less with the Lap-Band than with other forms of bariatric surgery.

"Athyrium is excited to partner with Apollo during this transformative time in the company's life," Athyrium Partner Richard Pines said in a statement. "Apollo's unique portfolio of minimally invasive products addresses the unmet need for treatments that are both more efficacious and safer in the large, growing global obesity market."

Orbera was already marketed ex-U.S. when Apollo acquired it, but it is no longer listed among Apollo's products which, in addition to Lap-Band, include the OverStitch Endoscopic Suturing System, the OverTube Endoscopic Access System and the Tissue Helix. The company also is developing the Sumo Endoscopic Tissue Access and Resection System to remove precancerous gastrointestinal polyps during endoscopy procedures.

Apollo Endosurgery was founded in 2006 out of the Apollo Group, a think-tank comprised of gastroenterologists and surgeons from five research institutions: Mayo Clinic, Johns Hopkins, Medical University of South Carolina, University of Texas Medical Branch-Galveston and Chinese University-Hong Kong. It was started to commercialize the innovations from the Apollo Group.

- here is the release