MINNEAPOLIS, March 12 /PRNewswire/ -- Urologix, Inc. (Nasdaq: ULGX), a
developer and marketer of minimally invasive medical devices for the treatment
of urological diseases, announced today that it has reduced its internal sales
projections as a result of slower than anticipated market development for its
Targis System, and limited product availability due to a reliability problem
recently experienced with a component in the catheter portion of the Targis
System.  The cause of the component problem has been identified and new
product is being manufactured.  As a result of these developments, the company
expects sales for the quarter ending March 31, 1998, to be in the $2.4 million
range and could incur an expense charge of approximately $700,000 in the
quarter related to the component problem.
    "While we are encouraged by the early reception of the Targis System in
the U.S. and the progress made by our international distribution partners,
there are factors causing a slower sales ramp-up compared to our previous
expectations," said Jack Meyer, president and chief executive officer.  "The
complex process of changing physician practice patterns relating to the
treatment of BPH, confusion regarding reimbursement, and competitive activity
have resulted in a longer than anticipated selling cycle and lower than
expected utilization rates."
    "BPH continues to represent an enormous worldwide market opportunity,"
continued Meyer.  "While we are disappointed that we have not been able to
penetrate this market as rapidly as we expected, significant progress has been
made.  Many reimbursement obstacles have been overcome, such as indications of
Medicare reimbursement in 47 states.  There are approximately 40 Targis
Systems installed in leading urological centers around the world.  We are
pleased that despite having marketed the Targis System for only four months in
the U.S., the average utilization rate in commercial sites has already reached
approximately seven procedures per month.  Further, the clinical results
produced by the Targis System continue to be excellent.  Over 650 patients
have been treated in controlled clinical studies throughout the world.  Of
these, 422 have reached their one year evaluation, 158 their two year
evaluation and 58 their three year evaluation.  Within three months following
a Targis System treatment, most patients experience a significant decrease in
major symptoms of BPH as measured by the American Urological Association (AUA)
Symptom Score and a significant increase in urinary flow rates.  These
improvements in BPH symptoms and flow rates are maintained at comparable
levels three years following treatment.  Two years following treatment, only
12 percent of the patients from the initial multi-center study had requested
some form of additional treatment for the BPH symptoms.  High levels of
patient satisfaction, significant long-term symptom reduction and minimal
additional treatment rates provide strong evidence of long-term durability,
which we believe is one of the key attributes differentiating our technology
from competing systems."
    "We have a growing number of key urological opinion leaders using the
Targis System and their positive experiences should accelerate the acceptance
with other urologists and with payors," added Meyer.  "We have strong, capable
and committed distribution partners, and a dedicated and talented group of
employees.  We remain committed to using these resources to become a leader in
treating BPH worldwide."
    In addition to the slower than expected market development progress for
the Targis System, the company's current operations are being temporarily
affected by limited procedure kit availability.  An electronic component in
the Targis System catheter has recently demonstrated an occasional failure.
Only a few of the Targis System treatment sites worldwide have experienced
this problem.  While the failure of this component does not present a safety
issue, the possibility that an occasional treatment interruption could occur
is unacceptable to Urologix.  As a result, Targis System catheters are not
being shipped to customers from our existing inventory, and new catheters are
currently being manufactured.
    "Thus far, we have executed this plan with a minimal delay to scheduled
treatments in existing accounts throughout the world and believe we can
continue to do so,"  explained Meyer.  "However, because of limited inventory
of the new catheters, new placements of control units in the U.S. could be
delayed and we will not be able to ship additional catheters to our
international distributors until the fourth fiscal quarter."
    Certain statements in this press release that relate to future performance
of the company are "forward-looking" and are subject to risks and
uncertainties inherent in the company's business.  These risks and
uncertainties include: competition from other BPH treatments; the ability of
the company's distributors and representatives to successfully market and sell
the Targis System; the company's ability to manufacture the Targis Systems in
sufficient quantities; the company's ability to maintain intellectual property
protection for its proprietary products and to defend its existing
intellectual property rights from challenges by third parties; and the extent
to which the physicians performing the Targis System procedures are able to
obtain third-party reimbursement.  In addition, a detailed discussion of risks
and uncertainties may be found in the Risk Factors section of the company's
Prospectus dated November 12, 1997.
    Urologix, Inc., based in Minneapolis, develops, manufactures and markets
minimally invasive medical devices for the treatment of urological diseases.
The company has developed the Targis System, a non-surgical, anesthesia-free,
catheter-based therapy that uses a proprietary microwave technology for the
treatment of benign prostatic hyperplasia (BPH), a disease that affects over
23 million men worldwide.  The Targis System has been approved for marketing
in the United States, the European Union, Japan and Canada.

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