Advanced Neuromodulation Systems Acquires Assets of Implantable Devices Limited Partnership and ESOX Technology Holdings LLC.

Business Editors

DALLAS--(BUSINESS WIRE)--Jan. 2, 2001

Gives ANS Ownership of Advanced Implantable Pump Technology

for Pain, Cancer Therapy and All Other Applications

Advanced Neuromodulation Systems Inc. (ANS) (Nasdaq:ANSI) today announced that it has acquired the assets of Implantable Devices Limited Partnership (IDP) and ESOX Technology Holdings LLC, privately held Minnesota companies with headquarters in Minneapolis and Eagan, Minn., respectively.

ANS has acquired substantially all of the assets of both companies in exchange for a total of 119,100 shares of ANS common stock.

"These transactions give ANS ownership of the advanced infusion pump technologies developed by IDP and ESOX. Previously, ANS had licensed rights to the technologies only for pain and cancer therapy applications," said Chris Chavez, chief executive officer of ANS.

"In addition," he continued, "we expect the acquisitions to reduce our costs by eliminating royalty payments on future implantable infusion pump sales, enhance our gross margins through vertical integration in manufacturing, and strengthen our R&D capabilities, which should allow ANS to compress the development cycle time for next-generation infusion pump products."

IDP was formed in 1986 to commercialize certain implantable infusion technologies developed at the University of Minnesota in the laboratories of Dr. Henry Buchwald. This laboratory's successes include: the world's first vascular access port; the world's first human pump implants for diabetes (insulin), thrombophlebitis (heparin) and inoperable liver cancer (FUDR); and the world's first implantable infusion pump.

IDP's first-generation gas-bearing infusion pump technology was developed for Metal Bellows Inc. (now Arrow International (Nasdaq:ARRO)), and it has become the basis for all commercially available constant flow implantable pumps, including those from Therex Limited Partnership (now Arrow International) and Medtronic (NYSE:MDT).

More recently, IDP's activities have focused on the development of its second-generation infusion pump technology. These efforts have resulted in the creation of the world's first silastic diaphragm implantable infusion pump, a new gas-free technology that represents a substantial advance over previous gas-bearing pump technologies.

ESOX, founded in 1991, collaborated with ANS on the development and commercialization of ANS' AccuRx(TM) Constant Flow Implantable Pump.

The transactions will be accounted for as a taxable purchase of assets. Chavez said that the acquisitions are expected to be earnings-neutral in 2001 and accretive to earnings thereafter.

About Advanced Neuromodulation Systems

Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this document that are not based on historical facts are "forward-looking statements." Terms such as "plan," "should," "would," "anticipate," "believe," "intend," "estimate," "expect," "predict," "scheduled," "new market," "potential market applications" and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: completion of research and development projects in an efficient and timely manner; obtaining regulatory approvals on a timely and cost-efficient basis to permit the introduction of new products; the satisfactory completion of clinical trials and/or market tests prior to the introduction of new products; the adequacy, acceptability and timeliness of component supply; the approval of new products by reimbursement agencies including insurance companies, HMOs, Medicare and Medicaid; the efficacy of the company's products for new applications; and other risks detailed from time to time in the company's Securities and Exchange Commission filings. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements.