Diversa Shares Triple on First Day, Boosted by Enthusiasm for Biotech Firms
Shares of Diversa Corp. soared in their first day of trading, rising to more than triple their $24-a-share initial public offering price. The San Diego biotechnology company said it raised about $200 million in gross proceeds from the stock sale, before expenses.</br></br>The shares opened yesterday at $56 on the Nasdaq Stock Market and rose to a high of $79.375 before falling back to $75 at 4 p.m. Diversa said it sold about 8.3 million shares, including the exercise of options to cover underwriters' overallotments. More than 14 million shares changed hands during the trading day.</br></br>Diversa is an early-stage biotechnology company that is developing novel enzymes from diverse natural environments and then screening them for possible use in agricultural, industrial and pharmaceutical applications. The company said it has collected samples from such places as Costa Rica, Indonesia, Iceland, and Yellowstone National Park in the U.S.</br></br>"Our processes are designed to help our strategic partners and customers reduce cost, reduce waste, improve yield and enhance the quality of end products and manufacturing," Diversa said in its prospectus filed in December with the Securities and Exchange Commission. The company's first product, Pyrolase 160, is used in the energy industry to facilitate oil recovery. Diversa is also hoping to discover compounds that may be used to develop human drugs.</br></br>Diversa's strategic partners, which have been a significant source of funding, include units of Novartis AG, Dow Chemical Co. and Rhone-Poulenc SA. In addition to $9.5 million received through Sept. 30, 1999, Diversa's partners are committed to fund at least $69.1 million under existing agreements, according to the prospectus.