CardioVascular BioTherapeutics Inc. completed its initial public offering, raising $17.25 million to fund late-stage trials of its protein drug candidate Cardio Vascu-Grow, a growth factor injection designed to boost angiogenesis.

The Henderson, Nev.-based company sold about 1.7 million shares of its common stock at $10 per share. Underwriters will have the option to purchase an additional 300,000 shares to cover overallotments. First Dunbar Securities Corp., of Boston, is underwriting the offering.

The company's stock (OTC BB:CVBT) rose $3.75 Monday to close at $13.75. Tuesday, it rose another 85 cents to close at $14.60.

The company declined to comment and referred to its prospectus.

CVBT had estimated selling 2 million shares at $10 per share, with 61 percent of the proceeds being used for clinical trials, 23 percent for research and development, 12 percent for marketing and infrastructure and 4 percent to cover accrued interest of outstanding convertible notes.

With full conversion of the company's convertible notes, CVBT said proceeds from the offering, along with available cash, would sustain operations for about two years. However, if holders of the notes choose not to convert them into common stock, CVBT said it would need to use about $14.9 million of the proceeds to redeem those notes, requiring the company to raise additional funds to make up the difference. As of Sept. 30, the company had about $6.6 million in cash and short-term investments.

CVBT said it does not expect to generate any revenues until Cardio Vascu-Grow is launched. For the six months ending June 30, the company posted a net loss of $2.1 million and had an accumulated deficit of $10.9 million. The company also anticipates additional expenses related to late-stage and premarket development of Cardio Vascu-Grow to be between $13 million and $15 million.

The product, an injected fibroblast growth factor-1, is in Phase I/II trials to determine whether it can promote the growth of new blood vessels in the heart and increase the pumping action of patients with coronary artery disease. The company's founder, Thomas Stegmann, tested Cardio Vascu-Grow in 40 patients during two German trials in the mid-1990s. Results from both trials indicated that the product helped grow new blood vessels. If the Phase I/II trials yield similar results to the German trials, the company said it will seek authorization to begin a pivotal Phase III trial, possibly as early as next quarter, and could receive marketing approval by mid-2007.

CVBT plans to handle sales and distribution itself in the U.S., Europe and Japan, and rely on regional distributors to sell and market the product in other areas.

According to the American Heart Association in 2003, coronary artery blockage results in about 38 percent of all deaths in the U.S., and that more than $170 billion per year is spent in hospital costs, medical services and on drugs to treat cardiovascular disease.

In addition to coronary artery disease, CVBT is conducting preclinical studies of Cardio Vascu-Grow in peripheral vascular disease in the legs, stroke, hypertensive renal disease, wound healing and anastomosis or as an adjunct for patients already undergoing a coronary bypass procedure.