get involved in medtech startups?
Dennis McWilliams: I initially got involved in life sciences startups, when I worked for George Kozmetsky, the grandfather of the tech community here in Austin. He was dean of the business school way back when, and I worked for his think tank, IC². I did a project with [the University of Texas Medical Branch in Galveston], started a biotech company in ’96, ran that for eight years and sold that company. [Chrysalis BioTechnology, an early stage drug development company, was bought by what is now Capstone (NASDAQ: CAPS) in 2004.] I was looking for a variety of different deals in ’04 and ’05, when I found a group of gastroenterologists who had set up a think tank to innovate in flexible surgery. I come from a general engineering and business background. My specialty was as an aerospace engineer where I went to Stanford.
I had always been interested in innovation technologies, especially about life sciences. It’s a rewarding experience to develop a new product, whether it’s a drug or product, and help patients.
X: What is the Apollo Group? How did Apollo Endosurgery come about?
DM: They began back in ’98 before I knew them. They wanted to innovate and to do really, really exciting groundbreaking things, similar to the space program, by shooting for the moon in developing all sorts of technologies that would beneficial to society. I met them in ’05. They financially supported a company named Olympus, realizing that if they truly want to see new technologies reach patients, you need to form a startup company. It’s the best way to do that.
When the Apollo Group was terminating out of their agreement with Olympus, they left a portfolio of about 50 patents. There was this intellectual property sitting at these universities. I went and licensed all those patents from five different academic institutions and brought them into Apollo. That was our foundation. From there, we started to build a strategy to build specialized surgical tools, tools that enable less invasive surgery. Overstitch, our suturing device, is the foundation of our platform today.
And that’s how we, Apollo Endosurgery, came about. The Apollo Group still serves as key scientific and medical advisers to the company. They are all now chairmen of departments at universities and are very busy, but we still work with the group.
X: Why buy the Allergan business, one that seemed to prove less profitable for Allergan? How does this fit into Apollo’s portfolio?
DM: Allergan acquired the lap band and bariatric business as part of another acquisition years ago to get the Botox and collagen lines. It never really was a fit with them. They had some strong years in the mid-2000s. They didn’t have any innovation synergistic with the brands; it made it hard for them. For us, we have an extensive pipeline of surgical device tools on bariatric and other clinical procedures. It’s a natural fit from a distribution and product portfolio standpoint. It calls on a lot of the same physicians that we call on.
We had had some conversations with Allergan about business collaborations when they announced the divestiture in the fourth quarter last year. We thought it would be synergistic. I think they thought
