Stock Price of Medstone Falls $3.25 : Securities: The price of Medstone International Inc.’s shares dropped nearly 31% after it failed to get federal approval of its lithotripsy device for treating gallstones.

Medstone International Inc.’s stock price fell Friday nearly 31%, or $3.25 a share from $10.50, in the wake of a Food and Drug Administration advisory panel’s decision not to recommend the use of its lithotripsy equipment for treating gallstones.

The stock’s drop established a new low for the Irvine-based biotechnology company, which also was hit earlier this week with a shareholder lawsuit alleging that it had concealed adverse information about its business prospects. For the week, Medstone’s stock tumbled 47.2% from $13.75.

Analysts said the biggest blow was the decision by a panel of medical experts in Washington not to recommend to the FDA approval of Medstone’s lithotripters as a non-surgical alternative for removing gallstones. The same lithotripters, which use shock waves to disintegrate stones, is already FDA-approved for treating kidney stones.

Medstone’s chief competitor, Dornier, a much larger French company, also failed to win a favorable recommendation Thursday from the medical experts.

Mirian W. Meglan, a securities analyst with Johnson Rice & Co. who attended the panel hearing, said the medical experts were not convinced that lithotripsy technology has a clear advantage over drugs or surgery in treating gallstones.

Meglan said the panel complained that Medstone’s clinical studies in which patients were treated by a combination of the lithotripter and drugs did not adequately show to what degree each contributed to the elimination of gallstones. Also, she said the panel wanted follow-up data on a larger number of patients who have undergone lithotripsy to learn, among other things, the incidence of harmful side effects.

“What it means is a big delay, I think a year, maybe more,” before Medstone obtains FDA approval to market its technology for gallstones, Meglan predicted. She said, however, that the company told analysts after the meeting Thursday that it would resubmit its request for approval to the FDA by January.

Company officials could not be reached for comment.

Medstone has seen a decline in sales of its lithotripters this year. The decline is blamed on near saturation of the market for kidney stone lithotripters and on a reluctance of some hospitals to order machines until they also are approved for treating gallstones.

In the first half of 1989, Medstone’s income fell to $175,000 from $3.2 million for the first half of 1988, which the company said reflected in part a beefing up of its international sales and marketing staff. In the same year-to-year period sales dropped to $8.6 million from $9.2 million.

Also, the company has said it expects to post a loss for its third quarter ended Sept. 30 because it voluntarily ceased shipment of its lithotripters until it could address some FDA concerns about its reporting and the X-ray component of the machines. Recently the company said it had met the FDA requirements and that the orders would be filled.

The flood of bad news has had a dampening effect on Medstone’s stock in recent months. The company’s stock sold for $13 a share when it went public in June, 1988, and then rose to a high of $42 a share in August of that year before it took a steep slide.