Digene posts record sales for quarter

August 09, 2006|By TRICIA BISHOP | TRICIA BISHOP,SUN REPORTER

Digene Corp. of Gaithersburg announced yesterday record revenue for the quarter ending June 30, closing the books on its second profitable year since its founding in 1990. The increase was led by sales of its test for HPV, a sexually transmitted disease linked to cancer.

Fiscal fourth-quarter revenue was $43.3 million, a 34 percent increase over sales in the corresponding quarter last year. For the year, revenue was $152.9 million, a 33 percent increase over fiscal 2005.

Income for the quarter was $3 million versus a loss of $3.8 million in the fourth quarter of fiscal year 2005.

For the year the company earned $8.4 million, compared with a loss of $8.2 million in the preceding year.

Fiscal year 2004 was the only other profitable year for Digene, when it earned $21.5 million.

Shares in the company, which announced earnings after the close of trading, closed yesterday at $40.12, down 48 cents, on the Nasdaq stock market.

Digene has had a full year. Its chief executive announced retirement plans, it dodged a competitive threat and it ramped up its commercial consumer campaign, which now targets 10 cities, including Baltimore and Washington.

"Fiscal year 2006 was an outstanding success," Charles M. Fleischman, chief financial and operating officer, declared during a conference call yesterday.

Digene makes the only Food and Drug Administration-approved test to diagnose dangerous versions of the human papillomavirus, or HPV, a sexually transmitted disease that, in one form or another, affects 80 percent of Americans. For most, it's a harmless annoyance, often clearing on its own. But in about 10,000 U.S. women each year, it causes cervical cancer.

Diagnosing the disease has made up the bulk of Digene's business, so it was initially nervous when pharmaceutical giant Merck & Co. received FDA approval this summer for its HPV vaccine. Then executives realized they could co-exist for years to come - and perhaps even make out on Merck's dime.

"[Merck] may well do a lot of the educational work, they certainly will spend more money than we would," said Robert Lilley, Digene's senior vice president, global sales and marketing. Lilley expects that Merck will offer a "full court press" of advertising about HPV, targeting bus stops, health clubs and media outlets - far outpacing Digene's city-to-city campaign.

"We're dealing with one of the world's largest marketing entities," he said. "When they come out of the gates, they come out of all gates at everything."

Digene has been spending about 40 percent of its revenue on marketing but hopes to scale that back to about 35 percent this fiscal year. Fleischman predicted revenue for the coming fiscal year of about $192 million.

tricia.bishop@baltsun.com

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