By Mary Welch

Diversa Corp., which identifies and catalogues genetic material and develops novel enzymes and other biologically active compounds, raised $200.1 million by selling 8.34 million shares of common stock at $24 each in an initial public offering.

The offering included the exercise of 1.1 million shares of the overallotment option granted to underwriters, and made it the second largest IPO - to Genentech Inc.'s $2.1 billion offering - in biotech.

Investors then flocked to Diversa stock. Its shares (NASDAQ:DVSA) closed Monday at $75, up $51, or a whopping 212.5 percent. Diversa's performance mimics the recent IPOs of Maxygen Inc., of Redwood City, Calif., and Antigenics LLC, of New York. Maxygen's stock climbed 163 percent its first trading day, after opening at $16, while Antigenics shares on their first day gained 241 percent from the $18 offering price. (See BioWorld Today, Dec. 20, 1999 p. 1; and Feb. 7, 2000, p. 1.)

Bear Stearns & Co. Inc., of New York, was lead underwriter. Deutsche Banc Alex. Brown Inc. and Chase H&Q, both of New York, were co-managers. The company has 32.8 million shares outstanding.

Diversa originally filed for its IPO back in December, intending to raise $85 million for research and development, capital expenditures and possible future acquisitions. The company had planned to sell about 7 million shares in the $13 to $15 price range.

Originally known as Industrial Genome Sciences Inc., the company changed its name in 1997. It ended last year with $5.2 million in cash and reported revenues of $10.27 million, about 90 percent of that from partnerships. During that same period, the company posted a net loss of $9 million.

The company applies its fully integrated and proprietary processes to obtain previously unaccessed genetic material from uncultured organisms found in natural environments. To date, Diversa has obtained samples from countries including Costa Rica, Bermuda, Indonesia, Mexico and Iceland, as well as from Yellowstone National Park.

With these, the company has developed environmental gene libraries, or DiverseLibraries, that now contain the complete genomes of more than 1 million unique microorganisms. It is also creating PathwayLibraries, which are libraries of multi-gene pathways responsible for the production of small molecules.

In addition, Diversa has ultra-high-throughput screening technologies, including SingleCell screening, that allows for the rapid discovery and identification of genes with desired biological activity or specific DNA sequences. The company can screen libraries to analyze more than 1 billion genes per day to identify potentially useful enzymes and compounds.

In addition to its technology, Diversa has 42 other projects with multiple production applications in various stages of development. It has one marketed product, Pyrolase 160, for the oil and gas services industry. Diversa has several partners, including Novartis Seeds AG, Rhone-Poulenc Animal Nutrition and the Dow Chemical Co., which have committed at least $69.1 million in funding to Diversa under current agreements and have invested $9.2 million in equity securities.

The company said its technologies and products have application in several markets, including agriculture, chemical processing, industrials and pharmaceuticals. In the pharmaceutical arena, Diversa is working to discover small-molecule compounds as candidates for antimicrobial, antifungal and antiviral drugs, as well as other therapeutic areas.