San Diego, California
October 21, 2002

Diversa Corporation (Nasdaq: DVSA) today reported financial results for the quarter and nine months ended September 30, 2002. The net loss for the quarter was $6.7 million, or $0.19 per share, compared to a net loss of $3.9 million, or $0.11 per share, in the third quarter of 2001. The net loss for the nine months ended September 30, 2002 was $21.7 million, or $0.61 per share, compared to $8.2 million, or $0.23 per share, for the same period in 2001. At September 30, 2002, the Company had cash, cash equivalents, short-term investments, and receivables totaling $167.9 million.  \

Revenues for the quarter and year-to-date, respectively, were $8.2 million and $22.6 million, compared to $9.1 million and $26.0 million for the same periods in 2001. The decrease in revenues was primarily due to lower research funding received as a result of the timing and number of research projects under the Company's collaboration agreements. 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.

Total operating expenses for the quarter and year-to-date, respectively, were $15.1 million and $45.7 million, compared to $14.4 million and $41.5 million for the same periods in 2001. These increases were primarily attributable to higher research and development expenses associated with the Company's investment in its pharmaceutical platforms as well as investment in internal products.

Interest and other income, net for the quarter and year-to-date, respectively, was $0.9 million and $3.1 million, compared to $2.1 million and $8.7 million for the same periods in 2001. These decreases were primarily due to lower interest income as a result of the decline in interest rates. Additionally, during the quarter, the Company wrote-off the remaining balance of its investment associated with warrants held by the Company to purchase shares of IntraBiotics Pharmaceuticals, Inc. As a result of the write-off, the Company incurred $0.4 million and $0.9 million in expense for the quarter and year-to-date, respectively.

For the quarter and year-to-date, respectively, equity in the net loss of Innovase LLC, the Company's joint venture with The Dow Chemical Company, was $0.7 million and $1.7 million, compared to $0.6 million and $1.3 million for the same periods in 2001. The year-to-date increase was related to marketing and administrative costs incurred by Innovase LLC in preparation for the launch of their Alpha Amylase enzyme.

"We are very pleased to report financial results that are favorable to both our revenue target of $8.0 million and our net loss target of $7.5 million," stated Karin Eastham, Senior Vice President, Finance and Chief Financial Officer. "We reaffirm our full-year 2002 revenues to be approximately $35 million and expect our net loss to be approximately $24 million for the full-year, or $0.67 per share. Additionally, we estimate our net cash burn to be approximately $28 million for the year. The achievement of these financial targets is dependent on the timing of certain milestones as well as the initiation of anticipated new collaborations," continued Ms. Eastham.

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. The Company has formed significant joint ventures with The Dow Chemical Company (named Innovase LLC) and with Syngenta Seeds AG (named Zymetrics, Inc.) focused on near-term commercialization of products for the industrial and agricultural markets, respectively. In addition, the Company has formed alliances with market leaders, such as Celera Genomics, The Dow Chemical Company, DuPont Bio-Based Materials, GlaxoSmithKline plc, Invitrogen Corporation, and Syngenta Biotechnology, Inc.