BioWorld International Correspondent

LONDON - U.S. vascular disease specialist CardioVascular Biotherapeutics Inc. is listing on the Alternative Investment Market in London, raising $30 million and providing a route around the naked short selling the company believes its stock is being subjected to on the Over-the-Counter Bulletin Board (OTCBB), on which currently it is listed.

Returning to the U.S. last week after being on the road in Europe, Dan Montano, president and CEO, told BioWorld International that he had received " a very good reception" from potential investors and is "very optimistic" of meeting the $30 million target.

The money will enable the Las Vegas-based company to advance its lead product, cardio-vascu-grow, a fibroblast growth factor that stimulates angiogenesis, into Phase II proof of efficacy in three indications.

The move also will provide CardioVascular with a defense against the naked short selling.

In short selling, brokers borrow stock and sell it in the hope of buying it back at a lower price. The naked version of short selling refers to brokers selling stock that they do not control, and which in some cases, it is alleged does not exist.

The practice is not illegal in the U.S., though manipulating markets is, and the issue of whether naked short selling is occurring, and if so, what its effects are, currently is the subject of huge controversy in the U.S.

To date, CardioVascular has raised about $60 million from family, friends and angels, with no venture capital or institutional investors. "We decided to get a quotation in the U.S. so our investors could liquefy if they needed to, and have become a victim of short selling," Montano said.

Montano said he thought the OTCBB listing would enable family and friends to trade stock by appointment among themselves. Instead, he said the level of activity in the stock and the number of shares being traded "is like the float I don't know about."

The share price has fallen from $8 per share at the beginning of April 2006 to $1.43 at the end of March 2007.

However, the company has not yet decided if it will delist from OTCBB following a listing on AIM.

Montano said he believes naked short selling is facilitated in the U.S. because the requirement to deliver share certificates within three days is not enforced. "Any company in the U.S. is exposed to this, with biotech [companies] particularly vulnerable because they have to go back to the market to refuel."

In contrast, London Stock Exchange rules require certificates to be delivered within three days with no exceptions.

CardioVascular Biotherapeutics was founded in 1998 to commercialize the research of Thomas Stegmann, a German scientist who discovered and pioneered the use of fibroblast growth factor-1 (FGF-1) to promote angiogenesis. Two open-label uncontrolled trials in Germany in which FGF-1 was injected directly into the heart muscle of patients suffering severe coronary artery disease have shown that blood flow is increased. Montano said people who were incapacitated by the disease have returned to leading normal lives.

In addition to progressing the product to proof of principle in cardiovascular disease, the company aims to develop two further formulations, for dermal healing of diabetic ulcers and peripheral artery disease, to the end of Phase II also.

"The $30 million [to be raised on AIM] is sufficient to get us through Phase II in all three indications, and to carry on operations for the next 18 months," Montano said.

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