Arthrocare Launches Cosmetic Surgery Business; Company to Begin Selling Dermatologic System Immediately.

SUNNYVALE, Calif.--(BW HealthWire)--April 23, 1998--ArthroCare Corp. (Nasdaq: ARTC) today announced that it is entering the cosmetic surgery market and that it has formed a new division, called Visage, to commercialize its technology in this field. This marks the company's first direct move into markets outside arthroscopy.

Visage will market directly to dermatologists and other specialists in the field of cosmetic surgery. In the United States, the division will sell through a direct sales force, which it is now assembling. Internationally, the technology will be marketed through a newly formed European subsidiary, ArthroCare Europe AB. ArthroCare recently established the subsidiary so that it could more effectively manage clinical and commercial development internationally as the company expands into new surgical markets.

"This is a true milestone for ArthroCare, and one that brings the original vision of the company further into focus," said Michael Baker, president and chief executive officer. "We have always believed that ours is a broad technology platform with application across a wide range of markets. Now we're beginning to prove it."

Visage will begin marketing its Cosmetic Surgery System (CSS) immediately in Europe for skin resurfacing, or wrinkle removal. ArthroCare has 510(k) clearances for use of its devices in general dermatology and will roll out the technology on that basis in the United States. The company believes that the most significant market potential, at least initially, lies in wrinkle removal and it is pursuing additional labeling that will allow it to market the system domestically for this indication.

The American Academy of Cosmetic Surgeons estimates that approximately 325,000 resurfacing procedures will be performed in the United States in 1998, with utilization growing at an annual rate of 15 percent over the next several years. These procedures are currently being performed with laser technology including carbon dioxide and erbium-yag lasers.

In the United States the clinical research needed to allow Visage to market the CSS for resurfacing is underway, with a phase I multicenter trial for removal of crow's feet nearing completion. The primary endpoint of the trial is clinical improvement of wrinkles and cosmetic appearance at six months. These data are not yet available but preliminary data collection within one month of the procedure has been completed. The early findings suggest that skin resurfacing with the CSS may be associated with less pain and significantly more rapid healing compared with existing techniques. Observational assessment indicates that the new skin has good tone and texture.

"The experience is very early but very exciting," said Roy Grekin, M.D., primary investigator for the study at the University of California-San Francisco Medical Center. "Redness and inflammation had completely cleared in all patients one month after the procedure. This is almost unheard of with the most common type of laser technique we now use, namely carbon dioxide lasers, where it can take three months or more for the skin to return to normal. The CSS results also compare favorably with results that we typically see with the erbium-yag."

Visage's products will use ArthroCare's patented method of tissue removal, called Coblation(TM), that is designed to improve the effectiveness and safety of standard surgical methods. Coblation uses radiofrequency (RF) energy to remove tissue through a significantly cooler process than that of traditional electrosurgery or dermatologic lasers. The Coblation approach disintegrates tissue layer by layer, giving the surgeon excellent control to remove and sculpt tissue while causing minimal damage to surrounding healthy tissue. As a result, Coblation-assisted surgery has the potential to improve the operative precision and efficiency of standard techniques, thereby reducing pain and speeding recovery.

The entry into cosmetic surgery is the most recent execution of ArthroCare's commitment to commercialize its technology in new markets, which the company has identified as a key strategic objective for 1998. In February, ArthroCare signed an exclusive licensing agreement with the SciMed division of Boston Scientific Corporation for that company to develop and market Coblation-based devices for use in myocardial revascularization, an emerging treatment for heart disease.

ArthroCare Corporation is a medical device company redefining the standard in soft tissue surgery by developing, manufacturing, and marketing novel Coblation(tm) technology that allows surgeons to operate with increased precision and accuracy, with minimal damage to surrounding tissue. The company's systems currently are being used to perform closed joint surgery, including many types of knee and shoulder procedures. ArthroCare's long-term strategy includes applying its patented technology to a broad range of surgical fields, including cardiology, dermatology, urology, gynecology, and plastic, oral and general surgery.

This press release contains forward looking statements that involve risks and uncertainties, including but not limited to quarterly fluctuations in results, the management of growth, the competitive environment and risks as detailed from time to time in the Company's Securities and Exchange Commission filings, including ArthroCare's Form 10-K for the year ended January 3, 1998.

CONTACT: ArthroCare Corporation

Christine Hanni, 408/736-0224

or

Scher Communications

Susan Scher or Daniel Berman, 415/546-6700