Forward Looking Statements and Regulatory Advisory
Forward Looking Statements: Certain statements in this presentation are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it may have on the Company’s operations, the demand for the Company’s products, global supply chains and economic activity in general. 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; the execution of our gross margin improvement projects; the ability to collect future payments from ReShape; statements relating to the availability of cash for Apollo's future operations; and Apollo’s ability to support the adoption of its products and 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, 2019 and Form 10-Q for the quarter ended March 31, 2020. 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.
Product Regulatory Advisory: This presentation is intended for the investment and financial community and not for the promotion of Apollo products or related procedures. The Apollo Intragastric Balloon products are approved in the US as a weight loss aid for adults suffering from obesity, with a body mass index (BMI) ≥30 and ≤40 kg/m2, who have tried other weight loss programs, such as following supervised diet, exercise, and behavior modification programs, but who were unable to lose weight and keep it off. Outside of the US the indications for Apollo Intragastric Balloon products vary based on product version and local regulatory clearance. The Overstitch is cleared for the endoscopic placement of sutures and the approximation of soft tissue in the GI tract The Overstitch clearance does not include procedure-specific indications for use. Although Apollo has and continues to obtain clinical data on additional uses for its products, the safety and effectiveness of these uses has not been cleared or approved for commercial purposes by the U.S. Food and Drug Administration.
2
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000ENDOSCOPY PRODUCT REVENUE $000s
ESS IGB
Transforming Therapeutic Endoscopy
Products • Endoscopic Suturing Systems
(ESS): OverStitch & OverStitch Sx
• Intragastric Balloon Systems (IGB):
Orbera, BIB, and Orbera365
User • Gastroenterologist
• Bariatric surgeons
Procedures • OverStitch: endolumenal surgeries
for GI tract, primary and revisional
bariatric therapies
• Orbera: interventional weight loss
Apollo Endosurgery Overview
3
ENDOSCOPY PRODUCT
ANNUALIZED CAGR 16%1
ESS ANNUALIZED
CAGR 38%1
IGB product revenue excludes US ORBERA starter kit sales in 2016 and 2017
1. CAGR rates calculated through 4Q19 period.
Operational Priorities
ESS: Accelerate momentum
in high value endoluminal
procedures
IGB: Leverage data with
consistently >10% TBW
reduction
Drive scale in the operating
model
OverStitch Sx launch
addresses
>90%OF MARKET WITH
SINGLE-CHANNEL
SCOPES
Last two years
>40%CAGR
Increased
diverse utilization
OF ORIGINAL
DUAL-CHANNEL
OVERSTITCH
HANDLE
Strong OUS market
position supports
VOLUME GROWTH
OPPORTUNITY
Increased US clinical
interest and documentation
MEDICAL WEIGHT
LOSS
Growing revenue in
CORE PRODUCT
LINES DRIVE SCALE
Margin improvement projects expected
$3.25M ANNUAL COST REDUCTION
COMPLETED; $2.5 MILLION
ADDITIONAL OPPORTUNITY
4
Apollo Response to COVID-19 Pandemic
5
Apollo Response
Preserve Cash – actions expected to reduce Q2-20 cash
requirements by $7 mil• Global compensation reductions implemented
• Other operating commitments reduced
• Restructured near-term inventory purchase commitments
Maintain Ability to Respond when Demand Improves
Continuing Critical Growth Project Investments• MERIT Trial and reimbursement initiatives
• New product development
Global Market Displacement• Strong start to case volumes Jan and Feb,
onset of pandemic impact in March
• Deferral of elective and non-critical procedures;
pushout of distributor orders
• Expecting significant reduction in Q2 cases
OverStitch™ – How It Works
7
320+ PATENTS and PATENTS PENDING
Load needle with suture Pull tissue into device -
pass needle and
suture through tissue
Grab tissue with helix Repeat as needed.
Drop needle
Deploy cinch to
complete suturing
Pull suture to
approximate tissue
1 2 3 4 5 6
Key intellectual property beyond 2030.
Enables physicians to perform endolumenal procedures that previously could not be
Overstitch has broad current and future applications – upper and lower GI tract
OverStitch™ – Large Addressable Markets for Endolumenal Surgery
8 * See Product Regulatory Advisory, slide 2
Bariatrics
$4.8BUpper GI
$150MGLOBAL
ADDRESSABLE
MARKET
GLOBAL
ADDRESSABLE
MARKET
• Primary (ESG)
• Revisions
• Stent Fixation
• ESD or EMR site closure
• POEM
• Fistula and other defect closure
IN MARKET
Reflux
• Primary
• Altered Anatomies
Lower GI
• Colorectal
IN DEVELOPMENT
ESS Market
• Product innovation that removes capital equipment barriers
• Medical education reach to new users
• Procedure and clinical data development
• Expand OUS footprint and procedure mix
GROWTH DRIVERS
9* See Product Regulatory Advisory, slide 2
** Advanced GI includes: ESD, EMR, POEM, and other defect closure
Advanced GI**
Bariatric Revision
Stent Fixation
ESG
REVENUE $000s PROCEDURE MIX
9% 2%
22%
67%
42%
24%
18%
16%
US OUS
$9,188
$16,481
$23,380
$28,309
$6,832
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2016 2017 2018 2019 YTD 2020
US OUS
2%**1%
18%
0%
5%
10%
15%
20%
MULTICENTER STUDY(2) SINGLE CENTER STUDY(3)
SURGICAL BARIATRIC PROCEDURES
Outcomes for Patients – ESG for Primary Obesity1
10
* % TBWL was statistically consistent between the three centers (using three different
techniques and patient population)
** most associated with reducing the fundus, which is no longer part of the standard technique
ESG uses suturing to reduce the volume of the stomach, but without the invasiveness of surgery or removal of part of the stomach
Demonstrates significant weight loss, with low adverse events, and repeatable across various centers
% TOTAL BODY WEIGHT LOSS
AT 24 MONTHS
% SERIOUS ADVERSE EVENTS
AT 24 MONTHS
18.6%*
20.9%
0%
5%
10%
15%
20%
MULTICENTER STUDY(2) SINGLE CENTER STUDY(3)
(1) See Product Regulatory Advisory, Slide 2
(2) Gontrand Lopez-Nava, Reem Z. Sharaiha, Eric J. Vargas, Fateh Bazerbach, Galvao Neto Manoel & Inmaculada Bautista-Castaño, Andres Acosta, Mark D. Topazian, Manpreet S. Mundi, Nikhil Kumta, Michel Kahaleh, Andrea Marie
Herr, Alpana Shukla, Louis Aronne, Christopher J. Gostout , Barham K. Abu Dayyeh ; OBES SURG DOI 10.1007/s11695-017-2693-7, Volume 27, Number 5
(3) Reem Z. Sharaiha, Nikhil A. Kumta, Monica Saumoy, Amit P. Desai, Alex M. Sarkisian, Andrea Benevenuto, Amy Tyberg, Rekha Kumar, Leon Igel, Elizabeth C. Verna, Robert Schwartz, Christina Frissora, Alpana Shukla, Louis J.
Aronne, and Micheal Kahaleh, Clinical Gastroenterology and Hepatology 2017
OverStitch™ Sx – Expanded Market Reach
Commercial launch in February 2019
• Removes requirement for account to purchase specific endoscopic capital equipment
• Provides an additional working channel for better suction, insufflation, or additional instrumentation
• Improves maneuverability and visualization
ENDOLUMENAL LEAK PRESSURE*
COMPATIBLE SINGLE CHANNEL SCOPES
* Kohei Takizawa, MD, Mary A. Knipschield, Elizabeth Rajan MD; Closure of full thickness defects by endoluminal suturing: leak pressure study in an ex vivo porcine model11
Orbera®: the #1 Gastric Balloon Worldwide
13
1 2 3 4
INSERTED THROUGH MOUTH INFLATED WITH SALINE ENCOURAGES PORTION
CONTROL AND DELAYS
GASTRIC EMPTYING
DEFLATED AND REMOVED
• CE marked in 1997, FDA approved in August 2015
• Only balloon currently meeting ASGE’s threshold standards(1) for safety and efficacy
• More than 230 peer reviewed publications reporting weight loss results consistently >10% TBW
• Completed Orbera FDA Post Approval Study 4Q 2019
1. ASGE Bariatric Endoscopy Task Force and ASGE Technology Committee. Journal of Gastrointestinal Endoscopy. 2015 Sep; Epub 2015 Jul 29.
IGB Addressable Markets
(1) ASMBS bariatric procedure data published June 2018
(2) American Society of Plastics Surgeons: 2018 National Plastic Surgery Statistics
* See Product Regulatory Advisory, Slide 214
Aesthetic Weight Loss
• 228,000 U.S. bariatric
procedures annually(1)
• 1.8 million U.S. cosmetic
surgical procedures
annually(2)
• Diverse sites for aesthetic
services:
• Plastic surgery centers
• Bariatric clinics
• Endo-bariatric (GI)
clinics
IN MARKET
Patients with medical
conditions that require
Weight Loss
• Non-cirrhotic NASH with
fibrosis
• Bridge to Orthopedics or
General Surgery
• Solid Organ
Transplantation
IN DEVELOPMENT
Orbera® (IGB) Revenue
IGB product revenue excludes US ORBERA starter kit sales in 2016 and 2017
ASGE Bariatric Endoscopy Task Force and ASGE Technology Committee. Journal of Gastrointestinal Endoscopy. 2015 Sep; Epub 2015 Jul 29. 15
• Strong market share in established OUS IGB market
• US Orbera post-approval study accepted by FDA in April 2020, fulfilling all post-approval study requirements
• 11 sites, 258 patients
• Primary safety endpoint met
• Secondary efficacy endpoint met
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
US OUS
REVENUE $000s
Medical Relevance of 10% weight loss on Liver Disease
(1) Manuel Romero-Gomez, Shira Zelber-Sagi, Michael Trenell - Treatment of NAFLD with diet, physical activity and exercise; graphic included as modified from Vilar-Gomez E, Martinez-Perez Y, Calzadilla-
Bertot L, Torres-Gonzalez A, GraOramas B, Gonzalez-Fabian L, et al. Weight loss through lifestyle modification significantly reduces features of nonalcoholic steatohepatitis. Gastroenterology 2015;149:367–
378, [Quiz e314–e365].16
% WEIGHT LOSS (WL)
Results over a 52-Week Period
of Lifestyle Intervention (1)
<5%> <7%> <10%>
NASH – Resolution 10% 26% 64% 90%
Fibrosis Regression 45% 38% 50% 81%
Steatosis Improvement 35% 65% 76% 100%
% of Patients Achieving WL 70% 12% 9% 10%But patients experience a
low success rate in meeting
the meaningful weight loss
thresholds
Highest rates of
NASH resolution,
Fibrosis regression,
and reduction in
liver fat occur with
>10% TBWL
2020 Clinical Data Programs
17
• MERIT RCT Trial for ESG
• AGA Endoscopic Suturing Registry
• European Bariatric Registry
• European GI Registry
• Various Investigator Initiated Studies
• European Post Market Study for Orbera365
• Various Investigator Initiated Studies
Ongoing Gross Margin Programs
18
Helix
Transfer
complete Q3 2017
Orbera
Delivery system
complete Q3 2018
Suture
Anchor needle production
complete Q3 2017
Cinch
Transfer
complete Q3 2018
Suture
Suture anchor assembly
complete Q3 2019
EXPECTED IMPACT OF COMPLETED PROJECTS
$3.25 million per year*
reduction in material and
purchased goods cost
8% improvement in Gross
Margin on Endo-bariatric
products*
FDA approved suture-anchor assembly September 2019 expected to reduce suture cost by ~50%
$2.5 million additional ESS cost savings
CURRENT PROJECTS – to resume
after COVID-19
COMPLETED PROJECTS
Operational Priorities
ESS: Accelerate momentum
in high value endoluminal
procedures
IGB: Leverage data with
consistently >10% TBW
reduction
Drive scale in the operating
model
OverStitch Sx launch
addresses
>90%OF MARKET WITH
SINGLE-CHANNEL
SCOPES
Last two years
>40%CAGR
Increased
diverse utilization
OF ORIGINAL
DUAL-CHANNEL
OVERSTITCH
HANDLE
Strong OUS market
position supports
VOLUME GROWTH
OPPORTUNITY
Increased US clinical
interest and documentation
MEDICAL WEIGHT
LOSS
Growing revenue in
CORE PRODUCT
LINES DRIVE SCALE
Margin improvement projects expected
19
$3.25M ANNUAL COST REDUCTION
COMPLETED; $2.5 MILLION
ADDITIONAL OPPORTUNITY
Leading Products in Minimally Invasive Therapies
Stefanie Cavanaugh
Chief Financial Officer
Matt Kreps
Darrow Associates Investor Relations
Market Cap, Capital Structure
21
Balance Sheet (as of 3/31/20)
Cash & Equivalents $24M
Total Assets $67M
Term Loan $34M
Convertible Debt $19M
Capitalization Table (as of 4/30/20)
Stock Price (as of 4/30/20) $2.31
Shares Outstanding 21.1M
Common Stock Equivalents 9.6M
Fully Diluted Shares 30.7M
Basic Market Cap w/ Conversion $70.9M
Term Loan
• Matures September 1, 2023
• Interest at LIBOR plus 7.5%
• Interest only through March 2021
Convertible Debt
• Matures August 12, 2024
• Conversion price of $3.25
• Interest at 6%, payable in stock
PPP Loan
• $2.8 million received May 1, 2020
• Interest at 1.0% starting November 2020
Selected Financial Results In 000s except percentages 1Q 2020 FY 2019 4Q 2019 3Q 2019 2Q 2019 1Q 2019 FY 2018
Revenue $10,718 $50,713 $11,989 $11,259 $14,254 $13,211 $60,854
Gross Margin 52.6% 50.6% 48.7% 48.3% 50.3% 54.8% 54.5%
Endoscopy Revenue $10,358 $45,149 $11,755 $10,381 $12,193 $10,820 $41,119
Endoscopy Gross Margin 51.9% 49.5% 48.6% 48.4% 50.1% 50.7% 44.2%
Sales and marketing $6,330 $28,730 $6,735 $6,495 $7,803 $7,697 $32,831
General and administrative $3,339 $13,588 $3,369 $3,159 $3,343 $3,717 $13,436
Research and development $2,147 $10,384 $2,139 $2,128 $2,689 $3,428 $12,176
Amortization of intangible assets $496 $2,095 $504 $510 $528 $553 $7,074
Total operating expenses $12,312 $49,188 $12,747 $12,292 $14,363 $9,7861 $73,2872
Loss from operations ($6,675) ($23,513) ($6,912) ($6,859) ($7,197) ($2,545) ($40,093)
Net Loss ($10,256) ($27,432) ($7,196) ($8,658) ($8,774) ($2,804) ($45,787)
Net Loss per Share ($0.49) ($1.27) ($0.34) ($0.40) ($0.40) ($0.13) ($2.31)
Shares used in computing
Net Loss per Share (000s) 21,117 21,542 20,946 21,401 21,927 21,907 19,790
1. First quarter 2019 operating expense includes settlement gain of $5,609 from Allergan Inc.
2. FY 2018 operating expense includes $7,770 loss on divestiture of the Surgical product line in December 2018. 22