GYG Gyg Plc

RNS No 7245r
GYRUS GROUP PLC
8th December 1998


Contacts:

Gyrus Group PLC                          01222-300 100
Mark Goble

Buchanan Communications                  0171-466 5000
Zena Bates/Tim Anderson/Kirsty Swan

Panmure Gordon                           0171-638 4010
Ronald Openshaw


                      GYRUS GROUP PLC
                             
                             
     RESULT OF PRELIMINARY HEARING - ARTHROCARE DENIED
                  PRELIMINARY INJUNCTION
                             
                             
Gyrus,  the  "PlasmaKinetic" endosurgical  device  company,
announces  the  decision of the US District  Court  in  the
matter of a preliminary hearing sought by ArthroCare.  This
concerned  the  patent infringement  suit  it  has  brought
against  Ethicon Inc relating to its importation, sale  and
distribution of Gyrus's VAPR(Trademark)arthroscopic system 
in the US market.  The  VAPR(Trademark)system is licensed 
and manufactured  by Gyrus for Ethicon Inc, a division of 
Johnson & Johnson.

After  due and careful consideration, the Court has  denied
ArthroCare  a  preliminary injunction against  Ethicon  Inc
because of "substantial questions as to the validity of all
eight ArthroCare claims that are in issue".

The  first VAPR(Trademark) system was launched by Gyrus and 
Ethicon's Mitek subsidiary in the second quarter of 1997, 
since  when Gyrus  has  sold over 150,000 electrodes. 
Two new electrode forms;  the VAPR(Trademark) "T" and Flex 
ranges, have been introduced during 1998 and further forms 
are planned during 1999  with the  aim  of maximising 
revenue from an installed generator base of nearly 1,600 
units in the US and Europe.


Mark Goble, Managing Director, commented:-

"This  decision gives us a clear indication of the  Court's
position on a number of key issues and, in particular,  the
lack  of validity of ArthroCare's claims. We now know where
to   focus  our  efforts  and  continue  strengthening  our
position  in  preparation for the definitive  hearing  next
May.  The decision is particularly timely given the  strong
market  response  we  have had to  our  recent  
VAPR(Trademark)  Flex launch."


Background

In  August  1996,  the  Group entered into  a  development,
licence  and supply agreement with Ethicon Inc, a  division
of  Johnson & Johnson, under which its Mitek. affiliate has
exclusive  worldwide rights to market distribute  and  sell
the   VAPR(Trademark) system  in  the  orthopaedic  field.   
Mitek. specialises  in  surgical devices for the  repair  
of  soft tissue  injuries of joints in the arthroscopic and  
sports medicine markets.

Since commencing end-user sales of the VAPR(Trademark)
system in  the $890  million  US arthroscopy market in July  
1997,  market penetration has continued to increase with 
the US installed user  base now exceeding 1,000 generators. 
As is so  common in the US medical device industry, this 
success has brought with   it  assertions  of  patent  
infringement  from   our competitor, ArthroCare, based in 
Sunnyvale, California.

ArthroCare filed a patent infringement suit against Ethicon
Inc,  Mitek  Surgical  Products  and  Gynecare  in  the  US
District   Court,  Northern  District  of  California,   in
February  1998. ArthroCare asserted that the  
VAPR(Trademark)  system infringed eight claims contained in 
four patents issued  to them   in   December,  1997.  They  
sought  a   preliminary injunction against Ethicon and 
Mitek to prevent  them  from amongst  other things, 
importing, selling or  offering  for sale  the 
VAPR(Trademark) arthroscopic system in the US. Following  a
preliminary hearing conducted in September 1998, the  Court
has  now ruled and denied ArthroCare injunctive relief. The
Court  states  that  the reason for denial  is  because  of
"substantial  questions as to the  validity  of  all  eight
ArthroCare claims that are at issue".

This  decision supports contentions made during the hearing
and provides a clear indication of the Court's position  on
a   number   of   key  issues  in  the  case.   With   this
understanding,  it is now abundantly clear where  to  focus
efforts  in preparing for the definitive hearing  scheduled
for  May,  1999,  and  that is to  continue  attacking  the
validity of ArthroCare's claims. This position will also be
strengthened by issuance of Gyrus's own patents in the  US,
several of which should be allowed prior to May, 1999.

The  Group recently announced the launch of the 
VAPR(Trademark)  Flex electrode  range  which  has received  
a  strong  level  of interest from the market, recording 
first sales on the  day of  launch. Additional electrode 
forms for both  the  VAPR(Trademark) system  and  
VersaPoint(Trademark)  hysteroscopic  system  are  under
development. The Group is also reporting the first end-user
sales  of  its Endourology system for treatment of enlarged
prostate  glands  in  both the UK and  Europe  through  its
direct sales and marketing operation.

Notes to Editors:

Based on radio frequency (RF) energy, Gyruss PlasmaKinetic
endosurgical technology utilises the conductive  properties
of fluids used to distend the operative site during minimal
access  surgical procedures.  The capability of controlling
and  adjusting power in microseconds enables  selection  of
two  tissue effect modes.  In the first mode ionised plasma
is  created  over  the active zone of the tissue  treatment
electrode.  Tissue entering the intense kinetic  energy  of
the  plasma is instantaneously vaporised and simply  washed
away.    The  low  thermal  mass  of  the  plasma  prevents
collateral tissue damage adjacent to the application  site.
In  the  second  mode,  rapid, predictable  and  controlled
elevations  in tissue temperature can be produced  to  seal
blood vessels or modify soft tissue structures.

The  first phase of the PlasmaKinetic development addresses
endoscopic  procedure applications in three major  surgical
specialities;  arthroscopic treatment of  sports  injuries,
hysteroscopic  treatment of uterine  abnormalities  and  in
endoscopic urology.  The VAPR(Trademark) arthroscopic 
system is  sold under  a  worldwide agreement with 
Johnson & Johnson.  The VersaPoint(Trademark) hysteroscopic 
system is sold worldwide  through Gynecare, now part of 
Ethicon Inc following its acquisition by Johnson & Johnson.  
The Gyrus Endourology system is sold through  Gyruss  
European sales  and  marketing  division. Marketing 
alliances will be established to address  the  US and 
Japanese markets.

It   is  estimated  that  the  markets  addressed  by   the
PlasmaKinetic technology will exceed $500 million per annum
by  the year 2000.  Products under development could double
the  market size for Gyrus technology over the next couple
of years.

END

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