SAN CARLOS, California, September 29, 2006 - Deltagen, Inc. (Pink Sheets: DGEN), a leading provider of drug discovery tools to the biopharmaceutical industry, today reported financial results for the three months ended June 30, 2006.

Revenues:  The Company's consolidated revenues for the three months ended June 30, 2006 totaled $3.749 million, compared to $1.882 million in the first quarter of 2006.  The second quarter revenues were attributable primarily to revenue received from our NIH contract, under which we recognized approximately $3.2 million in the second quarter of 2006.  Of this amount, approximately $1.3 million was received during the second quarter and approximately $1.9 million was received early in the third quarter of 2006.  No new delivery orders were placed by the NIH in the second quarter of 2006 and there are no assurances that the NIH will place any additional delivery orders.  The decrease in non-NIH-related revenues was attributable primarily to the fact that the Company did not recognize any access extension fees under its DeltaBase collaboration agreements during the second quarter of 2006.  The Company recognized $0.500 million in extended access fees in the first quarter of 2006.

Interest Income:  The Company had interest income of $0.087 million for the three months ended June 30, 2006.

Expenses:  Total consolidated expenses for the three months ended June 30, 2006 were $2.015 million, of which $1.125 million were attributable to third-party royalty and commission obligations and $0.123 million were attributable to a non-cash stock-based compensation expense relating to stock options granted by the Company on March 30, 2006 in accordance with Statement of Financial Standards (SFAS 123R).  Other operating expenses, which totaled $0.767 million for the three months ended June 30, 2006, were attributable primarily to salaries and other general and administrative expenses, and patent prosecution expenses.  Total consolidated expenses for the first quarter of 2006 were $1.555 million, of which $0.493 million were attributable to third-party royalty and commission obligations.  Other operating expenses totaled $1.062 million in the first quarter of 2006.  The increase in third-party royalty and commission obligations in the second quarter over the first quarter was due to the increase in revenues in the second quarter, which increased 100% over the first quarter.  The decrease in other operating expenses was due to a decrease in patent prosecution expenses and the cessation of legal expenses associated with the administration of the Company's bankruptcy case.  Legal and administrative fees associated with prosecution of the Company's patent portfolio were $0.201 million for the three months ended June 30, 2006, compared to $0.373 million in the first quarter of 2006.

Net Income:  Net income before provision for income taxes for the three months ended June 30, 2006 was $1.821 million.  Net income after provision for income taxes for such three-month period was $1.483 million.  

Cash, Cash Equivalents and Accounts Receivable:  As of June 30, 2006, the Company had $10.789 million in consolidated cash and cash equivalents and $3.380 million in accounts receivable.

The unaudited consolidated financial statements for the second quarter of 2006, accompanying notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations for such period will be posted on Deltagen's website (www.deltagen.com). 

The balance sheet for 2005 has been audited and the audited consolidated balance sheet will be posted on the Company's website, together with the auditors' report and notes to the financials for such period.

The consolidated financial results for the second quarter of 2006 reflect certain adjustments to the 2005 and first quarter 2006 financials made in connection with the audit.  The adjustments are discussed in the notes to the financials for the second quarter of 2006, which will be made available on Deltagen's website.

About Deltagen

Deltagen, Inc. is a leading provider of drug discovery tools to the biopharmaceutical industry. Deltagen offers access to its extensive inventory of knockout mouse lines and related phenotypic data, which enhance the efficiency of target validation and drug discovery. In addition, Deltagen offers target validation data in the areas of immunology and metabolic diseases. Deltagen's products and programs have been validated by customers and partners such as Eli Lilly & Co., GlaxoSmithKline, Merck & Co., Inc. and Pfizer Inc. For more information on Deltagen, visit the Company's website at www.deltagen.com. 

Safe Harbor Statement

This press release contains "forward-looking statements," including statements about Deltagen's future revenues and operating results, royalty and milestone revenues, third-party royalty obligations and third-party licenses and intellectual property, as well as other matters that are not historical facts or information.  These forward-looking statements are based on management's current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Deltagen's ability to achieve its operational objectives and revenue projections and to obtain patent protection for its discoveries, that may cause Deltagen's actual results to be materially different from any future results expressed or implied by such forward-looking statements. Information identifying such important risk factors is contained in "Management's Discussion and Analysis of Financial Conditions and Results of Operations", which can be found at Deltagen's website at www.deltagen.com. Deltagen undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.