Senomyx Inc. ( SNMX)

Q3 2010 Earnings Call

November 4, 2010; 11:00 am ET

Executives

Kent Snyder - Chief Executive Officer

John Poyhonen - President & Chief Operating Officer

Tony Rogers - Vice President & Chief Financial Officer

Don Karanewsky - Senior Vice President, Discovery

Sharon Wicker - Senior Vice President & Chief Commercial Development Officer.

Analysts

Andrew Vaino - Roth Capital Partners

Dalton Chandler - Needham & Company

Adam Fisher - BSI

Steve Brozak - WBB Securities

Presentation

Operator

Good morning. We will now begin the Senomyx third 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. (Operators Instructions).

I would now like to turn the call over to Gwen Rosenberg, Senomyx’s Vice President of Investor Relations & Corporate Communications.

Gwen Rosenberg

Good morning and welcome to the Senomyx’s third 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 involves risks and uncertainty.

The company’s actual results may differ materially from the projections described in the press release and on this conference call. Factors that might cause the 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.

I'd now like to turn the discussion over to Kent Snyder, CEO of Senomyx.

Kent Snyder

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 third quarter of 2010, including comments regarding Senomyx's business strategy and corporate collaborations. This will be followed by a question-and-answer session.

First, we are proud to announce today we received a GRAS or Generally Recognized as Safe regulatory determinations for two Senomyx's Bitter Blockers, S6821 and S7958. These are the first Senomyx's Bitter Blockers to go through the regulatory process and we have been granted GRAS status for all of the users and use levels requested.

Senomyx has now achieved GRAS designation for eight novel ingredients, which includes four savory flavor ingredients our S2383 sucralose enhancer and our S6973 sucrose enhancer. We believe the new approvals reflect the company’s growing, discovery, development and regulatory experience.

The GRAS regulatory status allows usage of the Bitter Blockers for a variety of product categories in the U.S. and numerous other countries. S6821 have demonstrated activity against bitter-tasting foods and beverages that include soy and whey protein, menthol, caffeine, cocoa and Rebaudioside A, a major component of the sweetener stevia. S7958, which is related to S6821 and has similar functionality, is distinguished by alternative desirable physical properties that may be useful in certain product applications.

We are very pleased to be able to provide current and potential new collaborators with two GRAS approved Bitter Blockers for evaluation in a broad range of product category. In conjunction with the GRAS designation, Senomyx will receive a $500,000 milestone payment from one of our collaborating partner. The partner, whom we cannot name at this time due to confidentiality consideration, has selected S6821 for potential development and has been engaged in internal evaluation. With this GRAS designation, our collaborator will have greater flexibility to conduct more extensive evaluations regarding possible uses of the Bitter Blockers with its products. However, it is too early to comment regarding timing for potential commercialization. We will provide additional information about the activities when possible.

As you may recall, Senomyx has been conducting development activity with another Bitter Blocker S0812. These activities include assessments of physical characteristics, solubility, stability and functionality under various conditions, safety and other attributes.

We have decided not to proceed with further development of S0812, because it has not met all of the company’s development and commercialization criteria. However, we have identified additional Bitter Blockers that are being evaluated for possible development based on their favorable properties and potential commercial applications.

Moving to our Sweet Taste Program, in late October we are very pleased to expand our collaboration with Firmenich for the S6973 sucrose enhancer. In addition to their previous rights related to commercial development of S6973 for virtually all food product categories and select powdered beverages, Firmenich has been granted an exclusive worldwide license to commercialize S6973 for use in instant and ready to drink milk, tea and coffee beverages and over-the-counter pharmaceutical products, some of which contain high sugar content.

We believe that Firmenich will be an excellent partner to commercialize S6973 for the new beverage applications in light of their experience preparing for commercialization of S6973 for food category. We are confident that extending our partnership to improve a new category will increase a long-term potential value of S6973.

Referring to our last earnings call, Senomyx entered into a major new collaboration with PepsiCo, the world’s second largest food and beverage company. PepsiCo is an innovative company, a company whose research and development approach and goals are synergistic with ours.

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