Next Digene chief is biotech veteran

Faulkner is to succeed Jones Dec. 11

November 15, 2006|By Tricia Bishop | Tricia Bishop,Sun reporter

Digene Corp. announced yesterday that Daryl J. Faulkner, a biotech industry veteran, will take over as chief executive next month.

Faulkner replaces the Gaithersburg company's current CEO, Evan L. Jones, who surprised colleagues and industry insiders this summer by detailing plans to retire just as the business was taking off.

"There's a little sadness on my part; it's been incredible building Digene," Jones, 50, said yesterday. He took over the struggling biotechnology company in July 1990, when it had just been downsized to about 30 people, had no cash to speak of and sales of less than $1 million.

Today, Digene - which is best known for a test that checks women for a cancer-causing virus - has more than 500 employees, $157 million in cash and revenue of $153 million last year.

"This is the right time for me to move on," said Jones, whose top priority now is making it to his high school freshman son's hockey games this winter. "And Daryl is a great fit for the next leg of growth for the company."

Faulkner, who once worked for the Rockville competitor that sold Digene its underlying technology, will assume Jones' post Dec. 11. Earlier this year, he retired as a senior vice president and general manager of "strategic business units" from Invitrogen Corp. after the California company, which provides products and services to pharmaceutical and biotechnology businesses, restructured.

"I had the opportunity to reflect and spend some time with my family and wife and think about [what was next]," said Faulkner, 57. "Next" turned out to be Digene.

"This is something I thought long and hard about. I really wasn't ready to retire," Faulkner said. "I've made a commitment to roll up my sleeves and help this company grow. ... I don't think you can find a better success story and a better place to plug in."

He takes the helm during a high point in Digene's history.

It's one of the biotech industry's few moneymakers, turning a profit in two of the past three years and raising record revenue during its most recent fiscal quarter.

Sales of its HPV test, which looks for dangerous versions of the cervical-cancer-causing human papillomavirus, have soared over the past year.

And the company is expecting further boosts from advertising campaigns led by Merck & Co., which makes a newly approved HPV vaccine, and Glaxo- SmithKline once its HPV vaccine is approved for sale.

Digene's stock price also reached its second-highest point last week, closing on the Nasdaq just $5 shy of its all-time high of $55 in March 2000, when the biotech industry was experiencing a bubble similar to the dot-com boom.

Digene shares closed at $48.97 yesterday, down 75 cents.

"I think investors are looking at the next year or two and saying `OK, what's next?'" said Amit Hazan, an analyst with CIBC World Markets in New York. "So they're looking at a CEO as someone who's going to provide the leadership to take this company to the next level."

International sales

Faulkner said he's going to take the next 90 to 100 days to get to know the company from the inside before outlining specific plans, but he'll likely focus on strengthening international sales of the HPV test as well as evaluating possible acquisitions.

His background at Invitrogen includes international operations - he spent three years in Europe - and acquisitions.

The Carlsbad, Calif., company is much larger than Digene, with more than 4,800 employees and revenue last year of $1.26 billion. But, unlike Digene, it has had a rough 2006.

"They've missed earnings for the last three quarters compared to Wall Street [estimates]," said analyst David Lo, of ThinkEquity Partners in New York. He said the company was struggling to absorb eight acquisitions it made last year.

Before Invitrogen, Faulkner was a 15-year veteran of Illinois' Abbott Laboratories and then took a job in Maryland in 1998 at Rockville's Life Technologies, which sold Digene its diagnostic test platform in 1990. Invitrogen acquired Life Technologies in 2000.

"I don't know the man, never met him, but he clearly has a past connection with Digene and it looks like a pretty comfortable fit on both parties' behalf," said Bruce Cranna, an analyst with Leerink Swann & Co. in Boston.

`The right guy'

After yesterday's 4 p.m. announcement, Cranna began calling around to check up on Faulkner's reputation.

"What I've heard is that he's the right guy to run the business. He's not a startup kind of guy, he's more of a management kind of guy," Cranna said.

Still, he added, it will likely be difficult for Digene to lose Jones: "He poured his heart and soul into that business for a long time."

tricia.bishop@baltsun.com

Daryl J. Faulkner

Position:

CEO, Digene Corp.

Effective:

Dec. 11

Age:

57

Residence:

California, but he plans to move to Maryland in early 2007

Education:

Bachelor's degree in industrial relations from the University of North Carolina at Chapel Hill; master's degree in business management from Webster University in St. Louis.

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