Aspect Medical Systems Obtains Exclusive License for Brain Monitoring Technology to Aid Diagnosis and Treatment of Psychiatric and Neurodegenerative Diseases

Business Wire, Sept 13, 2004

NEWTON, Mass. -- -Technology Developed at the Neuropsychiatric Institute and David Geffen School of Medicine at UCLA-

Aspect Medical Systems (NASDAQ: ASPM) today announced that it has obtained an exclusive license for Cordance technology, an EEG-based brain assessment tool for diagnosis and management of neurological diseases developed at the Neuropsychiatric Institute and David Geffen School of Medicine at UCLA. The company plans to combine its proprietary BIS(TM) technology with Cordance in an effort to develop new products that aid healthcare providers in diagnosing and treating psychiatric and neurodegenerative diseases, such as Alzheimer's disease and depression. These products may also enable pharmaceutical and device developers to quantify the effects of central nervous system therapies early in the development cycle.

"Aspect has demonstrated a unique ability to translate complex data about brain activity into valuable and practical clinical tools," said Dr. Andrew Leuchter, Professor of Psychiatry, senior investigator for the depression research group at UCLA and chair of Aspect's Neuroscience Advisory Board. "This technology holds promise to aid the management of psychiatric and neurodegenerative diseases in clinical practice settings and accelerate the development of drug and device therapies."

The licensing agreement follows two years of research collaboration between Aspect's neuroscience division and UCLA. An example of the efforts undertaken during the research collaboration is an ongoing study funded by Eli Lilly and Company and another large pharmaceutical company to identify 'placebo responders' in depression trials using the Cordance technology. The study, recently highlighted in The Wall Street Journal's June 18, 2004 issue, is being conducted at UCLA and Massachusetts General Hospital with the goal of aiding the development of new treatments for depression by differentiating between the EEG patterns of patients who respond to antidepressant drugs and those who respond to a placebo. By identifying the trial subjects who are responsive to depression treatments, the technology could enable researchers to discover the most promising antidepressant compounds with significantly fewer experimental subjects, thereby reducing development costs and accelerating time-to-market.

"This agreement provides a natural extension of Aspect's mission and technological expertise," said Phil Devlin, vice president of technology and general manager of Aspect's neuroscience division. "We believe that this new technology, combined with the knowledge we have gained through more than a decade of brain research and experience in bringing BIS technology to the market, positions us well as we seek to develop tools to aid the diagnosis and management of neurological diseases."

About Aspect Medical Systems, Inc.

Aspect Medical Systems, Inc. (NASDAQ: ASPM) is a global market leader in brain monitoring technology. Aspect's BIS(TM) technology directly measures the effects of anesthetics and sedatives on the brain. The technology has been used to assess more than 9 million patients and has been the subject of approximately 1,500 published articles and abstracts. BIS technology is installed in approximately 32 percent of all domestic operating rooms and is available in more than 160 countries. Aspect Medical Systems has OEM agreements with seven leading manufacturers of patient monitoring systems. Aspect is also investigating how other methods of analyzing EEG may aid in the diagnosis and management of neurological diseases, including depression and Alzheimer's. Based in Newton, Mass., Aspect employs more than 200 people worldwide. For more information, visit Aspect's Web site at http://www.aspectmedical.com.

Safe Harbor Statement

Certain statements in this release are forward-looking and may involve risks and uncertainties, including statements with respect to the Company's ability to successfully develop tools for the diagnosis and treatment of psychiatric and neurodegenerative diseases. There are a number of factors that could cause actual results to differ materially from those indicated by these forward-looking statements. For example, the Company may not be able to achieve widespread market acceptance of its BIS monitoring technology or to compete with new products or alternative techniques that may be developed by others, including third-party anesthesia monitoring products approved by the FDA. The Company also faces competitive and regulatory risks relating to its ability to successfully develop and introduce enhancements and new products, such as products for the diagnosis and treatment of psychiatric and neurodegenerative diseases. In addition, the Company has limited sales and marketing experience both in the U.S. and internationally, and if it is unable to develop and implement a successful sales and marketing strategy, including with respect to its own sales force, domestic and international distributors, original equipment manufacturers and other direct and indirect sales channels, it will not be able to generate meaningful product revenue. In addition, the Company's ability to become and remain profitable will depend upon its ability to promote frequent use of the BIS system so that sales of its BIS sensors increase. The Company will not be profitable if hospitals and anesthesia providers do not buy and use its BIS systems in sufficient quantities. Cases of awareness with recall during monitoring with the BIS system and significant product liability claims are among the factors that could limit market acceptance. There are factors that could cause Aspect's actual results to vary from its forward-looking statements, including without limitation those set forth under the heading "Factors Affecting Future Operating Results" in Aspect's Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2004, as filed with the Securities and Exchange Commission. In addition, any forward-looking statements represent Aspect's views only as of the date of this press release and should not be relied upon as representing Aspect's views as of any subsequent date. While Aspect may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if its expectations change. Therefore, you should not rely on these forward-looking statements as representing Aspect's views as of any date subsequent to the date of this press release.