Luna Announces Sale of Shape-Sensing Technology for Medical Applications

  Luna Announces Sale of Shape-Sensing Technology for Medical Applications

Intuitive Surgical buys medical shape-sensing technology in deal valued at up
                               to $30 million;

      Luna to retain shape-sensing technology for non-medical industries

Business Wire

ROANOKE, Va. -- January 22, 2014

Luna Innovations Incorporated (NASDAQ:LUNA), which develops and manufactures
new-generation products for the telecommunications, aerospace, automotive,
energy and defense markets, today announced the sale of its shape-sensing
technology for medical applications to Intuitive Surgical, Inc. (NASDAQ:ISRG).

The terms of the deal include Luna receiving $12 million upfront in two
tranches and up to an additional $18 million upon certain technical milestones
and commercial measures. Intuitive will acquire Luna’s fiber optic
shape-sensing and localization technology, including related patents, and hire
a number of engineering employees formerly utilized in Luna’s medical
shape-sensing business.

The sale will enable Luna to focus on the growth potential of its fiber-optic
sensing business while significantly strengthening the company’s balance
sheet. The sale contains provisions that maintain Luna’s ability to service
its existing agreements and for the continued use and exploration of
opportunities outside the medical industry.

“Luna develops technological solutions to problems that others cannot solve,
and this is yet another successful example of how our technology ultimately
reaches the market, in this case with a long-time development partner,” said
Luna President and CEO My Chung. “This sale is the culmination of the
shape-sensing development we’ve done over the past several years for
potentially integrating into Intuitive’s future products. One of the many
benefits of this agreement is the ability to monetize much of the value of our
innovations immediately – rather than waiting for longer-term revenues from
development and potential supply agreements – while enabling us to streamline
our focus on the growth opportunities that we believe exist for our
strain/temperature sensing business, especially within the automotive and
aerospace markets.”

“We look forward to working with Luna on a smooth transition,” said David
Larkin, Intuitive’s Vice President of Engineering. “We are excited about the
team joining Intuitive and the possibilities around this technology.”

With the sale, Luna will focus on growing its fiber optic sensing technology,
which improves manufacturing and testing of composite and non-composite
materials, structures and systems. “With strain and temperature sensing now as
our key focus, we’re prepared to develop technological solutions for this
growing market with our proven technology,” Chung said. ”We also will continue
to sell our test and measurement products to the telecommunications industry
and develop a pipeline of technologies through contract research.”

Mr. Chung and Dale Messick, Luna’s Chief Financial Officer will host a
conference call with investors on Thursday, January 23, 2014 at 9:00 a.m.
(EST) to discuss the transaction. The conference call will be available via
live webcast on the Luna website at www.lunainc.com under the tab “Investor
Relations”. To participate by telephone, the domestic dial-in number is
800.706.7745 and the international dial-in number is 617.614.3472. The
participant access code is 14875088. Investors are advised to dial in at least
five minutes prior to the call to register. The webcast will be archived on
the company’s website under “Webcasts and Presentations” for 30 days following
the conference call.

About Luna

Luna Innovations Incorporated (www.lunainc.com) is a public company composed
of scientists, engineers, and business professionals developing and
manufacturing a new generation of technologies and products. It has been
successful in taking innovative technologies from applied research to product
development and ultimately to the commercial market, driving breakthroughs in
fields such as aerospace, automotive, telecommunications, healthcare, energy,
and defense.

About Intuitive

Intuitive Surgical, Inc. (NASDAQ:ISRG) is the global technology leader in
robotic-assisted minimally invasive surgery (MIS). The Company's da Vinci®
Surgical System offers surgeons superior visualization, enhanced dexterity,
greater precision and ergonomic comfort for the optimal performance of MIS.
The da Vinci System enables surgeons to perform even complex procedures such
as open-heart surgery through 1-2 cm incisions.

Forward Looking Statements

This release includes information that constitutes "forward-looking
statements" made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995, including statements regarding, but
not limited to: Luna’s potential future receipt of deferred and contingent
payments, including royalties, in connection with the transaction; Luna’s
focus on markets outside of the medical industry; the uniqueness of Luna’s
technology and intellectual property; potential for future commercialization
of its technologies; the competitive advantage afforded by Luna’s technology;
the potential efficacy of Luna’s technology; growth potential of certain
markets and potential benefits of the incorporation of Luna’s shape-sensing
technology in robotic and non-robotic surgery and Intuitive’s ability to
improve the delivery of healthcare by virtue of the transaction. Statements
that describe the company's business strategy, goals, prospects,
opportunities, outlook, plans or intentions are also forward-looking
statements. Actual results may differ materially from the expectations
expressed in such forward-looking statements as a result of various factors,
including the ability of the technology transferred to Intuitive to achieve
certain technical specifications that are required for triggering future
payment under the asset purchase agreement, Intuitive’s successful development
of surgical systems incorporating the Luna technology; approval of such
systems for marketing by the United States Food and Drug Administration and
similar foreign regulatory bodies; market adoption of Intuitive surgical
systems incorporating Luna technology; uncertainties regarding the growth of
the markets for the company’s temperature and strain sensing technology
outside of the medical industry; technical and scientific difficulties; issues
that might arise in any particular business relationship; and risks and
uncertainties set forth in the company's periodic reports and other filings
with the Securities and Exchange Commission. Such filings are available at the
SEC's website at http://www.sec.gov, and at the company's website at
http://www.lunainc.com. The statements made in this release are based on
information available to the company as of the date of this release and Luna
undertakes no obligation to update any of the forward-looking statements after
the date of this release.

Contact:

Luna Innovations Incorporated
Dale Messick, 1-540-769-8400
IR@lunainc.com
 
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