Plymouth-based Kips Bay Medical, Inc., said Friday that it raised $16.5 million before expenses in an initial public offering-Minnesota's first of 2011 and one of just a few within the state during the last three years.

The company offered 2.1 million shares priced at $8 per share, the low end of its expected range of $8 to $10 per share. On the first day of trading on the NASDAQ Global Market, shares fell 7 cents and closed at $7.93.

Kips Bay Medical is a development-stage company that is focused on manufacturing and commercializing a product called eSVS Mesh. The device is a mesh sleeve that is placed over a saphenous vein graft during coronary artery bypass surgery. It is designed to improve the structural characteristics and long-term performance of the vein graft.

Kips Bay Medical will use the proceeds of its offering to pursue U.S. regulatory approval for its eSVS Mesh product, to fund the development and testing of additional applications of it, to pay for the intellectual property behind it, and for working capital and general corporate purposes.

Underwriters of the offering have 45 days to purchase up to an additional 309,375 shares of common stock to cover excess demand.

Kips Bay Medical's eSVS Mesh product was used in a 90-patient clinical trial, which resulted in approval of the product outside of the United States in May 2010. The company has since marketed the product in some European markets and the United Arab Emirates, but has “not generated significant revenue from the sale of products to date,” according to a filing with the U.S. Securities and Exchange Commission.

Kips Bay Medical filed for an initial public offering in April 2010. Last month, the company said that it expected to offer more than 2.7 million shares and capture net proceeds of $21.2 million.

Kips Bay Medical incurred a net loss of $10.1 million in the nine months that ended on October 2-which included a $2.3 million charge related to a modification of an investor stock purchase option and a $5 million charge for a “first milestone payment” due to Medtronic, Inc., one year after the first commercial sale of the eSVS Mesh. Kips Bay Medical purchased intellectual property from Medtronic for the development of its device.

The company was founded in 2007 by Manny Villafa–a, who has founded several other medical start-up companies, including Cardiac Pacemakers, St. Jude Medical, GV Medical, ATS Medical, and CABG Medical. He was named one of Twin Cities Business' “200 Minnesotans You Should Know” in April and inducted into the Minnesota Business Hall of Fame in 2003.

Minnesota's IPO activity has been slow during recent years. Only two local companies went public in 2010-New Prague-based Electromed, Inc., and Minneapolis-based SPS Commerce-up from one in 2009 and none in 2008.