NEW YORK (
) -- Shares of
have been on a roll of late and the company is apparently striking while the iron is hot.
After Wednesday's closing bell, the Redwood City, Calif.-based medical device company filed a pair of registration statements with the
Securities and Exchange Commission
. One announced plans for existing shareholders to sell roughly 6.2 million common shares at a maximum price of $2.46 each.
The other alerts investors to the dilutive sale of an additional $40 million worth of common stock and warrants, a considerable amount given the company's market capitalization stands at just under $100 million.
The filings follow a sensational run in the past week for Cardica's stock, which has jumped more than 50% since closing at $2.42 last Thursday. The shares rose almost 18% on Wednesday alone to finish at $3.84, making for year-to-date appreciation of 180%. Volume has soared along with the share price as trading has exceeded at least 300,000 in the past four sessions vs. the issue's three-month trailing daily average of around 50,000.
The driver for the recent buying interest was a
. which initiated coverage of the stock with an outperform rating. The firm's bullish thesis is based on its enthusiasm for Cardica's Microcutter product, an endoscopic stapling device that's still in clinical development.
In its note to clients about Cardica, Wedbush did note the company would likely need to bulk up its balance sheet. The company's cash balance stood at around $15 million at the end of September, an amount that the firm estimated would be enough to fund operations through the development and initial launch of Microcutter, which is expected to occur in the the company's fiscal 2012 first quarter ending in September.
We expect Cardica to seek additional funding in order to build the necessary infrastructure and sales force before proceeding with a full launch of the Microcutter," Wedbush said in last week's note to clients.
In its SEC filing, Cardica said it would use the proceeds of the $40 million securities sale for general corporate purposes, including research and development, general and administrative and manufacturing expenses, as well as a potential acquisition or investment.
The offering follows the company's licensing deal with
in August, which included a $12 million payment and gave Intuitive Surgical a stake of 1.25 million Cardica common shares.
Including Wedbush, three analysts currently cover Cardica's stock with the other two firms -- Needham and William Blair -- both rating it at hold. Wedbush, which believes Cardica may end up an acquisition target for a larger medical device company as Microcutter gets closer to launch, assuming its development doesn't meet any pitfalls. The firm has a fair value estimate on the shares of $4.
Written by Michael Baron in New York.
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