Laboratory Corp. to use Digene's HPV test

Deal seen as boon to Gaithersburg firm

Biotechnology

January 15, 2000|By Mara H. Gottfried | Mara H. Gottfried,CONTRIBUTING WRITER

Gaithersburg-based Digene Corp. said yesterday that it has come to an agreement with Laboratory Corporation of America Holdings to use its HPV test, which helps detect cervical cancer in women.

Vandana K. Bapna, a biotechnology analyst at Hunt Valley-based Offutt Securities, called the deal significant for Digene, a biotechnology company that focuses on DNA and RNA technology for the detection, screening and monitoring of sexually transmitted diseases.

"LabCorp is one of the largest reference testing labs in the United States," Bapna said. "Their clients include significant entities like physicians and government offices. This has the potential to impact Digene's sales and get the test established."

Digene's FDA-approved Hybrid Capture II HPV Test, which is based on DNA technology, is used for women who have borderline Pap smear results. The test detects human papillomavirus (HPV), the cause of almost all cases of cervical cancer.

HPV is one of the most common sexually transmitted infections. Cervical cancer is the second most common malignancy, next to breast cancer, in women.

Charles Fleischman, Digene president and chief executive, said Digene worked on the agreement with LabCorp for about six months. He said LabCorp will begin offering the test Feb. 1.

"This is a critical step for Digene," Fleischman said. "LabCorp is the No. 2 testing laboratory in the country, which will help us penetrate our market in the United States."

Digene lost $9.30 million, or 65 cents a share, on revenue of $17.47 million during its last fiscal year, which ended June 30. It lost $1.13 million, or 8 cents a share, on revenue of $5.22 million during its first quarter, which ended Sept. 30.

Bapna raised her 12-month target price for Digene from $18 to $26. Digene shares rose 68.75 cents yesterday to close at $22.1875.

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