Diversa Reports Financial Results for the Quarter Ended March 31, 2001 And Updates 2001 Financial Guidance

Achieved 86% Revenue Increase Over First Quarter 2000



Apr 16, 2001, 01:00 ET from Diversa Corporation

    SAN DIEGO, April 16 /PRNewswire/ -- Diversa Corporation (Nasdaq: DVSA)
 today reported revenues of $8.2 million for the quarter ended March 31, 2001,
 an increase of 86% over first quarter 2000 revenues of $4.4 million.  The net
 loss for the first quarter of 2001 was $1.4 million, or $0.04 per share,
 compared to a net loss of $6.0 million, or $0.20 per share on a pro forma
 basis, for the first quarter of 2000.  The reported losses for the first
 quarters of 2001 and 2000 include non-cash, stock-based compensation charges
 of $0.7 million and $5.6 million, respectively.
     The increase in revenues resulted from a number of strategic collaboration
 agreements signed in 2000 and a drug discovery and development agreement
 signed in early 2001.  The two most significant components of first quarter
 2001 revenues are related to Zymetrics, the Company's agricultural products
 contract joint venture with Syngenta Seeds AG, and Innovase LLC, the Company's
 50/50 industrial enzyme joint venture with The Dow Chemical Company.
     Total operating expenses for the quarter were $12.7 million compared to
 $11.4 million for the same period in 2000.  Excluding non-cash, stock-based
 compensation charges, operating expenses increased by $6.1 million compared to
 the first quarter in 2000.  This increase was primarily attributable to higher
 research and development expenses associated with research activities under
 strategic collaboration agreements signed in 2000 and 2001, as well as the
 continued investment in several key internal programs and technologies.
 Selling, general and administrative expenses also increased due to expansion
 of administrative infrastructure to support Diversa's growth and requirements
 as a public company.
     Interest and other income for the quarter was $3.2 million compared to
 $1.4 million for the same period in 2000.  This increase was primarily due to
 interest income as a result of higher average cash balances following
 Diversa's initial public offering in February 2000.
     At March 31, 2001, the Company had cash, cash equivalents, short-term
 investments, and receivables totaling $206.1 million compared to
 $211.8 million at December 31, 2000.
     "During the first quarter, we made significant progress in achieving our
 2001 objectives," stated Jay M. Short, Ph.D., President and Chief Executive
 Officer.
 
     First quarter 2001 accomplishments include:
     --  The signing of a drug discovery, development, and license agreement
         with IntraBiotics Pharmaceuticals, Inc. to identify and develop novel
         small molecules that demonstrate antibacterial or antifungal
         properties.  This second small molecule drug discovery deal closely
         followed the announcement of a drug discovery research collaboration
         with GlaxoSmithKline in December 2000.
     --  The receipt of five patents, the most significant of which included
         patents covering methods for liquid phase expression screening of
         libraries made from DNA of more than one species, Diversa's Gene Site
         Saturation Mutagenesis(TM) (GSSM(TM)) evolution technology, and
         high-throughput screening of gene libraries made from mixed
         populations of organisms using fluorescent detection.
     --  The sequencing of the Streptomyces diversa(TM) microorganism under a
         DNA sequencing collaboration with Celera Genomics.  The sequence data
         from this proprietary discovery and production host microbe should
         enable faster discovery and development of novel molecules of
         pharmaceutical interest from Diversa's PathwayLibrary(TM) collections.
 
     "Completion of these milestones contributes to Diversa's goal of rapidly
 developing products within our extensive pipeline and maximizing the full
 capability of our proprietary discovery and evolution technologies," 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.  The Company is utilizing its fully
 integrated approach to develop novel enzymes and other biologically active
 compounds, such as orally active drugs, produced by these genes and gene
 pathways.  The Company'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, the Company 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.  The Company's strategic partners are market leaders and include
 Aventis Animal Nutrition S.A., Celanese Ltd., Celera Genomics, Finnfeeds
 International Ltd (a unit of Danisco Cultor), The Dow Chemical Company,
 GlaxoSmithKline plc, IntraBiotics Pharmaceuticals, Inc., Invitrogen
 Corporation, and Syngenta (formerly Novartis) Agribusiness Biotechnology
 Research, Inc.  The Company has also formed joint ventures with The Dow
 Chemical Company (named Innovase LLC) and with Syngenta Seeds AG (named
 Zymetrics).
 
     Statements in this press release that are not strictly historical are
 "forward-looking" and involve a high degree of risk and uncertainty.  These
 include statements related to the financial guidance provided below, the
 discovery, identification, and/or development of novel molecules, the
 development of products, and the exploitation of the Company's technologies,
 all of which are prospective.  Such statements are only predictions, and the
 actual events or results may differ materially from those projected in such
 forward-looking statements.  Factors that could cause or contribute to
 differences include, but are not limited to, risks involved with the Company's
 new and uncertain technologies, risks associated with the Company's dependence
 on patents and proprietary rights, risks associated with the Company's
 protection and enforcement of its patents and proprietary rights, the
 Company's dependence on existing collaborations, the ability of the Company to
 commercialize products using the Company's technologies, the development or
 availability of competitive products or technologies, and the future ability
 of the Company to enter into and/or maintain collaboration and joint venture
 agreements.  These factors and others are more fully described in the
 Company's filings with the Securities and Exchange Commission, including, but
 not limited to, the Company's Annual Report on Form 10-K for the year ended
 December 31, 2000.  These forward-looking statements speak only as of the date
 hereof.  The Company expressly disclaims any intent or obligation to update
 these forward-looking statements.
 
     Note:  Gene Site Saturation Mutagenesis(TM), GSSM(TM), PathwayLibrary(TM),
 and Streptomyces diversa(TM) are trademarks of Diversa Corporation.
 
 
                           Selected Financial Information
                         Condensed Statements of Operations
                (unaudited, in thousands, except per share amounts)
 
                                                            Three Months
                                                          Ended March 31,
                                                        2001             2000
      Revenues:
      Collaborative revenue                            $7,881         $4,064
      Grant and product revenue                           334            342
       Total revenues                                   8,215          4,406
 
      Expenses:
      Research and development                          9,868          4,574
      Selling, general and administrative               2,122          1,303
      Non-cash, stock-based compensation                  747          5,555
       Total operating expenses                        12,737         11,432
 
      Loss from operations                             (4,522)        (7,026)
 
       Interest and other income, net                   3,168          1,414
 
      Loss before income taxes                         (1,354)        (5,612)
 
       Provision for income tax                           ---             75
 
      Net loss before preferred dividends              (1,354)        (5,687)
 
       Dividends on preferred stock                       ---            310
 
      Net loss applicable to common shares            ($1,354)       ($5,997)
 
      Basic and diluted net loss per common share     ($0.04)        ($0.32)
 
      Weighted average shares used in computing basic
       and diluted net loss per common share           34,963         18,979
 
      Pro forma basic and diluted net loss per common
       share                                              N/A        ($0.20)
 
      Weighted average shares used in computing pro
       forma basic and diluted net loss per common share  N/A       29,976(1)
 
      Net loss excluding non-cash, stock-based
       compensation                                     ($607)         ($442)
 
      Pro forma basic and diluted net loss per common
       share excluding non-cash, stock-based
       compensation                                   ($0.02)        ($0.01)
 
     (1)Weighted average shares used in computing pro forma basic and diluted
         net loss per common share assume all outstanding redeemable
         convertible preferred stock, which converted into common stock upon
         the Company's initial public offering in February 2000, had converted
         at the original dates of issuance.
 
 
                              Condensed Balance Sheet
                                   (in thousands)
 
                                                     March 31,    December 31,
                                                        2001           2000
                                                    (unaudited)
      Cash, cash equivalents and short-term
       investments                                   $204,123       $211,256
      Other current assets                              7,666          6,436
      Property and equipment, net                      17,455         14,903
      Other assets                                      3,458          2,666
       Total assets                                  $232,702       $235,261
 
      Current liabilities                              $7,805        $10,368
      Deferred revenue                                 20,668         22,337
      Long-term liabilities                             9,219          8,482
      Stockholder's equity                            195,010        194,074
       Total liabilities and stockholder's equity    $232,702       $235,261
 
 
                        2001 Updated Financial Guidance
 
     The following statements are forward-looking, and actual results may
 differ materially.  Please see page 2 of this press release for a description
 of certain risk factors and Diversa's quarterly and annual reports on file
 with the Securities and Exchange Commission for a more complete description of
 risks.  The Company will not provide any further material guidance on
 analysts' financial models beyond the information provided in this press
 release.
     Below is an update to the 2001 financial guidance previously provided
 during the Company's webcast conference call on January 30, 2001.  Revenue
 guidance remains at $35 million for the year, with a slight shift between the
 quarters.  The updated net loss guidance, which reflects higher interest
 income and lower operating expenses, has improved to $17.5 million for the
 year, or $0.50 per share.
 
                        (in millions, except per share data)
                                    (unaudited)
 
                                         Financial Guidance
                        Q1                                               2001
                      Actual          Q2          Q3          Q4        Annual
 
     Total revenues   $8.2         $8.6         $8.8         $9.4       $35.0
 
     Research &
      development      9.9         12.0         14.0         14.3        50.2
     Selling, general &
      administrative   2.1          2.6          2.6          2.6         9.9
     Non-cash,
      stock-based
      comp             0.8          0.8          0.7          0.6         2.9
      Total operating
       expenses       12.8         15.4         17.3         17.5        63.0
 
     Loss from
      operations     (4.6)        (6.8)        (8.5)        (8.1)      (28.0)
 
      Interest and
       other income,
       net             3.2          3.1          2.2          2.0        10.5
 
     Net loss       ($1.4)       ($3.7)       ($6.3)       ($6.1)     ($17.5)
 
     Net loss per common share (based upon weighted-average
      shares of 35 million)                                           ($0.50)
 
     2001 cash "burn"                                                     $18
 
 

SOURCE Diversa Corporation
    SAN DIEGO, April 16 /PRNewswire/ -- Diversa Corporation (Nasdaq: DVSA)
 today reported revenues of $8.2 million for the quarter ended March 31, 2001,
 an increase of 86% over first quarter 2000 revenues of $4.4 million.  The net
 loss for the first quarter of 2001 was $1.4 million, or $0.04 per share,
 compared to a net loss of $6.0 million, or $0.20 per share on a pro forma
 basis, for the first quarter of 2000.  The reported losses for the first
 quarters of 2001 and 2000 include non-cash, stock-based compensation charges
 of $0.7 million and $5.6 million, respectively.
     The increase in revenues resulted from a number of strategic collaboration
 agreements signed in 2000 and a drug discovery and development agreement
 signed in early 2001.  The two most significant components of first quarter
 2001 revenues are related to Zymetrics, the Company's agricultural products
 contract joint venture with Syngenta Seeds AG, and Innovase LLC, the Company's
 50/50 industrial enzyme joint venture with The Dow Chemical Company.
     Total operating expenses for the quarter were $12.7 million compared to
 $11.4 million for the same period in 2000.  Excluding non-cash, stock-based
 compensation charges, operating expenses increased by $6.1 million compared to
 the first quarter in 2000.  This increase was primarily attributable to higher
 research and development expenses associated with research activities under
 strategic collaboration agreements signed in 2000 and 2001, as well as the
 continued investment in several key internal programs and technologies.
 Selling, general and administrative expenses also increased due to expansion
 of administrative infrastructure to support Diversa's growth and requirements
 as a public company.
     Interest and other income for the quarter was $3.2 million compared to
 $1.4 million for the same period in 2000.  This increase was primarily due to
 interest income as a result of higher average cash balances following
 Diversa's initial public offering in February 2000.
     At March 31, 2001, the Company had cash, cash equivalents, short-term
 investments, and receivables totaling $206.1 million compared to
 $211.8 million at December 31, 2000.
     "During the first quarter, we made significant progress in achieving our
 2001 objectives," stated Jay M. Short, Ph.D., President and Chief Executive
 Officer.
 
     First quarter 2001 accomplishments include:
     --  The signing of a drug discovery, development, and license agreement
         with IntraBiotics Pharmaceuticals, Inc. to identify and develop novel
         small molecules that demonstrate antibacterial or antifungal
         properties.  This second small molecule drug discovery deal closely
         followed the announcement of a drug discovery research collaboration
         with GlaxoSmithKline in December 2000.
     --  The receipt of five patents, the most significant of which included
         patents covering methods for liquid phase expression screening of
         libraries made from DNA of more than one species, Diversa's Gene Site
         Saturation Mutagenesis(TM) (GSSM(TM)) evolution technology, and
         high-throughput screening of gene libraries made from mixed
         populations of organisms using fluorescent detection.
     --  The sequencing of the Streptomyces diversa(TM) microorganism under a
         DNA sequencing collaboration with Celera Genomics.  The sequence data
         from this proprietary discovery and production host microbe should
         enable faster discovery and development of novel molecules of
         pharmaceutical interest from Diversa's PathwayLibrary(TM) collections.
 
     "Completion of these milestones contributes to Diversa's goal of rapidly
 developing products within our extensive pipeline and maximizing the full
 capability of our proprietary discovery and evolution technologies," 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.  The Company is utilizing its fully
 integrated approach to develop novel enzymes and other biologically active
 compounds, such as orally active drugs, produced by these genes and gene
 pathways.  The Company'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, the Company 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.  The Company's strategic partners are market leaders and include
 Aventis Animal Nutrition S.A., Celanese Ltd., Celera Genomics, Finnfeeds
 International Ltd (a unit of Danisco Cultor), The Dow Chemical Company,
 GlaxoSmithKline plc, IntraBiotics Pharmaceuticals, Inc., Invitrogen
 Corporation, and Syngenta (formerly Novartis) Agribusiness Biotechnology
 Research, Inc.  The Company has also formed joint ventures with The Dow
 Chemical Company (named Innovase LLC) and with Syngenta Seeds AG (named
 Zymetrics).
 
     Statements in this press release that are not strictly historical are
 "forward-looking" and involve a high degree of risk and uncertainty.  These
 include statements related to the financial guidance provided below, the
 discovery, identification, and/or development of novel molecules, the
 development of products, and the exploitation of the Company's technologies,
 all of which are prospective.  Such statements are only predictions, and the
 actual events or results may differ materially from those projected in such
 forward-looking statements.  Factors that could cause or contribute to
 differences include, but are not limited to, risks involved with the Company's
 new and uncertain technologies, risks associated with the Company's dependence
 on patents and proprietary rights, risks associated with the Company's
 protection and enforcement of its patents and proprietary rights, the
 Company's dependence on existing collaborations, the ability of the Company to
 commercialize products using the Company's technologies, the development or
 availability of competitive products or technologies, and the future ability
 of the Company to enter into and/or maintain collaboration and joint venture
 agreements.  These factors and others are more fully described in the
 Company's filings with the Securities and Exchange Commission, including, but
 not limited to, the Company's Annual Report on Form 10-K for the year ended
 December 31, 2000.  These forward-looking statements speak only as of the date
 hereof.  The Company expressly disclaims any intent or obligation to update
 these forward-looking statements.
 
     Note:  Gene Site Saturation Mutagenesis(TM), GSSM(TM), PathwayLibrary(TM),
 and Streptomyces diversa(TM) are trademarks of Diversa Corporation.
 
 
                           Selected Financial Information
                         Condensed Statements of Operations
                (unaudited, in thousands, except per share amounts)
 
                                                            Three Months
                                                          Ended March 31,
                                                        2001             2000
      Revenues:
      Collaborative revenue                            $7,881         $4,064
      Grant and product revenue                           334            342
       Total revenues                                   8,215          4,406
 
      Expenses:
      Research and development                          9,868          4,574
      Selling, general and administrative               2,122          1,303
      Non-cash, stock-based compensation                  747          5,555
       Total operating expenses                        12,737         11,432
 
      Loss from operations                             (4,522)        (7,026)
 
       Interest and other income, net                   3,168          1,414
 
      Loss before income taxes                         (1,354)        (5,612)
 
       Provision for income tax                           ---             75
 
      Net loss before preferred dividends              (1,354)        (5,687)
 
       Dividends on preferred stock                       ---            310
 
      Net loss applicable to common shares            ($1,354)       ($5,997)
 
      Basic and diluted net loss per common share     ($0.04)        ($0.32)
 
      Weighted average shares used in computing basic
       and diluted net loss per common share           34,963         18,979
 
      Pro forma basic and diluted net loss per common
       share                                              N/A        ($0.20)
 
      Weighted average shares used in computing pro
       forma basic and diluted net loss per common share  N/A       29,976(1)
 
      Net loss excluding non-cash, stock-based
       compensation                                     ($607)         ($442)
 
      Pro forma basic and diluted net loss per common
       share excluding non-cash, stock-based
       compensation                                   ($0.02)        ($0.01)
 
     (1)Weighted average shares used in computing pro forma basic and diluted
         net loss per common share assume all outstanding redeemable
         convertible preferred stock, which converted into common stock upon
         the Company's initial public offering in February 2000, had converted
         at the original dates of issuance.
 
 
                              Condensed Balance Sheet
                                   (in thousands)
 
                                                     March 31,    December 31,
                                                        2001           2000
                                                    (unaudited)
      Cash, cash equivalents and short-term
       investments                                   $204,123       $211,256
      Other current assets                              7,666          6,436
      Property and equipment, net                      17,455         14,903
      Other assets                                      3,458          2,666
       Total assets                                  $232,702       $235,261
 
      Current liabilities                              $7,805        $10,368
      Deferred revenue                                 20,668         22,337
      Long-term liabilities                             9,219          8,482
      Stockholder's equity                            195,010        194,074
       Total liabilities and stockholder's equity    $232,702       $235,261
 
 
                        2001 Updated Financial Guidance
 
     The following statements are forward-looking, and actual results may
 differ materially.  Please see page 2 of this press release for a description
 of certain risk factors and Diversa's quarterly and annual reports on file
 with the Securities and Exchange Commission for a more complete description of
 risks.  The Company will not provide any further material guidance on
 analysts' financial models beyond the information provided in this press
 release.
     Below is an update to the 2001 financial guidance previously provided
 during the Company's webcast conference call on January 30, 2001.  Revenue
 guidance remains at $35 million for the year, with a slight shift between the
 quarters.  The updated net loss guidance, which reflects higher interest
 income and lower operating expenses, has improved to $17.5 million for the
 year, or $0.50 per share.
 
                        (in millions, except per share data)
                                    (unaudited)
 
                                         Financial Guidance
                        Q1                                               2001
                      Actual          Q2          Q3          Q4        Annual
 
     Total revenues   $8.2         $8.6         $8.8         $9.4       $35.0
 
     Research &
      development      9.9         12.0         14.0         14.3        50.2
     Selling, general &
      administrative   2.1          2.6          2.6          2.6         9.9
     Non-cash,
      stock-based
      comp             0.8          0.8          0.7          0.6         2.9
      Total operating
       expenses       12.8         15.4         17.3         17.5        63.0
 
     Loss from
      operations     (4.6)        (6.8)        (8.5)        (8.1)      (28.0)
 
      Interest and
       other income,
       net             3.2          3.1          2.2          2.0        10.5
 
     Net loss       ($1.4)       ($3.7)       ($6.3)       ($6.1)     ($17.5)
 
     Net loss per common share (based upon weighted-average
      shares of 35 million)                                           ($0.50)
 
     2001 cash "burn"                                                     $18
 
 SOURCE  Diversa Corporation