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ReShape Lifesciences sells obesity devices to Biorad Medisys

ReShape has entered into an asset purchase agreement with Biorad Medisys, which is party to a previously disclosed exclusive license agreement with ReShape for ReShape’s Obalon Gastric Balloon System. Pursuant to the asset purchase agreement, ReShape will sell substantially all of its assets to Biorad (or an affiliate thereof), including ReShape’s Lap-Band System, Obalon Gastric Balloon System and the Diabetes Bloc-Stim Neuromodulation (DBSN) System (but excluding cash), and Biorad will assume substantially all of ReShape’s liabilities, for a purchase price of $5.16 million in cash.

In addition, ReShape Lifesciences and Vyome Therapeutics, a private clinical-stage company targeting immuno-inflammatory and rare diseases, have entered into a definitive merger agreement under which ReShape and Vyome will combine in an all-stock transaction. The combined company will focus on advancing the development of its immuno-inflammatory assets and on identifying additional opportunities between the world-class Indian innovation corridor and the US market.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, existing ReShape stockholders will own approximately 11.1% of the combined company immediately following the closing of the merger, subject to adjustment based on ReShape’s actual net cash at closing compared to a target net cash amount of US$5 million. At the closing of the merger, ReShape will be renamed Vyome Holdings and expects to trade under the Nasdaq ticker symbol “HIND,” representing the company’s alignment with the US-India relationship. The board of directors of the combined company will be comprised of six directors designated by Vyome and one director designated by ReShape and executive management of the combined company will consist of Vyome’s executive officers.

The cash purchase price under the asset purchase agreement will count toward ReShape’s net cash for purposes of determining the post-merger ownership allocation between ReShape and Vyome stockholders under the merger agreement.

Simultaneously with the execution of the merger agreement, ReShape, Vyome and Vyome’s wholly-owned subsidiary, Vyome Therapeutics Ltd, entered into agreements with certain existing accredited investors, pursuant to which the investors have committed to purchase a minimum of $7.3 million in securities of ReShape, Vyome and Vyome’s subsidiary. Under these agreements, certain accredited investors have agreed to purchase up to $5.8 million in shares of common stock of the combined company immediately following completion of the merger which may be upsized through additional investments. The price per share for the common stock of the combined company to be paid by the investors in the offering will be calculated as a 30% discount to the agreed upon valuation of the combined company at the closing of the merger and does not contain any warrants or other convertible features.

ReShape and the investors are executing and delivering the subscription agreements in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and contemporaneously with the sale of the shares of common stock will execute and deliver a registration rights agreement requiring the combined company to register the resale of the shares of common stock issued in the offering.

In order to facilitate the transactions contemplated by the merger agreement and asset purchase agreement, ReShape entered into an agreement with a majority of the holders of its outstanding series C preferred stock that will, subject to and contingent upon the completion of the merger and the asset sale, reduce the liquidation preference of the series C preferred stock from $26.2 million to the greater of (i) $1 million, (ii) 20% of the purchase price paid for the asset sale, and (iii) the excess of ReShape’s actual net cash at the effective time of the merger over the minimum net cash required as a condition to the closing of the merger as set forth in the merger agreement. The series C preferred stock would automatically terminate at the effective time of the merger, except for the right to receive the reduced liquidation preference.

“Through the orchestration of the merger agreement with Vyome Therapeutics and the simultaneous asset purchase agreement with Biorad, we were able to maximize stockholder value,” stated Paul F Hickey, President and Chief Executive Officer of ReShape Lifesciences. “After reviewing various strategic alternatives and engaging in discussions with a number of other potential merger and acquisition candidates, our board of directors has unanimously recommended the merger with Vyome and simultaneous asset sale to Biorad, which we believe is a compelling opportunity for our stockholders to benefit from the potential of the combined company after the merger. We also appreciate the willingness of our series C preferred stockholders to significantly reduce their liquidation preference, which will permit our common stockholders to recognize the potential value of the merger. We are truly excited about the value we are delivering to our stockholders.”

“We have no debt and a clean capital structure and are positioning Vyome for success in the public markets. We intend to continue addressing the unmet needs of patients suffering from immuno-inflammatory diseases and building a broader platform that leverages our comparative advantage in the U.S.-India innovation corridor,” said Krishna K Gupta, current Director of Vyome and to be appointed Chairman of the combined company.

Venkat Nelabhotla, President & Chief Executive Officer of Vyome, stated, “We are confident in our ability to potentially build significant value with our pipeline of novel local agent drugs for significant unmet needs, supported by a robust patent portfolio, effective drug development strategies, and prudent capital deployment, that can potentially help maximize value.”

Completion of the merger and the asset sale are subject to certain closing conditions, including, among other things, approval by the stockholders of ReShape, the Securities and Exchange Commission declaring effective ReShape’s registration statement registering the shares to be issued in connection to the merger, and the Nasdaq Stock Market’s approval of the continued listing of the combined company in connection with the completion of the merger.


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