The new agreement is a significant expansion of the relationship between Diversa and BASF that began in 2001 with a collaborative agreement to develop biocatalysts. In 2003, under the original agreement, BASF licensed a proprietary enzyme from Diversa for the biocatalytic synthesis of a chiral pharmaceutical intermediate. The two companies will be focusing on improving industrial processes and product performance by combining BASF's application know how, chemical and biotechnology expertise and market knowledge with Diversa's enzyme discovery and optimization technologies.

"Diversa and BASF intend to leverage our combined expertise in biotechnology and chemistry aiming at system innovations for diverse industrial applications," said Dr. Alfred Hackenberger, BASF's President of Specialty Chemicals Research. "We look forward to addressing several exciting opportunities by developing better products to help our customers in several key markets like pulp and paper or fine chemicals to be more successful."

"Diversa has a well-established track record of applying powerful and patented enzyme discovery and optimization technologies to develop differentiated enzyme products. With this broad new agreement, Diversa will become a strategic partner in BASF's biotechnology activities and will apply these technologies to assist BASF in extending its well-deserved reputation as one of the industry leaders in the development of innovative bio-based products," stated Edward T. Shonsey, Diversa's Chief Executive Officer.

BASF has more than two decades of experience in the area of biotechnology. The company uses biocatalytic processes to produce a variety of products like vitamin B2, the amino acid lysine, and chiral intermediates (ChiPros(TM)) by means of living cell fermentation or enzyme catalysis. In 2005, BASF posted sales of around Euro400 million with products generated completely or partially using biotechnological processes. Expanding research activities within BASF's "Growth Cluster White Biotechnology" will be supported by investments of 150 million euros over the period 2006 to 2008.

BASF is the world's leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. As a reliable partner to virtually all industries, BASF's intelligent solutions and high-value products help its customers to be more successful. BASF develops new technologies and uses them to open up additional market opportunities. It combines economic success with environmental protection and social responsibility, thus contributing to a better future. In 2004, BASF had approximately 82,000 employees and posted sales of more than 37 billion euros. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA), New York (BF) and Zurich (AN).

Diversa Corporation is a leader in applying proprietary genomic technologies for the rapid discovery and optimization of novel protein-based products. Diversa is directing its integrated portfolio of technologies to the discovery, evolution, and production of commercially valuable molecules with agricultural, chemical, industrial, and pharmaceutical applications. Diversa has established alliances and joint ventures with market leaders, such as BASF, Cargill Health and Food Technologies, DuPont Bio-Based Materials, Medarex, Merck, and Xoma. In addition, Diversa has formed a broad strategic relationship with Syngenta AG, a world-leading agribusiness company. Diversa has commercialized products both independently and in collaboration with strategic partners and licensees.