Diversa Corporation today reported revenues of $5.4 million for the quarter ended June 30, 2000, a 181% increase over second quarter 1999 revenues, and $9.8 million for the first half ended June 30, 2000, a 295% increase over first half 1999 revenues. The net loss was $637 thousand in the second quarter of 2000, compared to a net loss of $3.8 million in the second quarter of 1999, resulting in a net loss per share of $0.02 compared to a pro forma net loss per share of $0.15 for the second quarter of 1999. The net loss before preferred dividends for the first half of 2000 was $6.3 million, or $0.20 on a pro forma basis, compared to $6.9 million, or $0.28 per share on a pro forma basis, for the first half of 1999. The reported losses for 2000 include non-cash, stock-based compensation charges of $1.8 million, and $7.4 million, for the quarter and year to date, respectively.

The revenue increases for the quarter and year to date result from a number of strategic collaboration agreements signed in 1999 and 2000, including the recently announced joint venture with The Dow Chemical Company formed to develop and commercialize innovative products for the industrial enzyme market. In addition to $31.4 million received from inception through June 30, 2000, Diversa's partners are also committed to fund at least $84.1 million under existing agreements through 2005, excluding milestone payments, license and commercialization fees and royalties or profit sharing.

Diversa's total operating expenses for the quarter and year to date respectively were $9.0 million and $20.5 million, compared to $5.8 million and $9.5 million for 1999. This increase was primarily attributable to higher research and development expenses resulting from expansion of the company's collaborations and increased investment in several key programs and technologies. Such investments advanced the human protein therapeutic and small molecule drug discovery programs, including work in the fields of antibiotics and cancer therapeutics. Additionally, the technology investments expanded the company's ultra high-throughput screening and host-cell
optimization platforms.

At June 30, 2000, the company had cash, cash equivalents, short-term investments and receivables totaling $208.8 million compared to $20.7 million at December 31, 1999.

"We are extremely pleased with our revenue growth and our success in establishing collaborations with market leaders,'' stated Karin Eastham, Senior Vice President, Finance and Chief Financial Officer. "Our financial strength, resulting from our successful initial public offering and our partnering progress, positions us for increased investment in our core technologies and internal product candidates. These investments will help us develop a strong presence in pharmaceuticals while further strengthening our innovation leadership in the industrial enzyme, agricultural, and chemicals markets. While increasing our research and development spending, we are also evaluating strategic acquisition and alliance opportunities.''

Diversa Corporation is a global leader in developing and applying proprietary technologies to discover and evolve novel genes and gene pathways from diverse environmental sources. Diversa is utilizing its fully integrated approach to develop novel enzymes and other biologically active compounds. Diversa's proprietary evolution technologies facilitate the optimization of genes found in nature to enable product solutions for the pharmaceutical, agricultural, chemical processing, and industrial markets. Within these broad markets, Diversa is targeting key multi-billion dollar market segments where the company believes its technologies and products will create high value and competitive advantages for strategic partners and customers. Diversa's strategic partners are market leaders and include The Dow Chemical Company, Novartis Seeds AG, Novartis Agribusiness Biotechnology Research, Inc., Aventis Animal Nutrition S.A. and Danisco Cultor.

Company news release
N2846