Senomyx Announces Q2 Results, Develops New Sweet Taste Modifier

Senomyx Inc. (San Diego), while releasing its second-quarter financial results, said it has found a new sweet taste modifier used to reduce high fructose corn syrup content and plans to work with PepsiCo Inc. to advance the new flavor ingredient into the preliminary development phase.

The company, which expects to bring in about $4 million in commercial revenue for the 2012 full year based on projected commercial revenue growth in the second half of the year, also reacquired the rights from PepsiCo. for a new sucrose modifier used to drastically reduce sugar content.

On Tuesday, Senomyx said S52617, also referred to as S617, is the company's first ingredient in development that can reduce both high fructose corn syrup, known as HFCS, and sucrose in foods and beverages while maintaining a sweet desired taste. 

Kent Snyder, Senomyx's CEO, said the sweet taste modifier works in low concentrations, which could provide important cost-in-use benefits to food and beverage companies that incorporate S617 in their products. As a result, Senomyx is working with PepsiCo to advance the new ingredient into the preliminary development phase, which includes the initial safety studies and other activities necessary to support regulatory filings in the United States and other regions. 

“The utility of S617 with both HFCS and sucrose is significant since it will allow manufacturers that use these sweeteners to focus their internal efforts on a single sweet taste modifier, thereby potentially increasing efficiency and cost-effectiveness,” Synder said. 

During the company's second-quarter conference call, executives added that the modifier's key differentiator is that S617 can be used in carbonated beverages. 

In other news, Senomyx has reacquired the rights, for use in non-alcoholic beverages, for sucrose modifier S9632, which can reduce sugar content by up to 50% in products, for its use in PepsiCo's nonalcoholic beverages. Specifically, S9632 is targeted for categories in powdered and concentrated beverages in addition to ready-to-drink and powdered forms of dairy, coffee and tea products. 

“These markets are large and tend to be fragmented, and additional access to beverage manufacturers should allow us to potentially get a greater share of the value we created with S9632,” Synder said in regards to the agreement.

During the conference call, John Poyhonen, Senomyx's president and COO, added that S6932 has distinct advantages compared to sucrose modifier S6973, because it can be used in powered drink beverages, which he said are "marketed widely" in Latin America and Asia. Compared to S6973, it can also be used in some alcoholic beverages, which also adds to its marketability. Poyhonen also estimated that the modifier can be used in a roughly $95 billion marketplace.  

Going forward, Senomyx said two of its partners, both of which are global food companies, are currently marketing new and reformulated established products that contain one of Senomyx’s Savory Flavors. The primary applications of the company’s Savory Flavor ingredients are to reduce or replace monosodium glutamate, known as MSG, and to enhance the savory taste of foods by combining Senomyx’s Savory Flavors with other ingredients to create unique new flavor blends.

Current commercialization activities include sales and market launches of products incorporating a Senomyx Savory Flavor in about 25 countries within Africa, Asia, Latin America, the Middle East and North America, with additional product launches expected during the third quarter of this year.

In addition, Senomyx is considering commercialization options for S9229 and S5456, new savory flavors with GRAS status that complement those being marketed by the company’s partners. Commercialization of Senomyx’s savory flavors in the European Union is contingent upon the ingredients being included in the European Food Safety Authority (EFSA) Union List of Flavouring Substances; however, timing for the publication of the Union List remains uncertain.

In an update, the company has ongoing commercialization activities in the Americas, Southeast Asia, Africa and Australia for its S6973 sucrose modifier, which cuts sugar usage as much as 50%. Recent market launches of retail products that incorporate S6973 have occurred in the United States, Latin America, Asia, and South Africa. These products span a variety of categories including ready-to-drink and powdered beverages, dairy products, and baked goods. Senomyx also expects additional product launches using the sucrose modifier this year.

The company also said its S2383 modifier, used to reduce sucralose up to 75%, is being marketed in North America and Latin America. Follow-on launches are being planned by manufacturers that currently use S2383 in their products, and additional customers of Senomyx’s commercialization partner are conducting product development work and evaluations for potential usage of S2383 in a variety of products.

In an update to its bitter blockers, a Senomyx partner plans to initiate its first market launch of a retail product incorporating S6821 in a Southeast Asian country during this year. S6821 has demonstrated activity against bitter-tasting ingredients such as soy and whey proteins, menthol, caffeine, cocoa, and rebaudioside A (stevia), which are used in foods and beverages. S7958, a related bitter blocker with similar functionality, has alternative desirable physical properties that may be useful for these or other product applications.

(To more about Senomyx’s flavor modifiers for sucrose (S6973) and sucralose (S2383) and its bitter blockers (S6821 and S7958), which received positive determinations regarding safety from the Joint FAO/WHO Expert Committee on Food Additives, click here.)

In addition, Senomyx continues to evaluate potential new bitter blockers. In its salt taste program which aims to identify flavor ingredients that significantly reduce sodium in foods and beverages without sacrificing taste, Senomyx has identified a novel blocker of salt taste and efforts are underway to evaluate this blocker as a tool to help discover the receptor involved with salt taste perception.

Senomyx also has started activities in support of future regulatory filings for its cooling agent S5031 (selected by Firmenich, its partner in the company’s Cooling Taste program). The first phase of safety testing has been completed successfully and final safety studies are underway. S5031 has a 10-times greater potency in taste tests and other advantageous properties, such as longer cooling duration and lack of aroma, compared to commonly used agents.

Specifically, Senomyx recognized $1.4 million and $1.8 million of development revenue related to the company’s sweet taste collaboration with Firmenich during the three months ended June 30, 2012 and 2011, respectively. 

For the full year 2012, Senomyx expects total revenue of $30 million to $33 million and a net loss of $8 million to $10 million (in comparison, the company posted a loss of $8.7 million on revenue of $31.3 million in 2011). For the three months ended June 30, revenue fell 1.3% to $6.87 million from $6.97 million a year earlier. However, its second-quarter loss narrowed to $3.09 million from $3.19 million a year ago. The company ended the quarter with $47.9 million of cash and highly liquid investments.


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