Senomyx, Inc ( SNMX)

Q3 2011 Earnings Call

October 27, 2011 11:00 am ET

Executives

Gwen Rosenberg - VP, IR and Corporate Communications

Kent Snyder - CEO & Chairman

John Poyhonen - President & COO

Tony Rogers - VP & CFO

Analysts

Scott Henry - Roth Capital

Jonathan Feeney - Janney Capital Markets

Presentation

Operator

Good morning. We will now begin the Senomyx Third Quarter 2011 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 up the conference for questions-and-answers after the presentation.

(Operator Instructions) I would now like to turn the call over to Gwen Rosenberg, Senomyx’s Vice President of Investor Relations and Corporate Communications.

Gwen Rosenberg

Good morning, and welcome to the Senomyx third quarter 2011 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 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 in this conference call.

Factors that might cause such a difference include, but that 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’ll provide you with a general business and financial update for the third quarter of 2011, and this will be followed by a question-and-answer session.

During the past quarter, Senomyx has continued to make important strides both on the commercial and discovery and development fronts. As John will discuss in more detail later in the call, we are very encouraged by Firmenich’s progress and their commitment regarding their commercialization activities for our S6973 sucrose enhancer. S6973 is a unique ingredient that allows sucrose to be reduced in numerous products by up to 50% while maintaining the desired taste of natural sugar.

We are excited that major food and beverage companies have achieved positive consumer acceptance of testing results with products that contain S6973. Firmenich has been notified of client’s plans to launch reformulated established brands that incorporate S6973 in North and South America starting in the first quarter of 2012, and we expect continued launches throughout the year.

We’re also pleased with Firmenich’s marketing activities with Senomyx’s S2383 Sucrose Enhancer. S2383 can be used to enable up to a 75% reduction in the concentration of the artificial sweetener Sucralose in foods and beverages with improved taste characteristics and some applications. Client feedback from top chef companies regarding S2383 continues to be positive and Firmenich has expanded the geographic scope of their commercialization effort from North America into Latin America.

Following John’s remarks, Tony will provide a financial update. I would like to note that consistent with their first and second quarters of the year, during the third quarter, Senomyx’s realized improved financial results from operations compared to 2010.

Very importantly for Senomyx’s as our partners are increasing their commercialization activities for our current flavor ingredients, we are continuing to be build a deep, longer-term pipeline of new ingredients with unique advantages. We are very focused on being a leader in the discovery and development of new flavor ingredients that address the challenges facing the food and beverage industry, such as improving the nutritional profile to their products, applying innovation that will lead to competitive advantages in the marketplace and keeping costs under control in an environment where commodity prices are increasing.

I am going to spend some time now describing a few of our recent discovery and development accomplishments starting with notable achievements in our Sweet Taste Program. The primary goal for this program is to add to the company’s portfolio of new flavor ingredients that will allow a significant reduction of sweeteners in food and beverage products while maintaining the desired sweet taste.

We have realized a new and very important advancement toward [physical] with discovery of enhancers of high fructose corn syrup which is also known HFCF. Tasters have demonstrated our new enhancers could enable up to a 33% reduction of HFCF in certain product applications. High fructose corn syrup has the same number of calories as sugar and a 33% reduction is a very meaningful effect.

HFCF is a widely used sweetener with a worldwide market of approximately $6.3 billion. According to the USDA high fructose corn syrup accounts for approximately 37% of all caloric sweeteners consumed in the US. It is used in products such as baked goods, yogurts, sauces and condiments, beverages and concentrates, granola and energy bars and canned and frozen fruits.

Reducing HFCF in products without altering taste would be very beneficial for consumers and manufacturers. The new discovery of new HFCF enhancers further strengthens our Sweet Taste Program product portfolio. We look forward to keeping informed of our progress as we continue our discovery and development efforts that conduct a taste test and additional valuation.

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