UK Surgeons Perform Europe's First Incisionless POSE Procedures Using USGI Medical's Incisionless Operating Platform(TM) (IOP)

Scar-Free Procedure Designed to Reduce Stomach Size in Overweight and Obese Patients

SAN CLEMENTE, California, September 15, 2010 - USGI Medical, Inc. the Incisionless Surgery Company, announced
that surgeons in the UK are the first in Europe to offer POSE (Primary
Obesity Surgery, Endolumenal) to patients for weight loss. The surgeons used
USGI's Incisionless Operating Platform(TM) (IOP), to perform the scar-free
procedure designed to reduce the size of the stomach helping patients feel
full after consuming less food.

Surgeons Mr. James Byrne and Mr. Jamie Kelly performed
Europe's first POSE procedures on six patients at a private hospital in
Southampton on August 26. The patients who underwent the procedure returned
to work or normal activities within 2-3 days.

"Given the lack of long-term success patients experience with
diets and weight loss drugs, we're very proud to be the first in Europe to
offer this incisionless procedure to help overweight and obese patients feel
full and eat less," Mr. Jamie Kelly said. "This discreet outpatient procedure
should result in less pain, shorter hospitalisation, less risk of infection
and no visible scars compared to traditional surgeries performed through the
abdomen. Our first patients were back at their jobs without any bandages or
signs of surgery within two to three days."

None of the patients experienced any complications other than
a slight sore throat.

To perform POSE, surgeons pass the USGI IOP down a patient's
throat, and use tools to grasp tissue and deploy the company's
specially-designed Expandable Tissue Anchors to create multiple tissue folds
around the stomach. An endoscope provides visualization.

Another Southampton surgeon Mr. Michael Van den Bossche
recently used the IOP and similar techniques to perform ROSE (Repair of
Surgery, Endolumenal) in patients who started to regain weight because their
stomach pouches and stomas had stretched out since a previous bariatric
surgery. Mr. Van den Bossche will also be performing POSE procedures.

"We are proud to be working with leading edge surgeons in
Europe to offer Incisionless Surgery to their patients and to pioneer this
exciting field," USGI Medical President and Chief Executive Mr. Eugene Chen
said. "We look forward to expanding Incisionless Surgery across Europe with
our distribution partners. We are on track to have distribution relationships
in place in all of the major European markets by 2011." Elemental Healthcare
Ltd. distributes the IOP in the UK market.

The devices that make up the IOP received the European CE Mark
in March 2010.

For more information on the Incisionless Operating Platform
and USGI Medical, Inc. visit www.usgimedical.com.

About USGI Medical

USGI Medical is committed to the development of technologies
to enable Incisionless Surgery - the treatment of diseases through the
natural passageways of the body. USGI's Incisionless Operating Platform
provides surgeons the operating platform and specialized tools they need to
perform surgery through a patient's mouth or other natural orifices, reducing
the need for external incisions into the abdomen. Importantly, USGI has
demonstrated the capability to reliably and durably approximate GI tract
tissue without an incision. Operating through the body's natural orifices
offers promise for less pain, shorter hospital stays, reduced risk of wound
infection and no external scars - and is rapidly becoming an option demanded
by patients and healthcare providers. USGI offers surgeons and
gastroenterologists the tools they need to offer millions of potential
patients a less invasive surgical option. www.usgimedical.com

Media Contact: Vicky Stoakes, Indigo Cow PR, +44(0)1273-773-516, vicky at indigocow.com .