Senomyx, Inc. ( SNMX) Q1 2011 Earnings Call April 29, 2011 11:00 am ET Executives Gwen Rosenberg - VP, IR and Corporate Communications Kent Snyder - CEO John Poyhonen - President and COO Tony Rogers - VP, CFO David Linemeyer - VP, Biology Analysts Jonathan Feeney - Janney Montgomery Scott Andrew Vaino - Roth Capital Partners Dalton Chandler - Needham and Company Presentation Operator We will now begin the Senomyx first quarter 2011 conference call. (Operator Instructions) I will now like to turn the call over to Gwen Rosenberg, Senomyx's Vice President of Investor Relations and Corporate Communications. Gwen Rosenberg
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 first quarter of 2011. This will be followed by a question and answer session. Senomyx is off to a strong start in 2011. As we'll discuss during the call, our partners continue to make good progress with the commercialization activities, and we continue to advance our Discovery & Development program. In addition, Senomyx has maintained a strong balance sheet with approximately $66 million in cash as of March 31. We are especially encouraged by Firmenich's activities with S6973, which allows sucrose to be reduced in products by up to 50%, while maintaining the taste of natural sugar desired by consumers. Firmenich has produced commercial quantities of S6973 and they expect to record their first commercial sale to a major brand customer during the second quarter. These activities are concurrent with Firmenich's sales of S2383, which can be used in numerous products to enable up to a 75% reduction in the concentration of sucralose. Importantly, Firmenich has found that use of S2383 improved the taste of certain products. We believe that Firmenich is highly motivated and well positioned to take advantage of the market opportunities for S2383. John will discuss Firmenich's commercialization activities regarding S2383 and S6973 in more detail shortly. As we announced earlier this week, we are very pleased to have been granted a U.S. patent that includes composition claims covering S2383 and its analogs. A new patent was issued on April 19, 2011 and has a term through June 8, 2027. In addition to providing IP protection and exclusivity in the marketplace for a long period of time, the patent is an important validation of our research capabilities, which represent some of the most innovative work in the field of flavor technology. We believe the patent is an indication of Senomyx's leadership in the identification and development of valuable products that can substantially reduce the use of added sweeteners and a broad range of food and beverage applications.
Our current research activity for the Sweet Taste Program include continuing work on new sucrose enhancers that have distinct physical properties which may be advantageous for a broad range of beverages and other product applications. We are assessing a number of very interesting new sucrose enhancers that have significant enhancement activity along with desirable taste and initial safety profile. These activities could lead to a selection for development later this year.We are also having an ongoing effort to discover and develop new flavor ingredients that amplifies the sweet taste of fructose, a key component of high fructose corn syrup. We have identified enhancers that demonstrated activity in Senomyx's proprietary fructose screening assays. Optimization of these enhancers, further screening, and taste tests are ongoing. As we discussed previously, Senomyx's activities to discover and develop natural high-potency sweeteners are an important new focus for the Sweet Taste Program. We have expanded our natural products library and high-throughput screening of the library has begun. The screening is proceeding well and we have already identified several plant-derived samples from the library that have significant activity in the assay. Current activities include preparing these plant extract samples for in-house taste tests. I would also like to draw attention to impressive breakthroughs in our Cooling Flavors Program. The goal of this program is to identify novel cooling flavors that do not have the limitations of currently available agents. We have now identified new cooling flavors that mimics the time-intensity profile of agents that have rapid onset and short acting cooling effects, as well as agents with slow onset and longer acting cooling effects. Many of our lead Cooling Flavor candidates have demonstrated approximately tenfold greater potency than a commonly used agent in taste tests. These new cooling flavors are currently being evaluated in a variety of product prototypes by Senomyx and Firmenich, our partner for this program, which could lead to a decision to begin development activities. Read the rest of this transcript for free on seekingalpha.com