Digene says Kaiser HMO will use its cancer test

Loss narrows as revenue rises at Gaithersburg firm

Biotechnology

May 04, 2000|By Rona Kobell | Rona Kobell,SUN STAFF

Digene Corp., the Gaithersburg-based maker of medical test kits, announced yesterday that Kaiser Permanente will use its flagship product to screen for cervical cancer.

The 10-year-old company's Digital Hybrid Capture HPV test detects the human papillomavirus, a frequent precursor to cervical cancer. The HPV test is one of a handful of products Digene is developing, but it's the most successful so far, said Digene President Charles Fleischman.

The test played prominently in Digene's earnings for the quarter ended March 31, which the company also released yesterday. Revenues increased 28 percent, to $6.1 million, compared with $4.8 million posted for the corresponding period last year. Roughly half of those revenues came from HPV test sales.

Digene also narrowed its loss by 6 percent, to $1.6 million, from $1.7 million in the year-earlier quarter.

Shares of Digene rose 6.7 percent yesterday, closing at $43.8750. Digene is still short of its 52-week high of $58.5, which it hit in March, but well above the $10 at which it traded in January.

That month, the Journal of the American Medical Association featured Digene's test in an article on cervical cancer prevention. Since then, national labs LabQuest and Quest Labs and California-based Unilab began offering the test.

Fleischman said the Kaiser deal will open doors for relationships with other health-maintenance organizations and move the company closer to profitablity. "We're an emerging biotech company; when we make money -- which we will soon -- we'll be one of a select few companies that do," he added. Fleischman said Digene is talking with national labs about its test for sexually transmitted diseases gonorrhea and chlamydia. The Food and Drug Administration approved that test in March.

Sandra Hollenhorst, a medical device analyst at Prudential Vector Healthcare Group in Minneapolis, agreed that the Kaiser deal will raise the profile of both Digene and HPV testing.

"Kaiser's known in the industry as a company that's very careful about implementing new technology," she said. "Once they adapt the HPV test, it will drive others."

With Kaiser's participation, Hollenhorst estimates, 200,000 women will take the HPV test this year. That number could jump as high as 8 million as more is written about the links between HPV and cervical cancer. Hollenhurst said Digene's losses were a bit higher than predicted because of the company's move from Beltsville to Gaithersburg. Digene had to wait for an FDA inspection before it could complete the move.

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