Heartstream Files $33 Million Ipo

Heartstream Inc. yesterday announced a $33 million initial public offering to complete development of its first product, an automatic defibrillator lay persons can use to revive heart attack victims.

Meanwhile, the 3-year-old company was fending off a recent lawsuit by rival Physio-Control Corp. of Redmond. The lawsuit alleges that Heartstream's five founders took valuable secrets with them when they left Physio in December 1992 to start Heartstream.

"We don't expect the suit to have an impact," said Gary Onn, Heartstream's director of finance and administration.

Onn said Heartstream is preparing a counter claim, but declined to elaborate.

After using more than $27 million in venture capital the past three years, Heartstream now intends to offer 3 million common shares at $11 to $13 a share.

Proceeds will be used to introduce and market an automatic external defibrillator called ForeRunner.

The company plans to list the shares on the NASDAQ National Market under the symbol HTST. The offer is being underwritten by UBS Securities Inc., Robertson, Stephens & Company, L.P. and Cowen & Company.

Unlike traditional defibrillators, which can only be used by highly trained medical personnel, an automatic external defibrillator senses heart rhythms and automically guides the user to apply shocks. It is projected for use in jetliners, stadiums, shopping centers and other public areas where lesser-trained security guards or flight attendants, could use it.

A key to ForeRunner's success is Heartstream's co-founder and vice-president of research and development, Carl Morgan, who is also a pivotal figure in the Physio lawsuit.

Morgan led a team of engineers who developed a Physio automatic external defibrillator that made it briefly to the market in the late 1980s, but was discontinued because of weak sales. Morgan has led development of Heartstream's updated version of the device.

Earlier this month Physio announced its own initial public offering: 11.6 million shares it hopes to move for about $16 million. The company traded publicly from 1971 to 1980, but has been privatelyheld by a series of owners since then.