GYG Gyg Plc

RNS No 3749p
GYRUS GROUP PLC
25 June 1999

GYRUS GROUP PLC

GYRUS ANNOUNCE SETTLEMENT OF U.S. LITIGATION

Gyrus, announces that the essential terms of a settlement of the US litigation
brought  by  Arthrocare in February 1998 against Ethicon Inc relating  to
their importation, sale and distribution of Gyrus's arthroscopic and
hysteroscopic systems  in  the  US market have been agreed. The systems are
manufactured  by Gyrus  and  licensed  to  Ethicon Inc. Subject to execution  of
a  settlement agreement,  Ethicon  will license Arthrocare's US patents in the
arthroscopic and hysteroscopic  gynaecology  markets  and Arthrocare  will
dismiss  the  legal action.

Both  Ethicon  and  ArthroCare will continue to be active  in  developing  the
arthroscopic  market. Ethicon will pay Arthrocare a license  fee  and  ongoing
royalties on sales  in  the  United  States  of  certain  arthroscopic   and
gynaecological  products.  The  settlement agreement  will  also  establish  a
procedure  for resolution of certain intellectual property disputes in  these
two markets  without resorting to litigation. Additional terms of  the
settlement agreement were not disclosed.

The  settlement  of  the  US litigation will remove what  could  have  been  a
significant risk to Gyrus's future growth and has simultaneously  provided  a
much  stronger barrier to other competitors seeking to enter the market.  With
impending  resolution of this issue, Gyrus ran now confidently move forward  in
developing additional markets and alliances.

In  a separate agreement, Gyrus and Ethicon will share the costs of settlement
including  ongoing  royalties on a proportional  basis,  comparable  to  their
respective  sharing  of  sales revenue. Gyrus will  make  a  one-off  charge  of
approximately  #0.9M against the costs related to settling the  litigation  in
the  current  financial  year ending 301h June, 1999.  Other  aspects  of  the
agreement include an extension of Gyrus's manufacturing exclusivity  for  the 
US market. Gyrus and Ethicon  are  also  negotiating terms to support a more
aggressive product development program  for  both the arthroscopic and
hysteroscopic product lines.

The first arthroscopic system was launched by Gyrus and Ethicon's Mitek
subsidiary in the second quarter of 1997, since when Gyrus has sold more than
250,000 electrodes. Two new electrode forms were introduced during 1998 and a
small diameter form is due to be launched shortly, with the aim of maximising
revenue from an installed generator base now exceeding 2,500 units in the US and
Europe.


In the first half of the current financial year, Gyrus was able to report a 135%
leap in product sales (#4 million from #1.7 million), along with a sharp drop
in pre-tax losses (#0.9 million from #1.9 million). Despite the settlement
costs, cash reserves are sufficient to reach profitability. Cash burn has been
reduced significantly over the second half of the year, with net cash flow now
approaching a neutral position.


Gyrus has been at the leading edge of an evolution in the surgical treatment of
diseases using minimal access techniques for the last five years. P1asmaKinetic
surgery - the name given to the application of their new radio-frequency energy
delivery technology - can be uniquely controlled to remove and modify body
tissues using minimal access techniques. This novel surgical procedure will
transform treatment for a variety of routine conditions and often in an
outpatient environment with no need for a hospital stay. Rapid recovery, safety
and cost effiectiveness give use of this technique major advantages in 
comparison to conventional open surgery.

In addition to the arthroscopic and hysteroscopic market applications for
Gyrus's PlasmaKinetic technology, the third niche market centres on urological
surgery and the management of prostatic diseases in particular (Gyrus
Endourology System). Gyrus is undertaking the challenging task of developing its
own market presence in this sector and has appointed a direct sales force in the
UK with country managers running distribution in Spain, France and Italy. A
510(k) has been submitted and approval is awaited prior to moving to the next
stage of discussions with potential US partners.

Independent figures predict that the world-wide market in this niche will grow
significantly.  Currently estimated $150 million p.a. future growth will be
driven  by  (a) an ageing population and (b) the introduction of  an  improved
surgical treatment competitively positioned against the higher long-term  cost
of continuous control using pharmaceutical management.

Gyrus employs 190 people at its headquarters and manufacturing  plant  near
Cardiff,  Wales.  The plant includes a 3,000sq. ft. Class 10,000 Clean Room
where the single use disposables for use with  PlasmaKinetic  systems  are
produced.  Plans to develop an adjacent site - which will increase  production
capacity significantly from January 2000 - have been approved and the  company
is now moving into its next rapid scale up phase.

Gyrus Group PLC has its UK headquarters at Gyrus Group PLC., Fortran Road,  St
Mellons, Cardiff, Wales CF3 OLT. Tel: (01222) 300100, fax: (01222) 300101. You
can also visit the company on the web at: www.gyrus.co.uk

Enquiries

* Shareholders, Brokers, Analysts, etc

GYRUS GROUP PLC
Dr Mark Goble, Managing Director, or
John Bradshaw, Finance Director

Tel. (01222) 300100
Fax: (01222) 300101

* Press

JEAN GARON PR
Jean Garon or Linda Hicks 

Tel: (01628) 483040
Fax: (01628) 486796

END

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