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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

OR

Commission file number 0-28194

DIGENE CORPORATION
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (301) 944-7000

(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    X    No       

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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DIGENE CORPORATION

INDEX TO FORM 10-Q

PART I. Consolidated Financial Information

Item 1. Consolidated Financial Statements

DIGENE CORPORATION
CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes.

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DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes.

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DIGENE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements of Digene Corporation (“Digene”) for the three- and six-month periods ended December 31, 2002 and 2001 are unaudited and include all adjustments which, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. All such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2002 filed with the Securities and Exchange Commission.

The results of operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.

2.     Inventories

Inventories are stated at the lower of cost or market on a standard cost basis, which approximates average cost.

Inventories consist of the following:

3.     Distribution Agreement

On April 29, 2001, Digene entered into a letter agreement with Roche Molecular Systems (the “Roche Distribution Contract”), which established Roche Molecular Systems (“Roche”) as the co-exclusive distributor of Digene’s human papillomavirus (“HPV”) products in Europe, Africa and the Middle East from May 1, 2001 through June 30, 2002. In June 2002, Digene adopted as its sole strategy for the distribution of its HPV products in Europe, Africa and the Middle East, a combination of direct distribution through its European infrastructure and the use of local distributors and agents. On June 30, 2002, the term of the Roche Distribution Contract expired, subject to a non-exclusive wind-down period. On December 20, 2002, Roche and Digene amended the Roche Distribution Contract to terminate the wind-down period on December 31, 2002 and to establish the procedures for Digene’s repurchase from Roche of HPV-related testing equipment

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purchased from Digene by Roche under the Roche Distribution Contract. The repurchase price for the equipment in use for HPV testing in customers’ laboratories is the equipments’ December 31, 2002 depreciated value, which is the net selling price less any amounts Roche recorded as depreciation based on a straight-line basis over a four-year period. The repurchase price for the equipment in inventory is a discount from the transfer price paid by Roche under the Roche Distribution Contract. The parties consummated the HPV equipment repurchase on January 6, 2003, subject to a reconciliation review scheduled to be completed in March 2003.

Commencing in the fourth quarter of fiscal 2002, Digene deferred recognition of revenue from HPV equipment sold to Roche under the Roche Distribution Contract. Equipment sold to Roche during the fourth quarter of fiscal 2002 had a sales price of $2.3 million and a cost of $1.4 million, which amounts were recorded as deferred revenue and deferred costs, respectively, during that quarter. The deferred revenue and deferred costs were being amortized over a four-year period beginning in April 2002 to other revenue (as equipment rental) and selling and marketing expenses, respectively. For the three-month period ended December 31, 2002, Digene recorded other revenue and selling and marketing expenses of $144,000 and $88,000, respectively related to the amortization of these balances. Based upon the aforementioned repurchase of equipment from Roche in January 2003, the remaining deferred revenue and deferred costs will be written off in the third quarter of fiscal 2003 against the cost of the acquired equipment.

4.     Intangible Assets

In July 2002, Digene adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142), which requires companies to stop amortizing goodwill and certain intangible assets with an indefinite useful life. Instead, SFAS 142 requires that goodwill and intangible assets deemed to have an indefinite useful life be reviewed for impairment upon adoption of SFAS 142 (January 1, 2002) and annually thereafter. Digene will perform its annual impairment review during the fourth quarter of each year, commencing with the fourth quarter of fiscal 2003.

Under SFAS 142, goodwill impairment is deemed to exist if the net book value of a “reporting unit” (i.e., the level of the consolidated business at which goodwill impairment is measured) exceeds its estimated fair value. This methodology differs from Digene’s previous policy, as permitted under accounting standards existing at that time, of using discounted and undiscounted future cash flows as a basis to determine if goodwill is recoverable. There was no impact on the carrying value of Digene’s intangible assets upon adoption of SFAS 142. Digene does not have any intangible assets, other than goodwill, which had a net book value of $900,515 at December 31, 2002.

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The historical results of operations for the three- and six- months ended December 31, 2001 do not reflect the provisions of SFAS 142. Had Digene adopted SFAS 142 on July 1, 2001, the historical net loss would have been changed to the adjusted amounts indicated below (in thousands):

5.     Reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related Notes thereto included elsewhere in this report and in our Annual Report on Form 10-K for the year ended June 30, 2002. Some of the information that follows are not statements of historical fact, but merely reflect our intent, belief or expectations regarding the anticipated effect of events, circumstances and trends. Such statements should be considered as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations. Factors that might cause or contribute to differences between our expectations and actual results include: uncertainty of market acceptance of our products by the worldwide medical community; uncertainty of future profitability and cash generation from operations; our ability to obtain requisite additional financing to fund our operations beyond calendar year 2003; our limited sales and marketing experience; the extent of future expenditures for sales and marketing programs; delay in or failure to obtain regulatory approvals for our products in development; uncertainty regarding patents and proprietary rights in connection with our products and products in development; dependence on third-party reimbursement from government entities, managed care organizations and private insurance plans; risk that other companies may develop and market HPV Tests competitive with our own; risks inherent in international transactions, including those relating to our expansion in Europe and elsewhere; our ability to scale up our manufacturing to the extent product sales increase; uncertainty of clinical trial results for our products in development; and other factors as set forth under the caption “Additional Considerations” in our Annual Report on Form 10-K for the year ended June 30, 2002.

Overview

Since our incorporation in 1987, we have devoted substantially all of our resources to developing, manufacturing and marketing our proprietary gene-based testing systems using our patented Hybrid Capture® technology for the screening, monitoring and diagnosis of human diseases. Since our inception, we have incurred substantial operating losses, resulting principally from expenses associated with our research and development programs, including preclinical studies, clinical trials and regulatory submissions for our products, the expansion of our manufacturing facilities and our global sales and marketing activities.

Our revenues to a significant extent have been derived from the sales of our HPV Tests, which, for fiscal year 2002, accounted for 74% of total revenues and, for the six months ended December 31, 2002, accounted for 79% of total revenues. We expect that the growing acceptance of our HPV Tests in both the United States and abroad will continue to drive the growth in revenues from our HPV Tests and testing services in the future.

In fiscal 2002, our gross margins improved substantially over the prior fiscal year. In the current fiscal year, we believe that we will be able to sustain gross margins consistent with, or better than, fiscal 2002 as we continue to scale up our manufacturing operations and realize expanded margins as a result of our direct distribution efforts in Europe.

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We believe that increasing our investment in sales and marketing and refocusing our investment in research and development is essential to allow us to capitalize more fully on the potential of our HPV Tests and our core technology. We expect to continue to invest heavily in our direct European distribution operation during fiscal 2003 and beyond while also expanding our direct sales organization in the United States. We also expect to moderately increase our expenditures in the development of our next-generation Hybrid Capture platforms and clinical trial activities for human papillomavirus screening in fiscal 2003 as compared to fiscal 2002.

Our sales and marketing expenditures have been and will continue to be focused on accelerating the adoption of human papillomavirus testing worldwide. We intend to capitalize on the growing acceptance of our HPV Tests in the United States and internationally by physicians, laboratories and health insurance providers by materially increasing expenditures on sales and marketing over the next several quarters. The increase in such expenditures will be primarily directed at expanded direct sales and marketing efforts in Europe and the United States.

We expect our general and administrative expenses will increase to provide adequate infrastructure to support greater sales and marketing activities and more focused research and development activities, to pay the anticipated expenses associated with our ongoing litigation matters and to support the overall growth of our business.

As a result of these anticipated increases in expenditures, we expect our operating losses to continue through fiscal 2003 with a turn to profitability near the end of fiscal 2003. There can be no assurance that we will meet this goal.

Results of Operations

Product sales increased 28% to approximately $14,207,000 for the three-month period ended December 31, 2002 from approximately $11,116,000 for the corresponding period in 2001. The increase was due primarily to a 34% growth in sales of our HPV Tests and testing services over such sales in the corresponding period in 2001, partially offset by decreases in sales of equipment and non-core products. The majority of the growth in HPV products sales was in the United States (79% over such sales in the corresponding period in 2001), which was partially offset primarily by a decrease in equipment sales to distributors in Europe, Africa and the Middle East as we transitioned to our direct-European distribution.

Product sales increased 26% to approximately $26,604,000 for the six-month period ended December 31, 2002 from approximately $21,088,000 for the corresponding period in 2001. The increase was due primarily to a 37% growth in sales of our HPV Tests and testing services over such sales in the corresponding period in 2001, partially offset by decreases in sales of equipment and non-core products. The majority of the growth in HPV products sales was derived from the United States (73% over such sales in the corresponding period in 2001), which was partially offset by a decrease in equipment sales to distributors in Europe, Africa and the Middle East.

During the first six months of fiscal 2002 we recognized revenue of approximately $603,000 related to minimum purchase guarantees under the Roche Distribution Contract. Under the Roche Distribution Contract, Roche has no further minimum purchase obligations after June 30, 2002, which may adversely affect our product revenues unless this can be offset by increased product sales

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from other sources. Please see “Liquidity and Capital Resources” below for a description of the Roche Distribution Contract.

Other revenues include research and development contract revenues, equipment rental revenues and licensing revenues. Other revenues increased to approximately $242,000 for the three-month period ended December 31, 2002 from approximately $192,000 for the corresponding period in 2001. Other revenues increased to approximately $462,000 for the six-month period ended December 31, 2002 from approximately $275,000 for the corresponding period in 2001. The increase for both periods was due primarily to the partial recognition of equipment sales to Roche in Europe, which were initially deferred in the fourth quarter of fiscal 2002.

Cost of product sales increased 2% to approximately $3,012,000 for the three-month period ended December 31, 2002 from approximately $2,945,000 for the corresponding period in 2001 and increased almost 4% to approximately $6,187,000 for the six-month period ended December 31, 2002 from approximately $5,966,000 for the corresponding period in 2001. Gross margin on product sales increased to 79% for the three-month period ended December 31, 2002 from 74% for the corresponding period in 2001 and increased to 77% for the six-month period ended December 31, 2002 from 72% for the corresponding period in 2001. The increase in gross margin percentage was due primarily to increased sales of our test products, particularly HPV Tests, principally in the United States where we sell such products directly. In addition, European margins increased due to substantially lower sales of equipment, which have lower margins than our test products, and pricing increases as a result of our change primarily to a direct sales approach in the region. During fiscal 2003, we have increased our reserves for spoilage and damaged products in the amount of $375,000 in the first quarter and $317,000 in the second quarter.

Research and development expenses decreased 9% to approximately $2,126,000 for the three-month period ended December 31, 2002 from approximately $2,342,000 for the corresponding period in 2001 and decreased 6% to approximately $4,166,000 for the six-month period ended December 31, 2002 from approximately $4,416,000 for the corresponding period in 2001. The decrease for the three-month period was due primarily to a 43% decrease in costs of laboratory supplies and an 11% decrease in personnel costs, partially offset by a 79% increase in outside professional services. The decrease for the six-month period was due primarily to a 39% decrease in costs of laboratory supplies and a 5% decrease in personnel costs, partially offset by a 40% increase in outside professional services. Our research and development activities focus on our platform technology, including different or modified uses of such technology, and improvements to our diagnostic test and equipment products. Because our research and development expenditures tend to benefit multiple product offerings, we do not account for research and development expenses on a per-product or per-disease target basis.

During the six-month period ended December 31, 2002, we focused our research and development activities on support and improvement of existing product lines and the development of several new products. Work was completed on a procedural modification to our Hybrid Capture 2 assay designed to improve test accuracy, which is currently being validated in a clinical study. We also completed the development of an improved quality control tool to be used by our laboratory customers in the quality control monitoring of luminometers used to measure results from Hybrid Capture 2 testing. Work is continuing on the development of our Rapid Capture System for automated processing of Hybrid Capture HPV Tests; the development of methods to improve

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specimen processing procedures and throughput, including procedures for the improved processing of PreservCyt® (Cytyc Corporation) specimens for high throughput HPV, chlamydia (“CT”), and gonorrhea (“GC”) testing; improved equipment for faster specimen processing; and the development of our Universal Collection Medium (“UCM™”) that is expected to allow simultaneous testing for HPV, CT/GC and of other genetic and cellular material from a single patient sample. Clinical trials are underway to validate the use of CT/GC testing from Cytyc’s ThinPrep® specimens, the HPV Rapid Capture System, and the HPV ThinPrep application using cervical specimens collected with a brush spatula device. Development is continuing on our next generation of Hybrid Capture technology, initially for the improved detection of HPV and herpes simplex virus (“HSV”) and the evaluation of certain molecular markers to complement our HPV Tests in cervical screening applications. We are continuing several basic research programs with the goal of developing improved molecular diagnostic assay systems for the detection of HPV and other targets of interest in the area of women’s cancers and infectious diseases.

As part of our research and development activities, we submitted a PMA Supplement Amendment to the U.S. Food and Drug Administration (“FDA”) in September 2002 to obtain market approval for the use of our Hybrid Capture 2 HPV Test in conjunction with the Pap test in cervical cancer screening for women aged 30 and older. We have provided additional information to the FDA as requested through letters and at meetings with FDA.

Selling and marketing expenses increased 44% to approximately $6,684,000 for the three-month period ended December 31, 2002 from approximately $4,627,000 for the corresponding period in 2001 and increased 51% to approximately $12,720,000 for the six-month period ended December 31, 2002 from approximately $8,439,000 for the corresponding period in 2001. The increase for the three-month period was due primarily to personnel costs, which increased approximately $730,000 (51%), professional expenses, which increased approximately $370,000 (210%), and agency fees, which increased approximately $331,000 (85%). In addition, depreciation expense increased approximately $393,000 (170%) for the three-month period due primarily to the May 2002 repurchase of equipment placed with customers by Abbott Laboratories (“Abbott”) upon expiration of the non-exclusive wind-down period of our distribution agreement with Abbott (the “Abbott Agreement”). The increase for the six-month period ended December 31, 2002 was due primarily to personnel costs, which increased approximately $1,549,000 (60%), professional expenses, which increased approximately $410,000 (103%), agency fees, which increased approximately $442,000 (52%), and depreciation expense, which increased approximately $810,000 (193%) due primarily to the repurchase of equipment from Abbott. Geographically, the majority of the increase in our selling and marketing expenses for the six-month period, excluding royalties, was incurred in Europe, which increased approximately $2,202,000 (108%) over the corresponding period in 2001 as we established subsidiaries, hired employees and continued to develop a distribution infrastructure, and in the United States, which increased approximately $1,875,000 (40%) over the corresponding period in 2001. We expect our selling and marketing expenses to continue to increase during fiscal 2003 as we establish direct sales and marketing operations in Europe due to the expiration, on April 30, 2002, of Abbott’s non-exclusive distribution wind-down period under the Abbott Agreement for our HPV and CT/GC products in Europe, Africa and the Middle East and the expiration of the Roche Distribution Contract on June 30, 2002, and as we expand our direct sales organization in the United States to increase HPV product sales and commercialize our CT/GC

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products. We also expect that compliance with the European Union CE marking regulations will be capital-intensive in 2003.

General and administrative expenses increased 48% to approximately $4,180,000 for the three-month period ended December 31, 2002 from approximately $2,826,000 for the corresponding period in 2001 and increased 69% to approximately $8,265,000 for the six-month period ended December 31, 2002 from approximately $4,887,000 for the corresponding period in 2001. The increase was due primarily to professional fees, which increased approximately $929,000 (121%) and approximately $2,713,000 (219%) for the three- and six-month periods, respectively, principally attributable to a $2,278,000 increase in legal fees for the six-month period primarily associated with various litigation matters, and insurance expense, which increased approximately $201,000 (84%) for the six-month period, principally related to directors’ and officers’ insurance coverage. The increase in general and administrative expenses was also attributable to an increase in personnel costs, which increased approximately $359,000 (26%) and approximately $635,000 (26%) for the three- and six-month periods, respectively. Geographically, the majority of the increase in general and administrative expenses for the six-month period was incurred in the United States, which increased approximately $2,281,000 (49%), due primarily to the aforementioned litigation expenditures, over the corresponding period in 2001, and Europe, which increased approximately $1,020,000 (590%) over the corresponding period in 2001 due to our change to direct distribution.

Interest income decreased to approximately $163,000 for the three-month period ended December 31, 2002 from approximately $185,000 for the corresponding period in 2001 and decreased to approximately $342,000 for the six-month period ended December 31, 2002 from approximately $392,000 for the corresponding period in 2001. The decrease was primarily due to lower interest rates in fiscal 2003 compared to the corresponding periods in fiscal 2002, partially offset by an increase in average cash balances in the fiscal 2003 periods.

Liquidity and Capital Resources

Since inception, our expenses have significantly exceeded our revenues, resulting in an accumulated deficit of approximately $75,329,000 at December 31, 2002. We have funded our operations primarily through the sale of equity securities and revenues from product sales and research and development contracts. At December 31, 2002, we had cash, cash equivalents and short-term investments aggregating approximately $31,992,000. We had negative cash flows from operations of approximately $5,579,000 for the six months ending December 31, 2002 as compared to positive cash flows from operations of approximately $3,175,000 for the six months ending December 31, 2001. The negative cash flow for the six months ending December 31, 2002 is primarily the result of our scheduled payment under the Co-Promotion Agreement with Cytyc Corporation (“Cytyc”) and non-recurring payments to professionals related to our terminated merger transaction with Cytyc, all of which were accrued during fiscal 2002. The positive cash flow for the three months ending December 31, 2001 is partially a result of advance minimum sales payments from Roche under the Roche Distribution Contract.

Capital expenditures increased to approximately $1,285,000 for the six months ended December 31, 2002 from approximately $1,206,000 for the corresponding period in 2001.

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On April 29, 2001, we entered into the Roche Distribution Contract, which established Roche as the co-exclusive distributor of our HPV products in Europe, Africa and the Middle East from May 1, 2001 through June 30, 2002. In June 2002, we adopted as our sole strategy for the distribution of our HPV products in Europe, Africa and the Middle East, a combination of direct distribution through our European infrastructure and the use of local distributors and agents. On June 30, 2002, the term of the Roche Distribution Contract expired, subject to a non-exclusive wind-down period. Under the Roche Distribution Contract, Roche made a non-refundable payment of $5.0 million to Digene, which was recorded as a deferred liability on the Consolidated Balance Sheet as of June 30, 2002. On July 1, 2002, consistent with the provisions of the Roche Distribution Contract, this payment was converted into 142,857 shares of Digene common stock at a conversion price of $35. On December 20, 2002, we amended the Roche Distribution Contract to terminate the wind-down period on December 31, 2002 and to establish the procedures for our repurchase from Roche of HPV-related testing equipment purchased from us by Roche under the Roche Distribution Contract. The repurchase price for the equipment in use for HPV testing in customers’ laboratories is the equipments’ December 31, 2002 depreciated value, which is the net selling price less any amounts Roche recorded as depreciation based on a straight-line basis over a four-year period. The repurchase price for the equipment in inventory is a discount from the transfer price paid by Roche under the Roche Distribution Contract. The parties consummated the HPV equipment repurchase on January 6, 2003, subject to a reconciliation review scheduled to be completed in March 2003.

Commencing in the fourth quarter of fiscal 2002, we deferred recognition of revenue from equipment sold to Roche under the Roche Distribution Contract. Equipment sold to Roche in the fourth quarter of fiscal 2002 had a sales price of $2.3 million and a cost of $1.4 million, which amounts were recorded as deferred revenue and deferred costs, respectively, during that quarter. The deferred revenue and deferred costs were being amortized over a four-year period beginning in April 2002 to other revenue (as equipment rental) and selling and marketing expenses, respectively. For the six months ended December 31, 2002, we recorded other revenue and selling and marketing expenses of $288,000 and $177,000, respectively, related to the amortization of these balances. Based upon the aforementioned repurchase of equipment from Roche in January 2003, the remaining deferred revenue and deferred costs will be written off in the third quarter of fiscal 2003 against the cost of the acquired equipment.

We anticipate that working capital requirements will increase moderately for the foreseeable future due to the investment necessary to support our European direct distribution operations, including the January 2003 buy back from Roche of equipment in Europe, as well as increasing accounts receivable as a result of expected revenue growth. We have incurred negative cash flows from operations since our inception, and have expended, and expect to continue to expend in the future, substantial funds to complete our planned product development efforts, expand our sales and marketing activities and expand our manufacturing capabilities. We expect that our existing capital resources will be adequate to fund our operations through calendar year 2003. Our future capital requirements and the adequacy of available funds may change, however, based on numerous factors, including our degree of success in commercializing our products, progress in our product development efforts and the magnitude and scope of such efforts, progress with preclinical studies and clinical trials, progress in our regulatory affairs activities, the cost and timing of expansion of our manufacturing capabilities, the development and maintenance of effective sales and marketing activities, the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, competing technological and market developments, and the development and

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maturation of strategic alliances for the marketing of our products. To the extent that our existing capital resources and funds generated from operations are insufficient to meet current or planned operating requirements, we will be required to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources. We do not have any committed sources of additional financing, and there can be no assurance that additional funding, if necessary, will be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, scale back or eliminate certain aspects of our operations or attempt to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates, products or potential markets. Under such conditions, our business, financial condition and results of operations will be materially adversely affected.

We have summarized below our material contractual obligations as of December 31, 2002 (in thousands):

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to market risk associated with changes in foreign currency exchange rates and interest rates. Our foreign currency exchange rate risk comes from our operations in Europe and South America. The net impact of foreign exchange activities on earnings was immaterial for the three- and six-month periods ended December 31, 2002 and 2001, respectively, however, we will continue to assess the impact, if any, as we continue to implement the distribution of our products in Europe through our direct infrastructure. Interest rate exposure is primarily limited to the approximately $31,992,000 of cash, cash equivalents and short-term investments owned by us. Such investments are money market debt securities that generate interest income for us on cash balances. We do not actively manage the risk of interest rate fluctuations; however, such risk is mitigated by the relatively short-term, less than twelve months, nature of certain investments. We do not consider the present rate of inflation to have a significant impact on our business.

Item 4. Controls and Procedures

As of February 3, 2003, the principal executive officer and principal financial officer evaluated Digene’s controls and procedures related to its reporting and disclosure obligations, as well as its internal controls. These officers have concluded that Digene’s disclosure controls and procedures are sufficient to provide that (a) material information relating to Digene, including its consolidated subsidiaries, is made known to these officers by other employees of Digene and its consolidated subsidiaries, particularly material information related to the period for which this periodic report is being prepared; and (b) this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission.

There have been no significant changes in Digene’s internal controls or in other factors that could significantly affect these internal controls subsequent to the date of the evaluation.

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PART II. Other Information

Item 1. Legal Proceedings

On November 19, 2001, we filed an action for patent infringement against Ventana Medical Systems, Inc. The action was filed in the United States District Court for the District of Delaware. In the action, we allege that Ventana Medical Systems, Inc. has made, used, sold and/or offered for sale products embodying our patented inventions thereby infringing our United States Patent No. 4,849,332 entitled “Human Papilloma Virus 35 Nucleic Acid Hybridization Probes and Methods for Employing the Same” and our United States Patent No. 4,849,331 entitled “Human Papilloma Virus 44 Nucleic Acid Hybridization Probes and Methods for Employing the Same.” We are seeking a permanent injunction and monetary damages for past infringement. On September 25, 2002, Ventana Medical Systems, Inc. publicly announced that it had acquired Beckman Coulter, Inc.’s human papillomavirus business and corresponding assets, including the assignment of the human papillomavirus intellectual property portfolio acquired by Beckman Coulter, Inc. from Institut Pasteur through a 1991 sublicense agreement. On October 18, 2002 we filed a motion to amend our complaint to add Beckman Coulter, Inc. as a co-defendant, as well as additional claims against Ventana. Ventana did not oppose the amendment and, instead, filed a Notice of Non-Opposition to our motion. On December 13, 2002, we formally served our amended complaint on Ventana and Beckman. Neither party has answered the amended complaint.

On March 15, 2002, we filed an action for declaratory judgment against Enzo Biochem, Inc. The action was filed in the United States District Court for the District of Delaware. We filed this action after having received direct threats from Enzo Biochem of infringement of U.S. Patent No. 6,221,581 entitled “Processes for Detecting Polynucleotides, Determining Genetic Mutations or Defects in Genetic Material, Separating or Isolating Nucleic Acid of Interest from Samples, and Useful Compositions of Matter and Multihybrid Complex Compositions.” We are seeking a judgment that the patent is invalid and has not been infringed by us. On March 20, 2002, in response to our complaint, Enzo Biochem filed a motion to dismiss our complaint for lack of subject matter jurisdiction, based on assertions that Enzo Diagnostics, Inc. (a wholly owned subsidiary of Enzo Biochem), not Enzo Biochem, was the holder of the patent in question. On the same day, Enzo Diagnostics, Inc. also filed a complaint for patent infringement against us in the Delaware District Court. Enzo Diagnostics, Inc. asserts in its complaint that we have infringed U.S. Patent No. 6,221,581 through the manufacture, sale and offer for sale of our Hybrid Capture products. The two cases have now been consolidated and discovery has commenced. We have filed counterclaims against Enzo Biochem for various business-related tortious conduct. We do not believe we are infringing such patent and will go forward with the action for declaratory judgment and continue vigorously defending against Enzo’s claim of patent infringement.

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Item 6. Exhibits and Reports on Form 8-K

(a)		Exhibits:
3.1		Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to Digene’s Registration Statement on Form S-1 (File No. 333-2968)).
3.2		Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to Digene’s Annual Report on Form 10-K for the year ended June 30, 1999).
4.1		Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to Digene’s Registration Statement on Form S-1 (File No. 333-2968)).
10.1		Amendment No. 3 to Letter Agreement, dated December 20, 2002, between Digene and Roche Molecular Systems, Inc.
99.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, by Chief Executive Officer.
99.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, by Chief Financial Officer.
(b)		Reports on Form 8-K:

Digene filed the following Current Reports on Form 8-K during the quarter ended December 31, 2002:

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CERTIFICATIONS

     I, Evan Jones, Chief Executive Officer, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Digene Corporation;

     2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

     4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

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	(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.     The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

     Date: February 7, 2003

     I, Charles M. Fleischman, Chief Financial Officer, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Digene Corporation;

     2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

     4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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	(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.     The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

     Date: February 7, 2003

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EXHIBIT INDEX

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