Evolution in Pap Marketplace Shows Impact of New Guidelines

Sales of Digene’s HPV test grow rapidly, direct-to-consumer ads will start in March

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NEW GUIDELINES for cervical cancer screening issued last year are fueling strong growth in the sales of Digene Corporation’s HPV test.

For its fiscal second quarter that ended on December 31, 2004, Digene reported sales of $27.0 million. That’s a 28% increase from Digene’s sales of $21.1 million for its second quarter last year.

HPV test revenues are the major part of those sales. For this past quarter, Digene’s worldwide HPV test sales totaled $22.3 million, compared to $17.1 million from the comparable quarter last year. That’s a 30% increase.

In offering guidance to investors, Digene estimates that, for its full fiscal year ending June 30, 2005, it will see growth of 40% to 50% in HPV test revenues over the previous year. The majority of Digene’s HPV test sales are coming from the United States.

Direct-To-Consumer Ads

Digene is expanding the sales team which calls on physicians and details them about the company’s products. It is also preparing to launch a direct-to-consumer advertising campaign in March.

There was equally strong growth at Cytyc Corporation, which manufactures the liquid preparation ThinPrep® Pap Test. Revenues for the year ending December 31, 2004 were $393.6 million. This is 23% more than its $303.1 million in sales for 2003.

Cytyc disclosed that it has shipped 158 imaging systems to laboratories in the United States since it released this product. On February 9, 2005, Cytyc announced that it had acquired Proxima Therapeutics, Inc. in a transaction valued at $160 million.

Proxima manufactures a single-use device “for the treatment of breast cancer that positions radiation sources directly into the post-lumpectomy site to optimize radiation treatment while minimizing damage to surrounding tissue.”

The operative words in Cytyc’s acquisition of Proxima Therapeutics are “single-use device.” Consumables are the most profitable part of the IVD business and Cytyc believes the Proxima business model—and its consumables—are complementary to Cytyc’s core business model.

At TriPath Imaging, Inc., full-year revenues totaled $68.5 million, a 27% increase over the $53.8 million it posted for 2003. The company’s net income for 2004 was $605,000, compared to a loss of $8.5 million in 2003.

TriPath manufactures the liquid preparation SurePath™ Pap Test and the Focal Point™ imaging system. It is also developing molecular diagnostic tests for malignant melanoma and cancers of the cervix, breast, ovary, and prostate.

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