Senomyx's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Senomyx, Inc. (SNMX)

Q2 2012 Earnings Call

August 7, 2012, 11:00 am ET

Executives

Gwen Rosenberg - VP, IR & Corporate Communications

Kent Snyder - Chairman & CEO

John Poyhonen - President & COO

Tony Rogers - SVP & CFO

Sharon Wicker - SVP & Chief Commercial Development Officer

Analysts

Mark Williams - Janney Capital Markets

Scott Henry - Roth Capital

Dalton Chandler - Needham & Company

Presentation

Operator

Good morning. We will now begin the Senomyx second quarter 2012 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 Gwen Rosenberg, Senomyx’s Vice President of Investor Relations and Corporate Communications. Please proceed.

Gwen Rosenberg

Good morning and welcome to the Senomyx second quarter 2012 earnings and corporate update conference call. Participating on this call from Senomyx will be Kent Snyder, Chief Executive Officer; John Poyhonen, President and Chief Operating Officer; Tony Rogers, Senior Vice President and Chief Financial 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 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 maybe accessed via our website, at www.senomyx.com.

I’ll now 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 the call, we will provide you with a financial update for the second quarter of this year and a general update on our business activities since our May conference call. This will be followed by a question-and-answer session.

I will start with our announcement today of a significant recent accomplishment for Senomyx, the discovery of S52617 which for reasons have complicity or referred to as S617 a new sweet taste modifier intended to be applicable for the reduction of both High Fructose Corn Syrup known as HFCS and sucrose in foods and beverages. Taste tests have demonstrated that S617 allows a very meaningful reduction of HFCS and sucrose and product prototypes while maintaining the desire if we taste.

This was achieved with very low concentration of the modifier which could provide important cost-in-use benefits to food and beverage companies that incorporate S617 in the products. In light of these valuable attributes have agreed to work with our partner PepsiCo to advance this new flavor ingredient into the preliminary development phase which include the initial safety studies and other activities necessary to support regulatory filings in the US and elsewhere. We will also continue to study other attributes to pass 617 as part of our ongoing evaluations of its commercial potential.

S617 is Senomyx’s first flavor ingredient which we have moved into the development that exhibits the ability to reduce the amount of HFCS a sweetener used primarily in beverages. We believe that S617 will be applicable for many product categories including the extremely important carbonated soft drink category. The utility of S617 with both HFCS and sucrose is significant since it could allow manufacturers that use these sweeteners to focus their internal efforts on a single sweet taste modifier thereby potentially increasing efficiency and cost effectiveness.

S617 is therefore a welcome addition to Senomyx’s family of sweet taste modifiers which includes four flavor ingredients’ at different stages of the development or the commercialization processes. We thought it would be useful to clarify for each of the sweet modifiers, a status, target product categories, incremental potential uses and why it is complementary to the other.

Starting with S2383, this remodifier is used to reduce the high intensity sweetness sucralose up to 75% in all food and beverage product categories. Commercialization of S2383 began in 2011 and is ongoing, with products that contain S2383 being marketed in North America and Latin America.

Next, S6973 our sweet modifier allowing up to a 50% reduction of sucrose, is for use in virtually all food product categories as well as certain beverages, such as ready-to-drink and powdered forms of tea’s coffee and milk products. The first commercial launch of products containing S6973 occurred in late 2011 and John will discuss current commercialization later in the call.

S9632 is our second sucrose modifier that provides for up to a 50% reduction of sugar. We expect it will be useful for essentially all products for which S6973 can be used plus the additional beverage product categories of powdered and concentrated form of food flavored beverages and of certain alcoholic beverages. We are moving towards the conclusion of development activities for S9632. During the second quarter, safety studies with S9632 were completed successfully and our goal is to receive Generally Recognized As Safe or GRAS regulatory approval in the US by the end of this year.

As we announced in our press release earlier today, Senomyx has reacquired from PepsiCo the rights for S9632 related to its use in non-alcoholic beverages. The reacquisition prides us with a new opportunity to maximize the commercial potential of S9632 which John will discuss in more detail later in the call. We appreciate that PepsiCo has consented to the amendment to our collaborative agreement. Other than provisions regarding S9632, no changes have been made to the agreement.

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