- ProSomnus is a pioneer of precision intraoral devices, a new
option for treating mild to moderate obstructive sleep apnea
(OSA)
- A number of scientific studies indicate ProSomnus precision
intraoral devices as the most effective treatment for mild and
moderate obstructive sleep apnea
- Obstructive sleep apnea is a chronic medical disease linked
with significant comorbidities that affects approximately one
billion people worldwide and 74 million Americans, approximately 80
percent of whom are undiagnosed
- ProSomnus precision oral devices are mass customized and
manufactured based upon each patient's anatomy and treatment plan,
enabling greater patient comfort, ease of use and dose control
- ProSomnus's oral appliance therapy devices have been prescribed
to over 150,000 patients and are considered more comfortable and
less invasive than continuous positive airway pressure (CPAP)
therapy
- The implied initial enterprise value of the business
combination is approximately $168
million
- The transaction is expected to be supported by a $30 million PIPE of senior and junior convertible
notes led and backstopped by Cohanzick Management, LLC and
CrossingBridge Advisors, LLC
- The business combination is expected to be completed in the
third quarter of 2022, and the combined company is expected to be
listed on the Nasdaq Capital Market under the symbol "OSA"
- This transaction is expected to accelerate ProSomnus's
development and commercialization of its oral appliance therapy
devices
SAN FRANCISCO, May 10, 2022
/PRNewswire/ -- ProSomnus Holdings Inc. ("ProSomnus"), the
leader in patient-preferred medical devices for the treatment of
obstructive sleep apnea, and Lakeshore Acquisition I Corp.
("Lakeshore") (Nasdaq: LAAA) today announced that they have entered
into a definitive business combination agreement. Upon closing, the
combined company is expected to change its name to ProSomnus, Inc.
and its Class A common stock is expected to be traded on the
Nasdaq Capital Market under the symbol "OSA."
Company Overview
ProSomnus is a pioneer of precision, mass-customized oral
appliance therapy devices to treat obstructive sleep apnea.
Precision oral appliance therapy is a new option for treating
obstructive sleep apnea, where each ProSomnus device is highly
personalized and digitally manufactured to match the anatomy and
treatment plan for each patient. A growing number of scientific
reports indicate ProSomnus devices as the most effective treatment
for mild to moderate obstructive sleep apnea. ProSomnus devices are
the only oral appliance therapy devices to demonstrate efficacy on
par with CPAP for mild to moderate obstructive sleep apnea and
adherence that exceeds the recommended seven hours of sleep per
night. Additionally, clinical investigations have shown a
mitigation of common dental side effects, better economics for
payers and providers, and patient preference over predicate
devices.
With more than 150,000 devices prescribed, patients report that
ProSomnus's patented devices are more comfortable, easier to use
and less invasive than CPAP therapy and traditional oral appliance
therapy devices. ProSomnus devices cost approximately 2.3 times
less than CPAP over a three-year period and an estimated 20 times
less than hypoglossal nerve stimulation. ProSomnus devices are
authorized by the Department of Defense and the U.S. Army.
Obstructive sleep apnea is the recurring collapse of the airway
during sleep, resulting in oxygen shortages and abrupt awakenings
accompanied by gasping or choking. In addition to daytime
sleepiness, obstructive sleep apnea is associated with serious
comorbidities, including heart failure, stroke, hypertension,
morbid obesity and type 2 diabetes. Patients with untreated
obstructive sleep apnea are 23 times more likely to suffer a heart
attack and four times more likely to have a stroke. It is estimated
that approximately one billion people worldwide and over 74 million
people in North America suffer
from obstructive sleep apnea. Approximately 56 million of those 74
million people in North America
are undiagnosed.
Management Comments
"Having treated over 150,000 patients and received
overwhelmingly positive feedback, we believe ProSomnus has the
potential to drastically help people who are suffering from
obstructive sleep apnea," said Len
Liptak, Co-Founder and Chief Executive Officer of ProSomnus.
"Historically, penetration of the obstructive sleep apnea treatment
market has been constrained by the invasiveness and ineffectiveness
of predicate therapies, but we believe that our patient-preferred
sleep apnea therapy and capital from the public markets can help us
reach millions of patients worldwide."
"Of the 74 million Americans affected by obstructive sleep
apnea, approximately 56 million are undiagnosed, and patients
with untreated obstructive sleep apnea face a
greater chance of heart attack, stroke and other life-threatening
health risks," said Laing F. Rikkers, Co-Founder
of ProSomnus and Executive Chairman of the
company's Board of Directors, and Managing Director of
HealthpointCapital. "We look forward to not only to realizing this
market opportunity, but to making our revolutionary treatments
available to more patients and addressing the comorbidities
associated with obstructive sleep apnea."
Key Transaction Terms
Pursuant to the business combination agreement, Lakeshore will
acquire ProSomnus for $125 million
(including the assumption of $13
million of debt that will be paid off at closing). In
connection with the transaction, (i) Lakeshore will issue
approximately 11 million newly issued shares to current
stockholders of ProSomnus (subject to the actual amount of net debt
outstanding, at closing), (ii) Cohanzick Management and
CrossingBridge Advisors are expected to lead and backstop a
$30 million senior and junior
convertible note investment, and (iii) the parties expect to
receive a minimum additional $10
million in equity from a PIPE or from Lakeshore's trust
account. Current stockholders of ProSomnus may also be entitled to
an earn-out of up to an additional 3 million shares in three
tranches if certain trading price targets are met within three
years after closing.
The transaction implies a pro forma enterprise value for the
combined company of approximately $168
million, which equates to approximately 4.3x projected FY
2023 revenue of $38 – 40 million, at
the midpoint.
The proposed transaction has been approved by the boards of
directors of each of Lakeshore and ProSomnus. The transaction will
require the approval of the stockholders of Lakeshore and ProSomnus
and is subject to other customary closing conditions, including a
registration statement on Form S-4 being declared effective by the
Securities and Exchange Commission. The transaction is expected to
close in the third quarter of 2022.
Advisors
Solomon Partners and Gordon Pointe Capital, LLC are acting as
financial advisors to ProSomnus. Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. is acting as legal advisor to ProSomnus and
Loeb & Loeb is acting as legal advisor to Lakeshore.
Craig-Hallum Capital Group and Roth Capital Partners are acting as
joint placement agents on the PIPE. Craig-Hallum Capital Group is
acting as M&A advisor to Lakeshore.
Management Presentation
A presentation made by the management teams of both ProSomnus
and Lakeshore regarding the transaction will be available on the
websites of ProSomnus at https://ProSomnus.com/investor-relations
and Lakeshore at https://www.lakeshoreacquisition.com/tzzy.
Lakeshore will also file the presentation with the SEC in a Current
Report on Form 8-K, which will be accessible at www.sec.gov.
About ProSomnus
ProSomnus is the first manufacturer of precision,
mass-customized oral appliance therapy devices to treat obstructive
sleep apnea, which affects over 74 million Americans and is
associated with serious comorbidities, including heart failure,
stroke, hypertension, morbid obesity and type 2 diabetes.
ProSomnus's patented devices are a more comfortable and less
invasive alternative to continuous positive airway pressure (CPAP)
therapy, and lead to more effective and patient-preferred outcomes.
With more than 150,000 patients treated, ProSomnus's devices are
the most prescribed oral appliance therapy in the U.S. To learn
more, visit www.ProSomnus.com.
About Lakeshore Acquisition I Corp.
Lakeshore Acquisition I Corp. is a blank check company, also
commonly referred to as a special purpose acquisition company, or
SPAC, formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses or entities.
Important Information About the Proposed Business Combination
and Where to Find It
This press release relates to a proposed business combination
between Lakeshore and ProSomnus. A full description of the terms of
the business combination will be provided in a Registration
Statement on Form S-4 and proxy statement to be filed with the SEC
by Lakeshore. The proxy statement will be mailed to
Lakeshore's shareholders as of a record date to be established for
voting at the shareholders' meeting relating to the proposed
transactions. This press release does not contain all the
information that should be considered concerning the proposed
business combination and is not intended to form the basis of any
investment decision or any other decision in respect of the
proposed business combination. Lakeshore's shareholders and other
interested persons are advised to read, when available, the
Registration Statement on Form S-4 and proxy statement and the
amendments thereto and other documents filed in connection with the
proposed business combination, as these materials will contain
important information about ProSomnus, Lakeshore and the proposed
business combination. The Registration Statement on Form S-4 and
the proxy statement and other documents filed with the SEC, once
available, may be obtained without charge at the SEC's website at
www.sec.gov, or by directing a written request to Lakeshore, 667
Madison Avenue, New York, NY
10065.
Participants in the Solicitation
Lakeshore, certain shareholders of Lakeshore, and their
respective directors and executive officers may be deemed
participants in the solicitation of proxies from Lakeshore's
shareholders with respect to the proposed business combination. A
list of the names of Lakeshore's directors and executive officers
and a description of their interests in Lakeshore is contained in
Lakeshore's registration statement on Form S-1, which was filed
with the SEC and is available free of charge at the SEC's web site
at www.sec.gov, or by directing a written request to Lakeshore, 667
Madison Avenue, New York, NY
10065. Additional information regarding the interests of such
participants will be contained in the Registration Statement on
Form S-4 and proxy statement for the proposed business combination
when available.
ProSomnus and its directors and executive officers may also be
deemed to be participants in the solicitation of proxies from the
shareholders of Lakeshore in connection with the proposed business
combination. A list of the names of such directors and executive
officers and information regarding their interests in the proposed
business combination will be included in the proxy statement for
the proposed business combination when available.
Forward-looking Statements
Except for historical information contained herein, this press
release contains certain "forward-looking statements" within the
meaning of the federal U.S. securities laws with respect to the
proposed business combination between Lakeshore and ProSomnus, the
benefits of the transaction, the amount of cash the transaction
will provide ProSomnus, the anticipated timing of the transaction,
the services and markets of ProSomnus, our expectations regarding
future growth, results of operations, performance, future capital
and other expenditures, competitive advantages, business prospects
and opportunities, future plans and intentions, results, level of
activities, performance, goals or achievements or other future
events. These forward-looking statements generally are identified
by words such as "anticipate," "believe," "expect," "may," "could,"
"will," "potential," "intend," "estimate," "should," "plan,"
"predict," or the negative or other variations of such statements,
reflect our management's current beliefs and assumptions and are
based on the information currently available to our management.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual results or
developments to differ materially from those expressed or implied
by such forward-looking statements, including but not limited to:
(i) the risk that the transaction may not be completed in a timely
manner or at all, which may adversely affect the price of
Lakeshore's securities; (ii) the risk that the transaction may not
be completed by Lakeshore's business combination deadline and the
potential failure to obtain an extension of the business
combination deadline if sought by Lakeshore; (iii) the failure to
satisfy the conditions to the consummation of the transaction,
including the approval of the business combination agreement by the
stockholders of Lakeshore, the satisfaction of the minimum cash
amount following any redemptions by Lakeshore's public stockholders
and the receipt of certain governmental and regulatory approvals;
(iv) the lack of a third-party valuation in determining whether or
not to pursue the proposed transaction; (v) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the business combination agreement; (vi) the effect
of the announcement or pendency of the transaction on ProSomnus's
business relationships, operating results and business generally;
(vii) risks that the proposed transaction disrupts current plans
and operations of ProSomnus; (viii) the outcome of any legal
proceedings that may be instituted against ProSomnus or Lakeshore
related to the business combination agreement or the proposed
transaction; (ix) the ability to maintain the listing of
Lakeshore's securities on a national securities exchange; (x)
changes in the competitive industries in which ProSomnus operates,
variations in operating performance across competitors, changes in
laws and regulations affecting ProSomnus's business and changes in
the combined capital structure; (xi) the ability to implement
business plans, forecasts and other expectations after the
completion of the proposed transaction, and identify and realize
additional opportunities; (xii) the risk of downturns in the market
and ProSomnus's industry including, but not limited to, as a result
of the COVID-19 pandemic; (xiii) costs related to the transaction
and the failure to realize anticipated benefits of the transaction
or to realize estimated pro forma results and underlying
assumptions, including with respect to estimated stockholder
redemptions; (xiv) the inability to complete its debt financing;
and (xv) risks and uncertainties related to ProSomnus's business,
including, but not limited to, risks relating to the uncertainty of
the projected financial information with respect to ProSomnus;
risks related to ProSomnus's limited operating history, the
roll-out of ProSomnus's business and the timing of expected
business milestones; ProSomnus's ability to implement its business
plan and scale its business, which includes the recruitment of
healthcare professionals to prescribe and dentists to deliver
ProSomnus oral devices; the understanding and adoption by dentists
and other healthcare professionals of ProSomnus oral devices for
mild-to-moderate OSA; expectations concerning the effectiveness of
OSA treatment using ProSomnus oral devices and the potential for
patient relapse after completion of treatment; the potential
financial benefits to dentists and other healthcare professionals
from treating patients with ProSomnus oral devices and using
ProSomnus's monitoring tools; ProSomnus's potential profit margin
from sales of ProSomnus oral devices; ProSomnus's ability to
properly train dentists in the use of the ProSomnus oral devices
and other services it offers in their dental practices; ProSomnus's
ability to formulate, implement and modify as necessary effective
sales, marketing, and strategic initiatives to drive revenue
growth; ProSomnus's ability to expand internationally; the
viability of ProSomnus's intellectual property and intellectual
property created in the future; acceptance by the marketplace of
the products and services that ProSomnus markets; government
regulations and ProSomnus's ability to obtain applicable regulatory
approvals and comply with government regulations, including under
healthcare laws and the rules and regulations of the U.S. Food and
Drug Administration; and the extent of patient reimbursement by
medical insurance in the United
States and internationally. The foregoing list of factors is
not exclusive. You should carefully consider the foregoing factors
and the other risks and uncertainties described in the "Risk
Factors" section of proxy statement, when available, and other
documents filed by Lakeshore from time to time with the SEC. These
filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date on which they
are made, and neither ProSomnus nor Lakeshore assume any obligation
to update or revise any forward-looking statements or other
information contained herein, whether as a result of new
information, future events or otherwise. You are cautioned not to
put undue reliance on these forward-looking statements. Neither
Lakeshore nor ProSomnus gives any assurance that either Lakeshore
or ProSomnus, or the combined company, will achieve its
expectations.
Non-solicitation
This press release is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the potential business combination or any other
matter and shall not constitute an offer to sell or a solicitation
of an offer to buy the securities of Lakeshore, ProSomnus or the
combined company, nor shall there be any sale of any such
securities in any state or jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of such state or
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of the Securities Act of
1933, as amended.
Contacts
Media
Sean Leous
Sean.Leous@westwicke.com
Investors
Mike
Cavanaugh
Mike.Cavanaugh@westwicke.com
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SOURCE Lakeshore Acquisition I Corp.