Kips Bay Medical (OTC:KIPS) turned to founder, chairman & CEO Manny Villafaña and other backers for a private placement worth up to $3.25 million, as the company makes a last-ditch bid to get its eSVS surgical mesh on the market.

The eSVS mesh is designed to keep vein grafts open during in coronary artery bypass graft surgeries. The device is comprised of a flexible, knitted sleeve that fits around the outside of the vein in order to reduce vessel wall stress and mitigate the potential for vessel injury.

In September 2011 the FDA issued a non-approvable letter for the device, asking for more information on the eSVS mesh before granting permission for a feasibility study. That approval came in November 2012 and was later expanded. Earlier this month, Kips Bay, which let its listing on the NASDAQ exchange expire last September, said it reached the enrollment goal for the Emesh I feasibility study.

The company slashed its workforce by 38% in January and instituted temporary pay cuts for its officers.

Villafaña, who also founded St. Jude Medical (NYSE:STJ) and is a serial medtech entrepreneur, joined the private placement along with principal stockholder Kips Bay Investments, according to a regulatory filing. The deal calls for the investors to put up $3.25 million in 4 equal tranches, but not before the Emesh trial generates 10 angiograms from eSVS-treated patients demonstrating that it’s "advisable for the company to continue with the Emesh I clinical feasibility trial and to continue to pursue marketing approval by the FDA for the eSVS mesh," according to the filing.

The remaining tranches would follow at 90, 180 and 270 days after the 1st payment, Kips Bay said.

The proceeds are earmarked for the trial, a hoped-for pivotal trial after that and then a bid for FDA approval. Kips Bay pledged not to use the cash to hire sales reps and to limit its monthly cash burn to about $208,000, not including trial expenses, according to the filing.