Senomyx, Inc. (SNMX)

Q4 2010 Earnings Conference Call

March 3, 2011, 11:00 am ET


Gwen Rosenberg – VP, IR and Corporate Communications

Kent Snyder – CEO

John Poyhonen – President and COO

Tony Rogers – VP and CFO

Don Karanewsky – SVP, Discovery and Chief Scientific Officer

Sharon Wicker – SVP and Chief Commercial Development Officer


Andrew Vaino – Roth Capital Partners

Dalton Chandler – Needham and Company

Doug Thomas – JET Investment Research



Good morning. We’ll now begin the Senomyx fourth 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 listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. If you any problem hearing the call, please key star zero and the conference operator will assist you. And now I would like to turn the call over to Gwen Rosenberg, Senomyx Vice President of Investor Relations and Corporate Communications. Please go ahead.

Gwen Rosenberg

Good morning and welcome to the Senomyx fourth quarter and year end 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; and Tony Rogers, Vice President and Chief Financial Officer; Don Karanewsky, Senior Vice President, Discovery and Chief Scientific Officer 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 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 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 the joining Senomyx management team for our conference call on webcast. During this call, we’ll provide you with a general business and financial update with a 2010 fourth quarter and year end, including comments regarding Senomyx’ business strategy and corporate collaborations. This will be followed by a question and answer session. 2010 was an outstanding year for Senomyx. Our accomplishments included an improved balance sheet, numerous business development achievements, value progress of our flavor and flavor modulation programs and increased commercialization efforts by three of our partners.

Senomyx improved each of our key financial metrics in 2010 compared to the prior year and we achieved record annual revenue while continuing to carefully manage our expenses. As a result, we are considering [ph] our net loss from $26.2 million in 2009 to $10.7 million in 2010. We also increased our cash position by more than $40 million putting us in an excellent financial position going forward. Tony will provide a more detailed financial review here, as well as guidance for 2011 later during the call.

Our business development accomplishments were our highlight of 2010. Our collaboration with PepsiCo in August provided a $30 million upfront payment to Senomyx and a committed source of R&D funding through August 2014. A notable aspect of both this collaboration and a recently expanded complementary agreement with Firmenich is financial support for a new focus on the discovery and development of natural flavor enhancers for the Sweet Taste Program.

Another business development achievement in 2010 was the expansion of our commercialization agreement with Firmenich regarding our S6973 sucrose enhancer to include selected beverage applications in addition to virtually all food product categories Snyder stated. Importantly, Firmenich has demonstrated that use of S6973 allows sucrose to be reduced in products by up to 50%, yet the sweet taste desired by consumers is maintained. As John will discuss shortly, we are very enthusiastic that our Firmenich’s activities regarding market launch of S6973.

John will also talk about Firmenich’s recent sale of commercial quantities of S2383, Senomyx’s highly effective Super Less enhancer. We believe that Firmenich is highly motivated and well positioned to take advantage of the market opportunities for S2383.

2011 started off very well with our announcement in January of another new partnership, our collaboration with the Cadbury Adams unit of Kraft Foods regarding the development and worldwide commercialization of novel flavor modulators for use in gum and medicated confectionary products. Kraft has agreed to take Senomyx development funding, cost reimbursements and specified payments upon the achievement of milestones during the collaborating period. Kraft may evaluate and select flavor ingredients for commercialization, after which Senomyx will receive royalty payments based on sales of products using the new flavor ingredients. We are very pleased to be working with Kraft team on this collaboration.

I am happy to announce today that Firmenich has exercised its options to extend the research funding period of our collaboration related to Senomyx Sweet Taste Technology for an additional year through July 28, 2012. As we have discussed previously, this research program is focused on discovery and development of both natural and artificial flavor ingredients intended to enhance the taste of sucrose, fructose and varied forms of Rebaudioside A, commonly known as stevia. Firmenich will continue to provide committed funding through the extended research period and Senomyx will receive royalty payments based on sales of products using any new flavor ingredients that Firmenich selects for development and commercialization.

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