Kips Bay Medical Inc. (NSDQ:KIPS) shares sank hard and fast on news that the FDA asked for additional information before allowing its eSVS surgical mesh to undergo clinical testing.

The Minneapolis-based company lost 34 percent yesterday, closing at $1.87 (compared to a close of $2.85 on Sept. 20). Along the way, shares hit an all-time low of $1.79.

Kips’ eSVS surgical mesh, a flexible device used to strengthen vein grafts during coronary artery bypass procedures, is under consideration for an investigational device exemption to begin conducting clinical trials toward U.S. marketing clearance. The FDA told the company that it needs to provide more data to support its application, according to a press release.

"While we are disappointed with the news from the FDA, we remain confident that our European studies will demonstrate the improved patency of grafts treated with the eSVS Mesh as compared to untreated grafts," chairman and CEO Manny Villafana said in prepared remarks. "We will then present this data to the FDA as further evidence supporting our request for an IDE."

The company is pursuing clinical studies in Europe and the United Arab Emirates in hopes of obtaining the necessary data to satisfy IDE status for the FDA.

Kips Bay stock has plummeted 78 percent since February, when it hit a high-water mark of $8.37 shortly after launching an initial public offering, which opened at $8.00 and raised $17 million on a hoped-for $21.2 million offering.

Shares have dropped pretty steadily since then, hitting the halfway mark of $4.00 by mid-May as sales of the company’s flagship mesh device have lagged.

The eSVS device won CE Mark in the European Union in May 2010, but sales have lagged.

"[W]e have not generated significant revenue from the sale of products to date," the company wrote in the Jan. 18, 2011, filing.

Kips managed to narrow losses heavily in the three months ended July 2, 2011, reporting $1.04 million lost, 82 percent less than the $5.9 million lost during the same period in 2010. Sales remained steady at $48,000 compared to last year.