CardioVascular Stock Drops a Day After Debut

IRVINE —  An initial stock offering by CardioVascular Dynamics Inc. got caught Thursday in a market downdraft that affected new issues.

Mirroring several other new offerings, CardioVascular’s stock fell below its initial price the previous day. The stock closed Thursday at $11 a share, off $1, in trading on the Nasdaq market.

Analysts said the stock’s debut obviously disappointed investors, and came at a time when the market is becoming increasingly nervous about the prospects for new issues.

Officials at the Irvine-based developer and marketer of catheters for treating vascular disease seemed satisfied with the offering, however. Michael R. Henson, chairman and chief executive officer, noted that the company originally thought the stock might be initially priced as low as $10 a share.

CardioVascular, a spinoff of Pleasanton-based EndoSonics Corp., raised $40 million in the sale of 3.4 million shares. Proceeds will be used for product development, clinical trials, sales and marketing, and repayment of an EndoSonics debt.

EndoSonics, a maker of catheters and ultrasound imaging systems, now holds 48.9% of the stock, down from its presale stake of 84.2%.

Henson said one caller even complimented him Thursday, saying the stock price had held up well at a time when health-care and technology issues have retreated.

But other observers were not impressed with CardioVascular’s debut. The stock opened Thursday at $12.75, up 75 cents from the offering price the previous day, then retreated to close at $11.

“This is an investment banker’s worst nightmare--that the stock closes below the opening price,” said Manish Shah, publisher of New York-based IPO Maven, which rates new issues. “They’ll have to do a lot more hand holding” with investors.

Shah said that a couple of weeks ago he recommended that investors avoid getting in on CardioVascular’s offering. He reasoned that it hasn’t made money, sales have been minimal, and it still faces regulatory hurdles with products in development.