Dealing with woman’s health issues…
working to eliminate cervical cancer.
Biotechnology & Drugs, Sector:
Healthcare, NASD: DIGE
Digene Corporation
1201 Clopper Rd., Gaithensburg, MD 20878,
Phone: 301-944-7001
Evan Jones, Chairman and Chief Executive
Officer
Interview conducted by: Diane Reynolds, Co-Publisher
Introduction & Career History:
Evan Jones - My name is Evan Jones and I am
the chairman and CEO of Digene Corporation. I
began in this field nearly two decades ago. My
family was involved with the diagnostic business that created one of the first companies. In 1990, we had a vision to create a company that
was developing gene tests for treatable diseases. We
were one of the first companies to enter this market and through the 1990’s we
developed our business and market position. We
are now one of the leaders in the field with Digene and we created a unique technology
called Hybrid Capture, which allows gene testing, and virtually any lab setting and our
lead product is for the cause of cervical cancer. We
have the only FDA cleared product for the cause of cervical cancer and the sales now are
growing rapidly. As we discussed earlier the
total revenues for our business grew 37% in the last quarter, to $7.2 million dollars.
Ceocfointerviews: Do you deal strictly with
Women’s Health Issues?
Evan Jones: That is the primary focus of the
company. We are working to become the world
leader in gene testing for women’s cancers and infectious disease.
Ceocfointerviews: Are other areas that could possibly use your
product?
Evan Jones: We do serve other markets, but our
lead product and focus is in the Women’s Cancers and Infectious disease markets. Our technology is broadly applicable and we have
applied it in and are working to apply it in two other areas. The second being what are known as blood viruses. These major viruses that are afflicting mankind
such as hepatitis, CMV, and HIV have been a focus for us.
Looking forward, we are active in the area of genomic and pharmaceutical
research.
Ceocfointerviews: It was I mentioned in one of your press releases
that you have set goals for yourself and have passed them.
What are the new goals you will set for this company?
Evan Jones:
We have a long way to go to fully execute our strategy and reap the rewards
in the women’s cancer and infectious disease market.
The HPV test sales in the last quarter were about $3 million dollars up 70%
of the prior year period. This is an enormous
potential market. There are on the order of
150 million cervical screens each year, cervical cancer screening tests, and we believe we
can gain a significant piece of that market place. You
can imagine the size of the market if you take each test at about $10.00 a test. You have 150 million tests times $10.00, our
total market opportunities can be in excess of a billion dollars just for our lead
product.
Ceocfointerviews: I know in the past they were strictly using Pap
Smears to test this...
Evan Jones: Pap smears have been a very
successful test but they have not completely eliminated cervical cancer. Now that we know the cause of cervical cancer,
there really is no reason why any woman should die of this disease. It’s our strong belief that with the
Digene Hybrid Capture? II HPV test, we can dramatically reduce or even potentially
eliminate this disease completely.
Ceocfointerviews: Is this test marketed on a global basis?
Evan Jones:
Yes and in terms of the milestones, right now we are working on trying to
complete our efforts to gain the US market place for the use of our test in conjunction
with the Pap smear for patient management. There
will be a large clinical trial published out of the NCI this winter called the ALTS Trial. This $20 million dollar clinical trial showed that
the Digene test was able to pick up 96% of underlying disease while the Pap smear picked
up just 85%. We are working with laboratories
that are setting up automatic testing programs that are called Automatic Reflex Testing. That should help to firmly establish our test in
the United States market.
Ceocfointerviews: Will the new test eliminate the Pap smear?
Evan Jones:
Initially the indication is for patient management; if a woman has what is
called a “borderline Pap smear” then our test will automatically be performed. That represents about three and a half million
women in the United States each year.
Ceocfointerviews: I know in the past that Pap smears have been
inaccurate.
Evan Jones:
Addressing this issue has been one of the initial focuses of our business. The problems with the Pap smear are inherent with
the technology. It’s a visually based
subjective diagnostic test, where as our test is a standardized molecular diagnostic test. We’re working to make a submission to the
Food and Drug Administration, hopefully by the end of this year, for our test to be used
in conjunction with the Pap smear. We believe
that this new combined test can provide women with close to 100% security in their
cervical cancer screening results.
Ceocfointerviews: Well sometimes you think, ”why spend the
extra money” if the first test was accurate enough.
Evan Jones: Ultimately it could be that the
mainstream test is the Digene HPV test as the ultimate cervical cancer-screening test. There are a number of countries looking at this
approach in particularly the countries just starting their screening programs.
Ceocfointerviews: How are you educating the doctors, the hospitals,
the nurses, and the medical professionals in general?
Evan Jones:
Our strategy is focused on disease management. We are working with many of
the largest health care providers; managed care chains and national government research
institutions to establish the HPV test as the standard of care. Once you’ve done that then you can get very
large organizations such as the National Cancer Institute, or large payers such as Kaiser
Permanente to help carry the message for you. We
have been successful in doing that. Kaiser
Permanente has adopted our test. We expect a
publication of the upcoming NCI clinical trial results to result in a large educational
effort both by the NCI, the labs who offer our tests, and the payers. Finally, media coverage can be an important
educational medium. It was in all of the
recent major peer reviewed medical journals that there has been a growing awareness about
the benefits of our tests relative to competing technologies.
Ceocfointerviews: Is it just the one product out there that’s
being marketed today?
Evan Jones: The lead product is the HPV test
in the women’s cancer and infectious disease market.
We have a strategy to do additional testing from a single sample and we have
FDA approval for our chlamydia and gonorrhea tests and we expect to release those products
in the US in January and have a full roll out with our marketing partner, Abbott Labs,
through the first half of calendar year 2001.
Ceocfointerviews:
How was Digene started?
Evan Jones:
My stepfather founded a company called “Technicon” which was one
of the first medical diagnostic companies. I
learned a lot about the business from him. He helped me start Digene ten years ago. But it’s n our website. This is not just from the United States but from
all over the world. People are trying to
educate themselves about the causes of cervical cancer and the certain types of tests that
are available. We have partners in the number
of non-governmental organizations that are taking up the crusade to educate the public and
physicians about the link between HPV and cervical cancer.
For instance, in the United Kingdom there is a campaign called “Women
for HPV testing”. In the United States,
there is the “National HPV and Cervical Cancer Prevention Resource Center”. These are independent groups that are pushing for
education among women and for health care providers to pay for the tests. They are all working together to try and get the
message out there and many of these groups use the internet, of course, as one of their
communication channels.
It is critical to our
business strategy to educate the world about the benefits of our tests relative to the
traditional methods. We can also thank our
laboratory partners for our recent success. We
work with the top labs in the US and they have all committed to the program I highlighted
a minute ago, Automatic Reflex Testing for HPV. They,
through their very large sales forces, are now educating the doctors in the United States
about this new product.
Ceocfointerviews: Now how much does the company spend on R&D?
Evan Jones:
We spent $2 million dollars in our last quarter. We are operating at an $8
million dollar run rate in resear and development. We
have a strong commitment in innovation in this area.
We think that kind of investment is necessary to become the world leader in
gene testing for women’s cancer and infectious diseases.
Ceocfointerviews: Do you see the R&D expenditures increasing ?
Evan Jones:
We see a very significant opportunity to expand our R&D; of course we
are also trying to run a fiscally disciplined company.
Right now we have about $20 million in cash and as our balance sheet
continues to improve and our revenues grow, we would like to increase R&D expenses in
the future.
Ceocfointerviews: Do you receive any government help with this?
Evan Jones:
We work with the government, we’ve had some small business industrial
research grants. The largest help we’ve
had from the governmental institutions are helping to fund the large-scale trials
validating our product. We have about 100,000
women in clinical trials around the world evaluating our new technology. Many of those trials are being funded by national
governments. I mentioned the NCI, $20 million
dollar trial; the Dutch government is also funding a 40,000 woman trial looking at HPV
testing for replacing the Pap smear. The UK
government is running a pilot program to implement our test in the United Kingdom, which
begins in March. Clearly, government is often
times our partner when it comes to applying our test and getting the large scale results
that are required to change public policy.
Ceocfointerviews: Now that you know what causes it and obviously
you can isolate it, is there any way of actually preventing it?
Evan Jones:
There are two approaches there. First
of all early detection is probably the best way to eliminate cervical cancer. We know if you detect this cancer early it is
virtually 100% treatable. Having said that
you would like people to be treated either therapeutically or through a vaccine. There are developments in both of those areas. Both initiatives benefit Digene to the extent that
you can have a better drug treatment, that will drive people to do more testing to find
women to be treated. Similarly, many of the
vaccine strategies that are being envisioned involve combined diagnostic testing.
Ceocfointerviews: Why should investors to look at your company?
Evan Jones:
First, Digene is a proven player in the market place. We have a strong track record. It is important to note that we have a very strong
intellectual property position for our products. We
have patent protection for our lead product, for the cause of cervical cancer. It’s an enormous potential market. We’re growing at 37% and certainly
approaching profitability in the next several quarters, and the future has enormous
opportunities. You’re talking about a
billion-dollar opportunity just for our lead product.
That’s just one product that can be developed from our core technology. We are operating in one of the most exciting areas
in health care today. It is one of the
fastest growing parts of the diagnostic market place.
We are taking the fruits of the human gene project and the biological
revolution that is going on in creating commercial products that can save lives.
We have a very focused
business and we’re executing our business plans successfully.
Ceocfointerviews: What would be your closing comment to our reade
Evan Jones: It is important to note that Digene has the
potential to help eliminate cervical cancer; we’re providing real results with proven
products. Our products are taking off and are helping to save lives as a company.
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