Total operating expenses for the quarter and year ended December 31, 2002, respectively, were $15.5 million and $61.3 million, compared to $19.3 million and $60.9 million for the same periods in 2001. For the quarter, the decrease is attributable to certain non-recurring costs incurred in the fourth quarter of 2001, including costs for sequencing and general lab expenses. The slight increase for the year was primarily attributable to higher research and development expenses associated with the Company's continued investment in its pharmaceutical platforms, as well as investment in internal products.

Interest and other income, net, for the quarter and year ended December 31, 2002, respectively, was $1.0 million and $4.2 million, compared to $2.3 million and $11.0 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, in 2002, the Company wrote off its investment associated with warrants to purchase shares of IntraBiotics Pharmaceuticals, Inc. As a result of the write-off, the Company incurred $0.9 million in expense for the year compared to $0.5 million of income for 2001.

For the quarter and year ended December 31, 2002, respectively, equity in the net loss of Innovase LLC, the Company's joint venture with The Dow Chemical Company, was $0.8 million and $2.5 million, compared to $0.5 million and $1.8 million for the same periods in 2001. These increases were related to marketing and administrative costs incurred by Innovase LLC.

"Despite the difficult partnering environment, we achieved our goal of signing three new collaborations, including the largest deal in the company's history," stated Jay M. Short, Ph.D., President and Chief Executive Officer. "In addition, our pending transactions with Syngenta demonstrate that we are successfully executing on our strategy to develop a pipeline of products with market leaders, while further developing our pharmaceutical platforms."

2002 Achievements

Diversa's achievements in 2002 reflect the success of the Company in several key areas. In 2002, the Company:

• Signed three new collaborations with:
  • * Dupont Bio-Based Materials, for biocatalysts for chemical applications
  • * PetroStar, for biodesulfurization of diesel fuels
  • * Syngenta, involving a broad-based product and technology development agreement and encompassing an antibody collaboration
• Achieved research milestones under our collaboration agreements, including 100% of the milestones available for 2002 under our Zymetrics joint venture with Syngenta
• Commercialized / advanced products:
  • * Licensed pharmaceutical manufacturing enzyme
  • * Launched two fluorescent proteins
  • * Delivered commercial quantities of phytase to Danisco and prepared for launch upon FDA approval
• Advanced pharmaceutical programs:
  • * Platforms advanced and pharmaceutical management strengthened
  • * Antibody Platform was 2002 Finalist: UCSD CONNECT Most Innovative
  • * Presented important validating data for our antibody optimization program
• Published on several key technologies developed at the company including high-throughput culturing
• Received grant funding including DOE Genomes to Life Program
• Received twenty issued patents, including sequence-based discovery from environmental samples
• Filed 120 patent applications
• Signed biodiversity agreements in Hawaii and Australia

"Diversa's achievements in 2002 are a reflection of the progress made throughout our organization. Last year, we were successful in advancing our product pipeline, furthering our pharmaceutical platforms, expanding our collaborative networks, and strengthening our intellectual property position," continued Dr. Short.

About Diversa

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. Additional information is available at Diversa's website: www.diversa.com. In addition, Diversa recently announced that it had entered into a series of agreements with Syngenta Participations AG pursuant to which it and Syngenta will, among other actions, form a broad collaboration to establish a shared biotechnology research platform and to discover products. Consummation of Diversa's proposed transactions with Syngenta is subject to the approval of Diversa stockholders, among other conditions. The press release announcing Diversa's agreements with Syngenta has been filed as an exhibit to a Current Report on Form 8-K that Diversa filed with the Securities and Exchange Commission, or SEC, on December 4, 2002. 

Where You Can Find Additional Information About Diversa's Proposed Transactions With Syngenta

Diversa has filed a definitive proxy statement concerning its proposed transactions with Syngenta with the SEC. Investors and security holders are advised to read the definitive proxy statement related to the proposed transactions, because it contains important information related to the transactions. Investors and security holders may obtain a free copy of the definitive proxy statement and other documents filed by Diversa with the SEC at the SEC's website at http://www.sec.gov. The definitive proxy statement and any other documents filed by Diversa with the SEC may also be obtained free of charge from Diversa by directing such request to Diversa Corporation, 4955 Directors Place, San  Diego, CA 92121, Attn: Investor Relations, or by calling Diversa at (858) 526-5000 or e-mailing Diversa at information@diversa.com. 

Information Concerning Participation In Diversa's Proxy Solicitation