General Surgical Innovations Licenses Ethicon Endo-Surgery, Inc. to Market New Balloon Dissectors.

PALO ALTO, Calif.--(BUSINESS WIRE)--July 3, 1996--General Surgical Innovations, Inc. (Nasdaq: GSII) announced that the Company has signed a five-year distribution and licensing agreement with Ethicon Endo-Surgery, Inc. (EES), a Johnson & Johnson company (JNJ). The license allows Ethicon Endo-Surgery to market its new balloon tissue dissection system in the laparoscopic hernia repair market. Under the agreement, GSI has the right to manufacture EES' balloon dissectors for EES.

"The EES license agreement helps strengthen GSI's position in the marketplace, while allowing Ethicon Endo-Surgery to take advantage of our portfolio of balloon dissection patents," commented Roderick A. Young, President and Chief Executive Officer of General Surgical Innovations. "This allows hospitals with purchasing contracts with Johnson & Johnson to buy the EES product and thus take advantage of this new, minimally invasive technology."

GSI's own Spacemaker(TM) I and II Balloon Dissection Systems, not subject to this agreement, are currently sold through the Company's direct sales force and through an exclusive distribution agreement with United States Surgical Corporation (USSC) within the domestic market and selected international markets. The distribution agreement signed with USSC in the spring of 1994, offered general surgeons a new technology to enhance patient care, primarily for minimally invasive hernia repair. "We are pleased with the job our partner, U.S. Surgical, has done selling our Spacemaker Balloon Dissection products," stated Young.

GSI and Ethicon Endo-Surgery have also agreed to work together on balloon dissector systems targeted for urinary stress incontinence. Urinary stress incontinence affects about 7 million women in the U.S. and this product potentially provides dramatic benefits to the large population which could benefit from surgical treatment. Traditional surgical techniques involve sizable open incisions and the possibility for complications and can take the patient weeks to recover. The product will be sold to both gynecologists and urologists who wish to perform minimally invasive surgery to treat this condition on an outpatient basis.

GSI's Spacemaker balloon dissection systems can rapidly and atraumatically create surgical working spaces by separating natural tissue planes without resorting to blunt dissections used in conventional open surgery and minimally invasive surgery conducted outside of a natural body cavity. In Spacemaker balloon dissection procedures, the balloon dissection system is inserted uninflated between tissue layers through a small incision. The balloon is then filled to a specific volume with air or saline, causing the desired dissection of the tissue planes. The system is then removed and the dissected space is insufflated with gas to create a surgical working space. Advantages of these techniques include reduced patient trauma and blood loss, shorter procedure and patient recovery times and ultimately lower medical costs.

Headquartered in Palo Alto, California, General Surgical Innovations, Inc. develops, manufactures, and sells balloon dissection systems for minimally invasive surgery. The Company's products are specifically designed for general, endoscopic, laparoscopic, vascular, cosmetic and reconstructive surgeries to create a working space at the surgical site, minimize tissue damage and improve patient recovery time. The Company has developed a broad range of balloon shapes and sizes to be used for various surgical techniques, procedures, and market segments. In addition to selling products to U.S. Surgical and Ethicon Endo-Surgery as discussed above, GSI also sells products directly into the vascular surgery and cosmetic and reconstructive surgery markets.

Except for historical information contained herein, the matters discussed in this press release are forward-looking statements, the accuracy of which is necessarily subject to risks and uncertainties. The timing of product introductions, receipt of regulatory approvals, relationships with the Company's distributors and resellers, clinical efficacy of and market demand for products, among other matters discussed in this release, may differ significantly from the discussion of such matters in the forward-looking statements. Such differences may be based upon factors within General Surgical Innovations' control, such as strategic planning decisions by management and reallocation of internal resources, or on factors outside of General Surgical Innovations' control, such as scientific advances by third parties, introduction of competitive products and delays by regulatory authorities, as well as those factors set forth under the heading "Risk Factors" in General Surgical Innovations' Registration Statement filed March 27, 1996.

CONTACT: General Surgical Innovations, Inc.

Stephen J. Bonelli, 415/812-9730

or

Burns McClellan, Inc.

Justin Jackson or Jonathan M. Nugent, 212/505-1919