Diversa Corporation (Nasdaq: DVSA - news) today reported revenues of $5.6 million for the quarter ended September 30, 2000, a 40% increase over third quarter 1999 revenues, and $15.4 million for the nine months ended September 30, 2000, a 138% increase over revenues for the same period in 1999. The net loss was $1.4 million, or $0.04 per share, in the third quarter of 2000, compared to a net loss of $84 thousand in the third quarter of 1999. Net loss for the nine months ended September 30, 2000 was $8.0 million, or $0.24 per share on a pro forma basis, compared to a net loss of $7.0 million, or $0.28 per share on a pro forma basis, for the same period in 1999. The reported losses for 2000 include non-cash, stock-based compensation charges of $1.6 million and $9.0 million for the quarter and year to date, respectively.

The revenue increases for the quarter and year to date result from strategic collaboration agreements signed in 1999 and 2000, including the recent collaboration with Celanese Ltd. announced during the third quarter of 2000. As of September 30, 2000, past and committed future funding from corporate partners totals over $117 million, excluding equity investments and future success-based payments.

Diversa's total operating expenses for the quarter and year to date, respectively, were $10.2 million and $30.7 million, compared to $4.1 million and $13.6 million for the same periods in 1999. These increases reflect expansion of the company's collaborations and increased investment in several key programs and technologies, including advancement of the small molecule drug discovery program, the human protein therapeutic program, and increased investment in the company's ultra high-throughput screening and whole-cell optimization technologies. Non-cash, stock-based compensation charges also contributed to the increases in operating expenses.

At September 30, 2000, Diversa had cash, cash equivalents, short-term investments and receivables totaling $211.1 million, compared to $20.7 million at December 31, 1999.

"We are very pleased with our year-to-date accomplishments, stated Jay M. Short, Ph.D., President and Chief Executive Officer. These achievements include: 

• Expansion of a collaboration agreement with Novartis, whereby Diversa will use its proprietary evolution technologies to further develop and optimize novel synthesis routes to crop protection chemicals. 
• Signing of a collaboration agreement with Celanese Ltd. for an evaluation project to discover and develop microorganisms capable of producing chemical products at rates substantially higher than traditional microbial strains.
• Commercialization by Invitrogen of ThermalAce(TM) DNA Polymerase, Diversa's third novel enzyme product, as well as the licensing by Invitrogen of two additional enzymes, all for use in research reagent applications.
• Extension of our research agreement with Aventis Animal Nutrition S.A. to develop a biocatalytic process for manufacture of a key Aventis animal nutrition product.
• Introduction of our second enzyme product, Pyrolase(TM) 200, for use in oil field applications.
• Formation of a 50/50 joint venture with The Dow Chemical Company to commercialize high-performance enzymes for industrial and consumer product applications.
• Signing of additional biodiversity access agreements, including an agreement gaining sampling rights to the Alaskan wilderness.
• Receipt of ten additional patents, covering proprietary technologies including screening and optimization of small molecule drugs, and screening and discovery of genes and gene pathways, bringing our patent portfolio to 34 issued patents."

"Our leadership position in microbial gene discovery, combined with the breadth of our evolution technologies, provide an unparalleled platform for development of innovative genomic-based products across multiple markets. Over the remainder of the year, we intend to achieve research milestones and to enter into additional collaborations, including a pharmaceutical collaboration in the area of small molecule drug discovery. We believe we are well-positioned to develop a strong presence in pharmaceuticals, while maximizing opportunities in the agricultural, chemical processing, and industrial markets,'' continued Dr. Short.

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, such as small molecule drugs. 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., Celanese Ltd., Invitrogen Corporation and Danisco Cultor.

Company news release
N3056