Digene reports record profit in first quarter

BUSINESS DIGEST

November 03, 2006|By Tricia Bishop | Tricia Bishop,Sun reporter

Driven by a 47 percent increase in worldwide sales of a test that identifies a cancer-causing virus in women, Digene Corp. yesterday reported record fiscal first-quarter results and raised financial guidance for its fiscal year 2007, which ends in June.

Revenue for the Gaithersburg biotech was up 38 percent to $46.1 million for the quarter ending Sept. 30, compared with $33.4 million in the corresponding quarter of 2005. Profit nearly quadrupled to $5.1 million from $1.3 million last year.

"[We're] off to an excellent start," Chief Executive Evan Jones said during a conference call held to discuss the results, which were released after the markets closed yesterday. Digene shares were down 56 cents to $45.72 on the Nasdaq stock market.

The quarter's performance is due to a surge in sales of the company's human papillomavirus, or HPV, test, which sells for an average of $20 apiece. Five states - Maryland, New Mexico, Texas, California and West Virginia - require insurance companies to cover the costs of the tests in eligible patients.

It's the only test approved by the U.S. Food and Drug Administration to diagnose dangerous versions of HPV, a sexually transmitted disease that affects 80 percent of Americans. Most HPV versions are harmless, often clearing on their own, but a handful of others cause cervical cancer in about 10,000 U.S. women each year.

The virus made headlines this summer when Merck & Co. received FDA approval for an HPV vaccine, which might have also helped boost Digene's sales, which rose 53 percent in the United States to $35.7 million from $23.4 million a year earlier.

Outside the U.S., another $10.4 million worth of tests were sold during the quarter, with some encouraging headway made in Europe, said Chief Financial Officer Joseph P. Slattery.

The company has been marketing its test to medical professionals and directly to consumers through television and print campaigns. On average, test usage increases by 80 percent six months after an advertising campaign has ended, said C. Douglas White, a senior vice president of sales and marketing.

Digene also increased its revenue expectation for fiscal year 2007 yesterday, raising its guidance by $5 million to $197 million. The company expects its profit to rise by about $1 million to $25.9 million.

tricia.bishop@baltsun.com

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