West Coast Editor

CardioVascular BioTherapeutics Inc. filed an initial public offering to sell 2 million shares at $10 each, raising about $20 million to advance Vascu-Grow, an injected fibroblast growth factor that boosts angiogenesis.

After deducting the underwriting discounts, expenses and commissions, and if an underwriter's overallotment option of 300,000 shares is exercised, the total take would be about $19.8 million.

The company plans to use 61 percent of the proceeds for FDA-required clinical trials, 23 percent for research and development, 12 percent for marketing and infrastructure build out, and 4 percent for accrued interest on outstanding convertible notes.

The company, which intends to trade on Nasdaq under the symbol "CVBT," said the targeted amount would be enough cash to operate for about 24 months, but said in the filing that the firm might have to repay about $14.9 million in convertible notes if they are not converted into common stock after the IPO.

In that event, the Henderson, Nev.-based company would have to raise money to replace that amount "and, without slowing or otherwise adjusting certain programs, to raise it within 18 months from this offering," CVBT said in its filing.

Since about $8.3 million and $6.6 million, respectively, of the convertible notes may convert into common stock at $2 per share and $4 per share, "we believe it is likely that most, if not all, of the convertible notes will be converted into common stock," CVBT said.

Vascu-Grow was the subject of two clinical trials in Germany in the mid-1990s, CVBT said, and increased the pumping capacity of the heart in the patients treated. Such trials were conducted with limited patient populations. Based on the results, CVBT started Phase I/II trials in November of last year at three medical centers.

The studies are being conducted in patients with advanced heart disease who have no alternative treatment. If the Phase I/II trials are successful, CVBT said, the firm will ask the FDA to go ahead with a Phase III pivotal trial.

Approval also will be sought in other countries. "We plan to handle sales and distribution in the United States, Europe and Japan internally," CVBT said in its filing. "Our current plan is to handle sales and marketing in the remaining international markets through regional distributors."

CVBT said it was aware of no competition in its particular space, although noted that some companies are deploying gene therapy approaches. GenVec Inc., of Gaithersburg, Md., disclosed in 2002 that it had completed a 71-patient study with a viral gene-therapy drug that was delivered to the hearts of patients and intends to pursue further development of its catheter-delivered drug for severe coronary artery disease. Gene-therapy approaches "may involve more patient risk," CVBT said, pointing out that no gene therapy has yet been approved by the FDA.

Underwriter of the IPO is First Dunbar Securities Corp., of Boston.