Cardiac Science Stock to Go Public May 15

Cardiac Science Inc. says it will lift restrictions on the sale of nearly 5 million shares of its common stock, almost a year after the heart device manufacturer was spun off from CytoCare Inc.

The 10-month delay in the offering of 4.72 million shares to the public will end next week, now that company officials have obtained private funding to help the infant biotechnology company, said chief executive Howard K. Cooper.

An additional 2.27 million shares will continue to be held by corporate shareholders, Cooper said.

“We put that restriction (on stock sales) ourselves,” Cooper said on Tuesday. “I did not want it traded publicly while trying to raise capital.”

Cooper is a former president and chief executive of Trimedyne Inc. who left the surgical laser manufacturer last year to launch his own company for developing a new series of non-implantable heartbeat regulators.

Trimedyne had been losing money in the cardiovascular field for two years, and “decided to make the transformation from a cardiovascular laser company to a diversified surgical laser company,” Trimedyne chairman of the board Marvin P. Loeb wrote in the company’s annual report.

Cooper, who wanted to continue development of cardiovascular devices, said he approached CytoCare in March, 1991, and immediately started Cardiac Science as a CytoCare subsidiary.

CytoCare develops and manufactures medical devices for treatment of kidney and prostate diseases.

In July, Cardiac Science was spun off to CytoCare shareholders through a stock dividend distribution, valued at .0016 cents per share.

“We felt it more advantageous to be a separate business and to be allowed to seek our own financial successes,” Cooper said.

At the time of issue, CytoCare stockholders received an equal number shares of almost valueless Cardiac Science stock.

For instance, a thousand shares of Cardiac Science stock was valued at $1.60. CytoCare stockholders did not pay any money for the Cardiac Science stock, but were told at the time of the stock distribution that they were unable to sell them until June, or when the Cardiac Science board of directors authorized a public sale.

Cooper said he did not know what the price per share would be when the stock begins trading May 15 on the over-the-counter market.

Cardiac Science is developing cardiovascular defibrillator devices that treat patients suffering from ventricular arrhythmia, an ailment that brings on sudden cardiac death--a form of heart attack that is the leading killer in the United States.

One of the best-known victims of ventricular arrhythmia was college basketball star Hank Gathers, who collapsed from the disease on a basketball court.

Cooper said Cardiac Science researchers have been developing a new family of defibrillators that regulate irregular and fluttering heartbeats without the need for surgical implants, the current procedure.

He estimated that the market for such devices would far surpass the $200 million-a-year implantable defibrillation method.

No devices have been sold by the company, but Cooper said Cardiac Science has developed several working prototypes ready for clinical trials and has filed Food and Drug Administration applications.

Trials will be conducted at UCI Medical Center, the Albert Einstein Institute and Cornell University in New York, Harvard University in Boston and Emory University in Atlanta.

For the past 10 months, Cooper has been raising money while the company has prohibited shareholders from trading its stock.

Restrictions on stock trading are seldom imposed. But in cases where there is no public offering, trading restrictions are allowed by boards of directors, Cooper said.

The Cardiac Science trading restrictions were described in company brochures at the time of the spinoff, he said. Money raised through the sale of the stock will go toward general corporate expenses and product development.

Cardiac Science initially raised $310,000 in private funding from CytoCare as a line of credit at 8% per year, to be repaid by 1995, to begin development of the new technology.

Cooper said the company also raised $250,000 from Technical Funding Partners, a Menlo Park venture capital company. An additional $250,000 has been promised for a later undetermined date, he said.