MDY Mdy Healthcare

RNS No 7796w
MEDISYS PLC
2 July 1999
                                  MEDISYS PLC
                                  ("Medisys")

                   Joint Venture with Elan Corporation plc

         Subscription by Elan for 6,072,874 new Medisys Ordinary Shares 
                             at 31.25p per share

Highlights

* Joint venture established with Elan to develop new biosensor-based blood
glucose monitoring systems for use by diabetics

* Joint venture concentrates complementary glucose monitoring technologies of
Medisys and Elan into one company 

* Medisys licenses its re-usable blood glucose monitoring product, Arrow, to
joint venture, accelerating the development programme and shortening Arrow's
route to market

* Medisys retains technology rights to all of its other biosensor based
monitoring applications, including its other blood glucose monitoring systems 

* Joint venture acquires minimally invasive, continuous monitoring technology
from Marathon Medical Technologies, Inc. 

* Subscription by Elan for US$22 million (#13.9 million) of redeemable
preferred shares to fund the acquisition of technologies and product
development in the joint venture

* Subscription by Elan for 6,072,874 new Medisys ordinary shares at a price of
31.25p per share  raising #1.9 million, for the general corporate purposes of
Medisys

* Todd C. Davis of Elan, appointed to the Medisys board as a non-executive
director

Kurt E. Amundson, President and Chief Operating Officer of Medisys said: "This
partnership will create a new company with a strong technology portfolio and
the capability to build a leading position in the market for blood glucose
monitoring systems.  Combining our joint technology and marketing resources is
expected to accelerate the development of our Arrow product and enhance our
future product pipeline.  Elan's experience will also be invaluable in helping
Hypoguard increase its penetration of the important U.S. market.

"The continuous monitoring technology acquired from Marathon will form the
basis for the next generation of glucose monitoring products, placing
Hypoguard at the forefront of glucose monitoring innovation."

Steve Thornton, Executive Vice President, Commercial Development, of Elan
Pharmaceutical Technologies, said, "Hypoguard has an excellent pedigree as an
innovator in the field of glucose monitoring and I am pleased we have been
able to conclude a technology licensing deal with such a strong development
partner."

Enquiries:

Medisys PLC                                           (02/07/99) 0171 601 1000
Kurt Amundson, President & Chief Operating Officer
                                                 (Thereafter) 001 650 327 7900
Michael Barry, Chief Financial Officer           (Thereafter) 001 770 271 2795

Square Mile Communications                                       0171 601 1000
Kevin Smith/James Melville-Ross




                                  MEDISYS PLC
                                  ("Medisys")

                  Joint Venture with Elan Corporation plc

        Subscription by Elan for 6,072,874 new Medisys Ordinary Shares 
                            at 31.25p per share


1. Introduction

Medisys announces that it has entered into a joint venture with Elan
Corporation plc ("Elan"), the Irish speciality pharmaceutical group, for the
development of biosensor-based blood glucose diagnostic products.  In
addition, the joint venture has acquired the rights to certain technologies
relating to the in-vivo monitoring of blood glucose in diabetics from Marathon
Medical Technologies, Inc. ("Marathon"), a joint venture company owned by
BioJect Medical Technologies, Inc. and Elan.

Elan has also subscribed for 6,072,874 new Medisys ordinary shares of 1p each
("Medisys Ordinary Shares") at a price of 31.25p per share for a total
consideration of approximately #1.9 million.

2. Background to the Joint Venture 

Through its subsidiary, Hypoguard Limited ("Hypoguard"), Medisys is a leading
manufacturer and distributor of blood glucose monitoring products for the
worldwide blood glucose monitoring market.

Hypoguard's strategy is to exploit this expertise to develop a series of point
of care diagnostic products.  Its initial focus is on the fast growing market
for blood glucose monitoring where its Supreme monitoring strip and Supreme
Petit meter are already well established.
 
As part of this strategy, Hypoguard is developing an innovative, re-usable
biosensor-based blood glucose monitoring system, known as Arrow.  Medisys
believes the Arrow system will be the first all-in-one, automatic blood
glucose monitoring meter on the market when it is launched in 2001.  The
product is currently going through the final stages of development, prior to
commencing the FDA approval process.

Hypoguard is also developing other biosensor-based tests for blood glucose
monitoring, osteoporosis,  and H. pylori (peptic ulcers).
 
3. The Joint Venture

Licensing Arrangements

Under the terms of the joint venture, Hypoguard and Elan have each provided a
worldwide exclusive licence to certain technologies to Hypoguard Development
Co Limited ("JVCO"), a newly incorporated wholly owned subsidiary of Medisys.

Hypoguard has licensed to JVCO its Arrow technology.  Elan has granted a
licence to JVCO of an enabling pump technology which is intended to be
utilised in the self-cleaning and calibration process of the re-usable
biosensor in the Arrow product.  

In addition, JVCO has acquired all of Marathon's technologies for the in-vivo
monitoring of blood glucose in diabetics.  These technologies are based on an
in-vivo sensor that uses an enzyme coated needle to sense glucose
concentrations in interstitial fluid.  Blood glucose levels are monitored
through a wireless, hand-held smart card.  The Marathon technology is
minimally invasive and facilitates real-time monitoring of blood glucose
levels.  This leading-edge technology will form the basis of the next
generation of monitoring systems.

JVCO has paid Elan and Marathon licence and assignment fees of US$17 million
in aggregate for the licences of the Elan and Marathon technologies.  Medisys
will also pay Marathon a royalty based on future revenues generated by the
Marathon technology. 

Funding and Development

In order to enable JVCO to fund the licence and assignment fees and the
development of the technologies, certain funding has been provided by Elan. 
In addition, Medisys has agreed to provide additional working capital to JVCO
of up to US$4.5 million if the parties agree that such additional funding is
required.

Elan has subscribed for redeemable preference shares in Hypoguard Holding Co
Limited ("HOLDCO"), a newly incorporated holding company of JVCO (which is
also a wholly-owned subsidiary of Medisys) for a total subscription price of
US$13 million.  The shares are generally redeemable at par plus a premium of
5% per annum at any time between the second and ninth anniversaries of their
issue, although Medisys has the right to apply the proceeds of redemption
towards the issue to Elan of new Medisys Ordinary Shares at a price of 47.5p
per share.

Elan may require that the proceeds of redemption be applied towards the
purchase by Elan from HOLDCO of 50% of the issued share capital of JVCO save
that Medisys may, at its option, deny this right by (a) the issue to Elan of
new Medisys Ordinary Shares at a price of 31.25p per share and (b) the payment
to Elan of a royalty based on market sales of products developed by JVCO.

Elan has subscribed for a second class of redeemable preference shares in
HOLDCO for a total subscription price of US$4 million.   The shares are
generally redeemable by Elan at par plus a premium of 15% per annum at any
time between the second and ninth anniversaries of their issue, although
Medisys has the right to apply the proceeds of redemption towards the issue to
Elan of new Medisys Ordinary Shares at a price of 31.25p per share.

Elan has subscribed for a third class of redeemable preference shares in
HOLDCO for a total subscription price of US$5 million.  The shares are
generally redeemable by Elan at par plus a premium of 6% per annum at any time
between the second and ninth anniversaries of their issue, although Medisys
has the right to apply the proceeds of redemption by the issue to Elan of new
Medisys Ordinary Shares at a price of 41.25p per share.

4. Rationale for the Joint Venture

The market for diabetes monitoring systems is growing rapidly.  According to
the World Health Organisation, the number of diabetics worldwide is forecast
to grow by over 13% a year until 2005, with the current worldwide market for
blood glucose testing estimated at approximately US$3.0 billion per annum.

Medisys is dedicated to building a leading position in the diabetes monitoring
market.  Establishing the joint venture will create a company with a strong
portfolio of complementary blood glucose monitoring technologies.  Medisys
believes this will accelerate Arrow's route to market and facilitate the rapid
development of the next generation of glucose monitoring systems.

5. Subscription for new Medisys Ordinary Shares by Elan

Medisys also announces that it has issued 6,072,874 new Medisys Ordinary
Shares to Elan at 31.25p per share for a total consideration of approximately
#1.9 million.  The proceeds of the issue will be used for general corporate
purposes by Medisys.

Application has been made for these shares to be admitted to trading on AIM
and it is expected that dealings will commence on July 8 1999.

6. Board Appointment

The board of Medisys has agreed that Elan has a right to appoint a
representative to the board of Medisys for such time as Elan holds, or there
remains the possibility that the proceeds of redemption of any of the
preference shares may be applied towards the subscription by Elan for, Medisys
Ordinary Shares representing in aggregate at least 7.5 per cent. of the issued
share capital of Medisys.

Accordingly, the Board of Medisys is pleased to announce the appointment of Mr
Todd Davis to the Board.  Todd C. Davis, 38, is a director of Strategic
Planning within Elan and is also a director of Sheffield Pharmaceuticals, Inc.

7. Comment

Kurt E. Amundson, President and Chief Operating Officer of Medisys said: "This
partnership will  create a new company with a strong technology portfolio and
the capability to build a leading position in the market for blood glucose
monitoring systems.  Combining our joint technology and marketing resources is
expected to accelerate the development of our Arrow product and enhance our
future product pipeline.  Elan's experience will also be invaluable in helping
Hypoguard increase its penetration of the important U.S. market.

 "The continuous monitoring technology acquired from Marathon will form the
basis for the next generation of glucose monitoring products, placing
Hypoguard at the forefront of glucose monitoring innovation."

Steve Thornton, Executive Vice President, Commercial Development, of Elan
Pharmaceutical Technologies, said, "Hypoguard has an excellent pedigree as an
innovator in the field of glucose monitoring and I am pleased we have been
able to conclude a technology licensing deal with such a strong development
partner."  


Enquiries:

Medisys PLC                                           (02/07/99) 0171 601 1000
Kurt Amundson, President & Chief Operating Officer       
                                                 (Thereafter) 001 650 327 7900
Michael Barry, Chief Financial Officer           (Thereafter) 001 770 271 2795

Square Mile Communications                                       0171 601 1000
Kevin Smith/James Melville-Ross


Medisys PLC

Medisys PLC develops, manufactures and markets diagnostic, medical and safety
products serving the rapid test and point of care medical market.  The Group
has two principal operating subsidiaries, Hypoguard and Lukens, located in the
UK and in the US respectively.  The diagnostic division develops and supplies
blood glucose monitoring systems for the diabetic market.  Its future focus is
on serving unmet medical needs through the development of diagnostic products
based on its own proprietary platform technologies.  Headquartered in Ipswich,
UK, the Group employs approximately 225 people in the UK and US.

END

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