Digene Corp. said yesterday that strong U.S. sales of its cervical cancer tests drove quarterly revenue up 47 percent, but that costs from a scuttled secondary offering resulted in a loss equal to that of a year ago.
The Gaithersburg company lost $1.6 million, or 10 cents per share, for its fiscal third quarter this year and last. The loss this year included about $500,000 - or 3 cents per share - in expenses related to an offering Digene pulled during the market slump in March.
Analysts had predicted a loss of 9 cents per share, excluding the one-time costs, according to the average estimate of three analysts surveyed by Zacks Investment Research Inc. Quarterly revenue was $9 million, compared with $6.1 million a year ago.
"It's pretty hard to be negative," said H. C. Wainright analyst Ronald Opel, who upgraded shares of Digene from an "accumulate" rating to a "buy" in March. "I think it's undervalued."
Shares of Digene climbed $1.49, or 7 percent, to close at $22.79.
The company has been gaining business in the cervical cancer testing market as more U.S. doctors and laboratories use its HPV test for cervical cancer to double-check or clarify results of Pap smear tests.
To that end, Digene began an agreement in January with Cytec Corp., which is marketing an improved Pap smear test. Cytec encourages labs that use its Pap test to use Digene's HPV test if the initial test results need to be clarified.
Cytec reported last week that its share of the U.S. Pap smear market had increased to 41 percent, and Opel estimates Cytec is gaining market share at a rate of 3 percent to 4 percent a quarter - bringing more business to Digene.
"We've had good momentum for our business," said Digene's chief, Evan Jones.
But while Jones said U.S. sales of the HPV test gained 167 percent in the first nine months of this fiscal year, European sales gained only 15 percent.
In an attempt to give a boost to sales in Europe, the Middle East and Africa, the company earlier this week announced it had handed over responsibility for marketing of the HPV test in those areas to Roche Molecular Systems Inc. HPV sales in those regions previously were handled by Abbott Laboratories.