Senomyx Inc. (SNMX)
Q2 2010 Earnings Call
August 05, 2010 11:00 pm ET
Sharon Wicker - VP and CCD Officer
Kent Snyder - CEO and Chairman
John Poyhonen - President and COO
Tony Rogers - VP and CFO
Andrew Vaino - Roth Capital Partners
Dalton Chandler - Needham & Company
Pamela Bassett - Cantor Fitzgerald
Steve Brozak- WBB Securities
Good morning. We will now begin the Senomyx second quarter 2010 conference call. At this time, I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions-and-answers after the presentation. (Operator Instructions).
I would now like to turn the call over to Ms. Gwen Rosenberg, Senomyx Vice President of Investor Relations and Corporate Communications.
Good morning and welcome to the Senomyx second quarter 2010 earnings and corporate update conference call.
Participating in this call from Senomyx will be Kent Snyder, Chief Executive Officer; John Poyhonen, President and Chief Operating Officer; Tony Rogers, Vice President and Chief Financial Officer; Don Karanewsky, Senior Vice President, Discovery; and Sharon Wicker, Senior Vice President and Chief Commercial Development Officer.
Before we begin, please note that during the course of this call, we may make projections or other forward-looking statements regarding future events or financial performance of the company that involve risks and uncertainties. The company
s actual results may differ materially from the projections described in the press release and this conference call.
Factors that might cause such a difference include, but are not limited to, those discussed in our quarterly and Annual Reports filed with the SEC. Copies of these documents are available upon request from Investor Relations at Senomyx or may be accessed via our website, at www.senomyx.com.
d now like to turn the discussion over to Kent Snyder, CEO of Senomyx.
Thank you, Gwen. Good morning to everyone, and thank you for joining the Senomyx management team for our conference call and webcast. During this call, we will provide you with a general business and financial update for the second quarter 2010, including comments regarding Senomyx
s business strategy and corporate collaboration. This will be followed by a question-and-answer session.
The second quarter has been quite active for Senomyx on many fronts including progress for the programs, business development activities and commercialization efforts. I will start the call by discussing Senomyx
s progress with sweet enhancer program and it
s relevance to our overall commercialization strategy, specifically the large average category opportunity.
We continue to be very enthusiastic about Senomyx
s ongoing success and development sweet enhancers and the potential long-term value of these ingredients. Within the past two years we have received GRAS or Generally Recognized as Safe regulatory status for two sweet enhancers.
First our S2383 sucrose enhancer which enables up a 75% reduction of the high intensity sweetener sucrose in numerous products received a GRAS designation in the fourth quarter of 2008. The following year Senomyx received GRAS determination for the use of S6973 a novel sucrose enhancer in a large number of food products.
S6973 allows the sugar content of certain products to be reduced by up to 50% without altering desired sweet taste. In the first quarter of this year the GRAS designation for S6973 was extended to the instant and ready to drink coffee and the tea categories as well as imitation diary products such as non diary creamers and whiteners.
We have also identified a new family of sucrose enhancers with the same physical properties that may be advantageous for a broader range of beverages and other product application. I am pleased to report that a recently discovered sucrose enhancer from this family enables up to 50% reduction of sugar in preliminary tastes.
In addition, Senomyx has identified promising flavor ingredients that demonstrated a statistically significant (inaudible) of the sweet taste of fructose, a key component of high fructose corn syrup. This is meaningful because high fructose corn syrup is the primary sweetener used in carbonated and certain other beverages, especially in North America.
A number of new enhancer has been active in the fructose screening assay. They are currently being optimized to increase their potency and improve their physical properties, followed by evaluation in taste tests.
There is an increasing focus by consumers, health experts and government agencies on reducing the consumption of carbohydrate sweeteners such as sucrose and fructose. In the highly competitive consumer food and beverage markets, manufacturers cannot sacrifice taste without losing market share. Senomyx enhancers could allow food and beverage manufacturers to respond to this need by offering lower calorie products that maintain the taste characteristics that appeal to consumers. Our sweet enhancers may therefore provide the company with a very timely and substantial commercial opportunity.
s potential profitability is depended on the commercialization of our flavor ingredients. As we stated previously, we believe the sweet enhancer program is the most valuable of all of our programs and especially large market for sweet enhancers is non-alcoholic ready drink beverages a $600 billion industry projected by industry analyst to exceed $1 trillion by the year 2020.
In order to exploit this opportunity as fully as possible, we have been evaluating opportunities that would allow us to accelerate a sweet enhancer speed to market, maximize penetration rate, a large number of product category and access the market broadly across many geographies.
On April 23rd, we announced that Senomyx had a term sheet with Coca-Cola regarding a potential continuation and expansion of our collaboration. During the 60-day negotiations period, Senomyx continued to receive funding from Coca-Cola at the same rates as was provided under our 2002 collaboration agreement.