Kips Bay Inks Deal to Sell Up to $20M in Stock

The company, which was founded in 2007 by serial entrepreneur Manny Villafa–a, has entered an agreement through which it will sell up to $20 million of its common stock.

Kips Bay Medical, Inc., on Tuesday announced that it has entered into a deal to sell $20 million of its common stock to Aspire Capital Fund, LLC, a Chicago-based investment fund.

Under the terms of the deal, Aspire Capital has committed to buy up to $20 million of the Plymouth-based company's stock over the course of three years, based on the stock's prevailing market price during a period leading up to each sale. Kips Bay also said that the deal gives it control over the timing and share amount of the sales to Aspire Capital.

Kips Bay-which was founded in 2007 by Manny Villafa–a, a serial entrepreneur behind medical companies like Cardiac Pacemakers and St. Jude Medical-went public in February.

“This agreement provides us the flexibility to raise equity capital at our discretion on fair and reasonable terms,” Villafa–a said in a statement, adding that the deal will help Kips Bay in “making progress on the regulatory and reimbursement issues that novel medical devices face in today's environment.”

About a month ago, Kips Bay experienced a setback in its plan to bring its product-a mesh sleeve that is placed over a saphenous vein graft during coronary artery bypass surgery-to market in the United States. The U.S. Food and Drug Administration told the firm that it needs additional information about the device before it will allow the company to pursue a clinical trial. Kips Bay already sells its eSVS Mesh in six countries outside the United States.

“While we wait for the opportunity to move forward with the U.S. regulatory process, we continue to focus our efforts on developing our international business and continue to expand our sales and marketing activities,” Villafa–a said in Tuesday's statement, adding that his firm is meeting with European doctors and hospitals to expand the use of its eSVS Mesh product overseas.

Used during coronary bypass surgery, the eSVS Mesh is designed to improve the structural characteristics and long-term performance of the vein graft. Villafa–a recently told Twin Cities Business that he believes the market potential for the device is greater than for pacemakers, heart valves, and stents combined due to the large volume of bypass surgeries performed each year.

Shares of the company's stock were trading up about 9 percent to $1.86 on Thursday morning. Shares of its stock were trading at about $2.85 in mid-September before dropping more than 30 percent following the news about the FDA setback.