0001251769-18-000083.txt : 20180808 0001251769-18-000083.hdr.sgml : 20180808 20180808160935 ACCESSION NUMBER: 0001251769-18-000083 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20180808 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180808 DATE AS OF CHANGE: 20180808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Apollo Endosurgery, Inc. CENTRAL INDEX KEY: 0001251769 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 161630142 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35706 FILM NUMBER: 181001432 BUSINESS ADDRESS: STREET 1: 1120 SOUTH CAPITAL OF TX HWY STREET 2: BUILDING 1 SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78746 BUSINESS PHONE: 512-279-5100 MAIL ADDRESS: STREET 1: 1120 SOUTH CAPITAL OF TX HWY STREET 2: BUILDING 1 SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78746 FORMER COMPANY: FORMER CONFORMED NAME: LPATH, INC DATE OF NAME CHANGE: 20060316 FORMER COMPANY: FORMER CONFORMED NAME: LPATH INC DATE OF NAME CHANGE: 20051202 FORMER COMPANY: FORMER CONFORMED NAME: NEIGHBORHOOD CONNECTIONS INC DATE OF NAME CHANGE: 20040323 8-K 1 a8kearningsrelease2018.htm 8-K Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 8, 2018
 
 
 
Apollo Endosurgery, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-35706
 
16-1630142
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
1120 S. Capital of Texas Highway
Building 1, Suite #300
Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
(512) 279-5100
(Registrant’s telephone number, including area code)

 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 




Item 2.02    Results of Operations and Financial Condition.
On August 8, 2018, the Company issued a press release reporting its financial results for the fiscal quarter ended June 30, 2018. A copy of the Company’s press release is attached hereto as Exhibit 99.1.
The press release attached hereto as Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
APOLLO ENDOSURGERY, INC.
 
 
 
 
 
 
 
Dated:
August 8, 2018
 
 
 
 
 
 
 
By:
/s/ Todd Newton
 
 
 
 
Name:
Todd Newton
 
 
 
 
Title:
Chief Executive Officer
 



 EX-99.1 2 a2018q2ex-991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

APOLLO ENDOSURGERY, INC. REPORTS SECOND QUARTER 2018 RESULTS
OverStitch™ Product Sales Increase 37% Year-Over-Year
Conference Call to Discuss Results Today at 3:30 p.m. CT / 4:30 p.m. ET
AUSTIN, Texas (August 8, 2018) - Apollo Endosurgery, Inc. ("Apollo") (Nasdaq: APEN), a global leader in less invasive medical devices for bariatric and gastrointestinal procedures, today announced financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Highlights
•
OverStitch became Apollo's top selling product in U.S. and OUS direct markets
•
Completed public offering of common stock generating net proceeds of $21.9 million
•
Received Special 510(k) clearance from the FDA for OverStitch™ Sx Endoscopic Suturing System
Todd Newton, CEO of Apollo, commented, "During the second quarter, we made progress on a number of fronts. OverStitch sales were up 37% compared to the second quarter of 2017, becoming our top selling product in direct markets, while we also saw strong growth in sales of Orbera365 in the markets in which it is available. At the beginning of June, we received FDA approval for updated U.S. Orbera labeling to reflect the product's most current safety information to both physicians and patients. We continued to move closer to the introduction of OverStitch Sx and made progress both on our margin improvement projects and our clinical data initiatives."
Second Quarter 2018 Results
Total revenues in the second quarter of 2018 were $15.8 million, compared to $17.1 million in the second quarter 2017, a decrease of 8%.
Total Endo-bariatric product sales increased 13% to $10.8 million in the second quarter 2018 compared to $9.5 million in the second quarter 2017 and comprised 68% and 56% of total revenues, respectively.
Total Endoscopic Suturing System ("ESS") product sales increased 37% to $5.5 million in the second quarter 2018 compared to $4.0 million in the second quarter 2017. Outside the U.S. ("OUS") ESS product sales increased 44%, to $2.8 million and U.S. ESS product sales increased 31% to $2.7 million due to new user adoption and greater product utilization in existing accounts.
Total Intragastric balloon product ("IGB") sales decreased 4% to $5.3 million in the second quarter 2018 compared to $5.5 million in the second quarter 2017. OUS IGB product sales increased 4%, to $3.6 million as higher unit sales and average selling prices of Orbera365™ in Europe was partially offset by weaker six-month balloon sales in Brazil. In the U.S., IGB product sales decreased 18% to $1.7 million due to decreased consumer demand in reaction to the June 4, 2018 FDA letter to Health Care Professionals issued to highlight the new U.S. Orbera labeling.
Total Surgical product sales decreased $2.7 million, or 36% in the second quarter 2018 compared to the second quarter 2017 due to reductions in gastric banding procedures being performed worldwide.
Gross margin for the second quarter 2018 was 58%, compared to 61% for the second quarter 2017 as the result of a greater proportion of our overall product sales coming from our ESS products which realize a lower gross margin than our other products. While gross margin was down due to our changing sales mix, ESS product gross margin improved compared to the same period in 2017 due to completed gross margin improvement projects and higher selling prices. We expect additional ongoing and planned gross margin improvement projects to further improve Endo-bariatric product gross margin in 2019.
Total operating expenses increased $0.8 million to $16.7 million in the second quarter 2018, compared to the second quarter 2017. The increase was due to higher research and development expenses in the second quarter attributable to clinical study activities associated with our ESS and IGB products.
Net loss for the second quarter 2018 was $9.5 million compared to $6.9 million for the second quarter 2017. The increased net loss was primarily due to lower gross margin and higher research and development expenses.
Cash, cash equivalents and restricted cash were $35.4 million as of June 30, 2018, which includes total net proceeds of approximately $21.9 million from the Company's follow-on common stock offering that closed on June 22, 2018.




Conference Call
Apollo will host a conference call on August 8, 2018 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss Apollo's operating results for the second quarter ended June 30, 2018.
To participate in the conference call dial (800) 263-0877 for domestic callers and (646) 828-8143 for international callers. The conference ID number is 7723529. A live webcast of the conference call will be made available on the "Events and Presentations" section of our Investor Relations website: www.ir.apolloendo.com.
A replay of the webcast will remain available on Apollo's website, www.apolloendo.com, until Apollo releases its third quarter 2018 financial results. In addition, a telephonic replay of the call will be available until August 14, 2018. The replay dial-in numbers are (844) 512-2921 for domestic callers and (412) 317-6671 for international callers. The replay conference ID number is 7723529.
About Apollo Endosurgery, Inc.
Apollo Endosurgery, Inc. is a medical technology company focused on less invasive therapies for the treatment of obesity, a condition facing over 600 million people globally, as well as other gastrointestinal conditions. Apollo's device based therapies are an alternative to invasive surgical procedures, thus lowering complication rates and reducing total healthcare costs. Apollo's products are offered in over 70 countries today and include the OverStitch™ Endoscopic Suturing System, the ORBERA® Intragastric Balloon, and the LAP-BAND® Adjustable Gastric Banding System.
Apollo’s common stock is traded on Nasdaq Global Market under the symbol "APEN". For more information regarding Apollo Endosurgery, go to: www.apolloendo.com.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: the advancement of Apollo products; development of enhancements to Apollo’s existing products and technologies; market acceptance of Apollo’s products; and statements relating to the availability of cash for Apollo's future operations, Apollo’s ability to support the adoption of its Endo-bariatric and Surgical products and its ability to broaden its product portfolio as well as other factors detailed in Apollo’s periodic reports filed with the Securities and Exchange Commission, or SEC, including its Form 10-K for the year ended December 31, 2017. Copies of reports filed with the SEC are posted on Apollo’s website and are available from Apollo without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, Apollo disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Disclosure Information
Apollo uses the investor relations section of its website as a means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor Apollo's investor relations website in addition to following Apollo's press releases, SEC filings, and public conference calls and webcasts.
Contacts
Apollo Endosurgery, Inc.
Stefanie Cavanaugh, 512-279-5100
Chief Financial Officer
investor-relations@apolloendo.com

The Ruth Group
Lee Roth, 646-536-7000
apolloendo@theruthgroup.com




APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except for share data)
(unaudited)
 
 
Three months ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Revenues
 
$
15,788

 
$
17,109

 
31,531

 
31,626

Cost of sales
 
6,607

 
6,636

 
13,160

 
11,732

Gross margin
 
9,181

 
10,473

 
18,371

 
19,894

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
8,489

 
8,580

 
17,734

 
16,854

General and administrative
 
3,249

 
3,248

 
6,568

 
7,435

Research and development
 
3,154

 
2,285

 
5,610

 
4,242

Amortization of intangible assets
 
1,802

 
1,827

 
3,604

 
3,641

Total operating expenses
 
16,694

 
15,940

 
33,516

 
32,172

Loss from operations
 
(7,513
)
 
(5,467
)
 
(15,145
)
 
(12,278
)
Other expenses:
 
 
 
 
 
 
 
 
Interest expense, net
 
1,019

 
1,046

 
1,979

 
2,516

Other expense
 
981

 
282

 
465

 
168

Net loss before income taxes
 
(9,513
)
 
(6,795
)
 
(17,589
)
 
(14,962
)
Income tax expense
 
28

 
63

 
86

 
113

Net loss
 
$
(9,541
)
 
$
(6,858
)
 
(17,675
)
 
(15,075
)
Net loss per share, basic and diluted
 
$
(0.53
)
 
$
(0.64
)
 
$
(1.00
)
 
$
(1.41
)
Shares used in computing net loss per share, basic and diluted (1)
 
18,005,759

 
10,702,627

 
17,654,777

 
10,700,431

_________________________________________
(1) In July 2017, 6.5 million common shares were issued upon completion of a public offering. In June 2018, 4.3 million common shares were issued upon completion of a public offering.







APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Product Sales by Product Group and Geographic Market
Unaudited (In thousands)
 
 
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
 
% Increase / (Decrease)
 
 
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
ESS
 
$
2,655

 
$
2,825

 
$
5,480

 
$
2,034

 
$
1,956

 
$
3,990

 
30.5
 %
 
44.4
 %
 
37.3
 %
 
IGB
 
1,675

 
3,609

 
5,284

 
2,052

 
3,477

 
5,529

 
(18.4
)%
 
3.8
 %
 
(4.4
)%
Endo-bariatric
 
4,330

 
6,434

 
10,764

 
4,086

 
5,433

 
9,519

 
6.0
 %
 
18.4
 %
 
13.1
 %
Surgical
 
2,631

 
2,093

 
4,724

 
4,752

 
2,636

 
7,388

 
(44.6
)%
 
(20.6
)%
 
(36.1
)%
Other
 
292

 
8

 
300

 
194

 
8

 
202

 
50.5
 %
 
—
 %
 
48.5
 %
 
Total revenues
 
$
7,253

 
$
8,535

 
$
15,788

 
$
9,032

 
$
8,077

 
$
17,109

 
(19.7
)%
 
5.7
 %
 
(7.7
)%
 
% Total revenues
 
45.9
%
 
54.1
%
 
 
 
52.8
%
 
47.2
%
 
 
 
 
 
 
 
 

 
 
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
 
% Increase/ (Decrease)
 
 
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
ESS
 
$
5,152

 
$
6,095

 
$
11,247

 
$
3,722

 
$
3,111

 
$
6,833

 
38.4
 %
 
95.9
 %
 
64.6
 %
 
IGB
 
3,286

 
6,527

 
9,813

 
3,860

 
6,160

 
10,020

 
(14.9
)%
 
6.0
 %
 
(2.1
)%
Endo-bariatric
 
8,438

 
12,622

 
21,060

 
7,582

 
9,271

 
16,853

 
11.3
 %
 
36.1
 %
 
25.0
 %
Surgical
 
5,569

 
4,359

 
9,928

 
8,849

 
5,559

 
14,408

 
(37.1
)%
 
(21.6
)%
 
(31.1
)%
Other
 
525

 
18

 
543

 
351

 
14

 
365

 
49.6
 %
 
28.6
 %
 
48.8
 %
 
Total revenues
 
$
14,532

 
$
16,999

 
$
31,531

 
$
16,782

 
$
14,844

 
$
31,626

 
(13.4
)%
 
14.5
 %
 
(0.3
)%
 
% Total revenues
 
46.1
%
 
53.9
%
 
 
 
53.1
%
 
46.9
%
 
 
 
 
 
 
 
 
_________________________________________
Endoscopic Suturing System ("ESS") and Intragastric Balloon ("IGB").





APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
2016 and 2017 Product Sales by Product Group and Geographic Market
Unaudited (In thousands)
 
 
 
Q1 2017
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Full Year 2017
 
 
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
ESS
 
$
1,688

 
$
1,155

 
$
2,843

 
$
2,034

 
$
1,956

 
$
3,990

 
$
2,018

 
$
2,878

 
$
4,896

 
$
2,279

 
$
2,473

 
$
4,752

 
$
8,019

 
$
8,462

 
$
16,481

 
IGB, excluding starter kits
 
1,490

 
2,683

 
4,173

 
1,770

 
3,478

 
5,248

 
1,137

 
3,151

 
4,288

 
1,042

 
3,829

 
4,871

 
5,439

 
13,141

 
18,580

 
IGB starter kits
 
318

 
—

 
318

 
282

 
—

 
282

 
126

 
—

 
126

 
136

 
—

 
136

 
862

 
—

 
862

Endo-bariatric
 
3,496

 
3,838

 
7,334

 
4,086

 
5,434

 
9,520

 
3,281

 
6,029

 
9,310

 
3,457

 
6,302

 
9,759

 
14,320

 
21,603

 
35,923

Surgical
 
4,097

 
2,923

 
7,020

 
4,752

 
2,636

 
7,388

 
4,422

 
2,605

 
7,027

 
4,095

 
2,063

 
6,158

 
17,366

 
10,227

 
27,593

Other
 
157

 
6

 
163

 
194

 
7

 
201

 
200

 
7

 
207

 
215

 
8

 
223

 
766

 
28

 
794

 
Total Revenues
 
$
7,750

 
$
6,767

 
$
14,517

 
$
9,032

 
$
8,077

 
$
17,109

 
$
7,903

 
$
8,641

 
$
16,544

 
$
7,767

 
$
8,373

 
$
16,140

 
$
32,452

 
$
31,858

 
$
64,310



 
 
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Full Year 2016
 
 
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
U.S.
 
OUS
 
Total Revenues
 
ESS
 
$
1,255

 
$
590

 
$
1,845

 
$
1,597

 
$
933

 
$
2,530

 
$
1,542

 
$
765

 
$
2,307

 
$
1,790

 
$
716

 
$
2,506

 
$
6,184

 
$
3,004

 
$
9,188

 
IGB, excluding starter kits
 
1,166

 
3,065

 
4,231

 
1,316

 
3,504

 
4,820

 
1,225

 
3,690

 
4,915

 
1,284

 
3,120

 
4,404

 
4,991

 
13,379

 
18,370

 
IGB starter kits
 
2,128

 
—

 
2,128

 
1,073

 
—

 
1,073

 
499

 
—

 
499

 
650

 
—

 
650

 
4,350

 
—

 
4,350

Endo-bariatric
4,549

 
3,655

 
8,204

 
3,986

 
4,437

 
8,423

 
3,266

 
4,455

 
7,721

 
3,724

 
3,836

 
7,560

 
15,525

 
16,383

 
31,908

Surgical
5,182

 
2,772

 
7,954

 
5,768

 
2,946

 
8,714

 
5,295

 
2,656

 
7,951

 
5,315

 
2,332

 
7,647

 
21,560

 
10,706

 
32,266

Other
92

 
6

 
98

 
130

 
9

 
139

 
111

 
3

 
114

 
119

 
6

 
125

 
452

 
24

 
476

 
Total Revenues
 
$
9,823

 
$
6,433

 
$
16,256

 
$
9,884

 
$
7,392

 
$
17,276

 
$
8,672

 
$
7,114

 
$
15,786

 
$
9,158

 
$
6,174

 
$
15,332

 
$
37,537

 
$
27,113

 
$
64,650

_________________________________________
Endoscopic Suturing System ("ESS") and Intragastric Balloon ("IGB").