With the intent of bringing its cardiovascular drug into a U.S. Phase II study, Forbes Medi-Tech Inc. raised $10.75 million in a private placement.

"It's definitely a significant milestone for the company," said Darren Seed, manager of investor relations at the Vancouver, British Columbia-based company. "It helps us initiate and maintain funding for pharmaceutical development programs."

The company issued about 5.4 million Series A convertible preferred shares at $2 each. The shares had about 1.6 million warrants attached, each of which entitles the holder to purchase one common share at $2.40 for three years. Each preferred share is convertible into one common share.

Its stock (NASDAQ:FMTI) fell 3 cents Wednesday to close at $2.81. The company also trades on the Toronto Stock Exchange.

The proceeds have been earmarked for the company's pharmaceutical development programs, specifically for research on FM-VP4 and the development of the FM-VPx library of compounds, as well as for operational purposes.

FM-VP4 is in Phase II European trials for cardiovascular and related diseases. Results are expected by the end of this quarter, Seed said.

"If the results are deemed successful, we would have sufficient funding now to continue with a U.S. FDA Phase II study," he told BioWorld Today.

The company's FM-VPx library of compounds includes synthetic entities with therapeutic potential in lowering triglycerides, increasing HDL, and in antiobesity, anti-diabetic and anti-inflammatory indications. Aside from those pharmaceutical programs, the company has a nutraceutical business consisting of functional food, dietary supplements and Vivola oil, which is used for cooking, baking and salad dressing.

Following the company's last financing in September when it raised $4.8 million, Forbes Medi-Tech had enough cash to last it beyond 2005, Seed said. He could not say how much further the newest financing would carry the company.

"The truth lies in the details of our pharmaceutical development and R&D expenditures over the next few years," he said.

One of the investors in the recent financing introduced Eric Topol to Forbes Medi-Tech, which then appointed him chairman of the company's medical and scientific advisory board and scientific consultant for its pharmaceutical development program. Topol is provost at the Cleveland Clinic Lerner College of Medicine and chief academic officer of the Cleveland Clinic Foundation, as well as chairman of the department of cardiovascular medicine.

"He brings a great deal of credibility with him to both the company and, specifically, our science," Seed said.

Investors in the private placement include Great Point Partners LLC, of Greenwich, Conn., and Biotechnology Development Fund IV LP, of Palo Alto, Calif., the latter of which also participated in the financing last September.

With the financing, Forbes Medi-Tech has about 32.3 million shares outstanding.