Diversa Corporation (Nasdaq: DVSA - News) today reported financial results for the quarter ended March 31, 2003. The net loss for the quarter, on a pro forma basis, was $9.5 million, or $0.27 per share, compared to a net loss of $7.0 million, or $0.20 per share, in the first quarter of 2002. The net loss, calculated in accordance with U.S. generally accepted accounting principles (GAAP), for the quarter ended March 31, 2003 was $21.0 million, or $0.54 per share, compared to a net loss of $7.0 million, or $0.20 per share, in the first quarter of 2002.

Pro forma net loss for the quarter ended March 31, 2003 excludes adjustments associated with the February 2003 acquisition of intellectual property rights licenses and property and equipment from Syngenta Participations AG and its wholly-owned subsidiary, the Torrey Mesa Research Institute, respectively. In connection with this acquisition, the Company also entered into a research collaboration with Syngenta. See the condensed statements of operations below for detailed explanations for the adjustments. The Company is presenting pro forma information excluding the effects of this acquisition because the Company believes it is useful for investors in assessing the Company's operating results compared to prior year.

At March 31, 2003, the Company had cash, cash equivalents, short-term investments, and receivables totaling $155.7 million.

Revenues for the quarter were $8.0 million ($8.3 million on a pro forma basis), compared to $7.2 million for the same period in 2002. The increase in revenues was primarily due to the addition of several new grants awarded in 2002 and 2003, additional product revenue as a result of the launch of Phyzyme(TM) XP through the Company's partner, Danisco Animal Nutrition, and additional research funding from the recent research collaboration signed with Syngenta. Revenues have historically fluctuated from period to period and likely will continue to fluctuate substantially in the future based upon the timing and composition of funding under existing and future collaboration agreements and joint ventures.

Research and development expenses for the quarter were $15.0 million, compared to $12.3 million for the same period in 2002. These increases were primarily related to personnel and facility costs as a result of an additional 71 researchers that were hired by the Company in conjunction with the recent Syngenta transactions.

As a result of the recent Syngenta transactions, the Company also recorded $10.8 million of expense related to the write-off of acquired in-process research and development and $0.3 million of amortization expense for acquired intangible assets during the quarter ended March 31, 2003.

Interest and other income, net for the quarter was $0.7 million, compared to $1.6 million for the same period in 2002. These decreases were primarily due to lower interest income as a result of the maturity of interest earning investments that were reinvested at the current lower rates, as well as lower cash balances. Additionally, during the quarter ended March 31, 2002, the Company recorded $0.2 million of other income related to the increase in value of warrants the Company holds to purchase 700,000 shares of stock of IntraBiotics Pharmaceuticals, Inc. The Company subsequently wrote-off the remaining balance of its investment associated with warrants in the third quarter of 2002.

"Diversa accomplished several significant goals this quarter. We closed our new research collaboration with Syngenta, which represents the largest in the Company's history and under which we are entitled to receive a minimum of $118 million in research funding over the initial seven-year term of the agreement. With our partner, Danisco Animal Nutrition, we were granted FDA authorization to market our Phyzyme(TM) XP enzyme to the US animal feed industry and, we were awarded three important technology patents," stated Jay M. Short, Ph.D., President and Chief Executive Officer. "Our success in securing additional collaborative funding, introducing new products, and in managing our cash position enables us to continue to develop our pharmaceutical platforms and continue to evaluate opportunities to further accelerate our growth through strategic acquisitions."

Diversa Corporation is a leader in applying proprietary genomic technologies for the rapid discovery and optimization of novel products from genes and gene pathways. Diversa is directing its integrated portfolio of technologies to the discovery, evolution, and production of commercially valuable molecules with pharmaceutical applications, such as optimized monoclonal antibodies and orally active drugs, as well as enzymes and small molecules with agricultural, chemical, and industrial applications. In addition, the Company has formed alliances and joint ventures with market leaders, such as Celera Genomics, The Dow Chemical Company, DuPont Bio-Based Materials, GlaxoSmithKline plc, Invitrogen Corporation, and affiliates of Syngenta AG. Additional information is available at Diversa's website: www.diversa.com .