Senomyx Advancing on Implementing New Direct Sales Strategy

02 Aug 2013 --- Senomyx, Inc., a company using proprietary taste science technologies to discover, develop, and commercialize novel flavor ingredients for the food, beverage, and ingredient supply industries, today reported financial results for the second quarter 2013. The Company ended the second quarter with $37.5 million in cash and highly liquid investments.

“Senomyx is continuing to advance the implementation of our new direct sales strategy,” stated Kent Snyder, Chief Executive Officer of the Company. “Our primary goal for the second quarter – to complete the hiring of key personnel for the initial commercial organization – has been achieved. We are very pleased to have new regional sales account managers who have strong track records in the flavor ingredients and packaged foods industries. In addition, Ken Simone, who has nearly 30 years of global supply chain, manufacturing, quality and product application experience, has joined Senomyx in the newly created position of Vice President, Supply Chain.”

Kenneth Simone has held leadership positions at global food industry companies, including eight years at Firmenich in both their U.S. and Swiss headquarters, where he served as Vice President, Supply Chain Integration. He received a Bachelor of Engineering from Stevens Institute of Technology and a Master of Business Administration from Fairleigh Dickinson University.

“Ken has expertise in all aspects of supply chain management for food, beverage, and ingredient supply businesses,” noted John Poyhonen, Senomyx’s President and Chief Operating Officer. “Importantly, he spent the past 12 years focused on categories that are integral to Senomyx’s direct sales: flavors, high potency sweeteners, and food ingredients. Ken has an impressive breadth of knowledge regarding flavors and food ingredients that will be a significant benefit to Senomyx beyond his role in establishing our supply chain capabilities.

“Concurrent with staffing our commercial organization, Senomyx has been successful in expanding the number of flavor companies that are evaluating our direct sales offerings,” Poyhonen added. “Initial evaluations of our S9632 sucrose modifier, as well as selected flavor ingredients from our Savory Taste and Bitter Blockers Programs, are now underway. The interest shown by the flavor companies during this early phase of our direct sales initiative is very encouraging. In addition, we remain on track to receive initial commercial quantities of S9632 from our contract manufacturer in the fourth quarter of 2013.”

“Senomyx is also continuing to make significant progress with our R&D activities,” Snyder said. “We now have two flavor ingredients in the development phase, which involves safety studies and other preparations for anticipated regulatory filings. During the past quarter S2227, a new cooling agent, was advanced into definitive safety studies. Importantly, development activities are ongoing with S617, a modifier of both sucrose and high fructose corn syrup (HFCS). Beyond S617, we are continuing to identify and optimize new discoveries from the Sweet Taste Program that we believe will be useful to expand our market opportunities.

“A notable recent achievement was the discovery of a natural sucrose modifier, which is the first taste modifier proof-of-concept for our natural products initiative. Related plant-derived samples from our expanded natural products library are currently being assessed via Senomyx’s proprietary high-throughput screening systems and taste tests,” Snyder stated.

Senomyx Direct Sales Initiative: Under the Company’s new direct sales strategy, rather than relying solely on licensing collaborations for commercialization, Senomyx will also sell certain of its pure, also commonly referred to as ‘neat’, ingredients to flavor companies that can incorporate them into proprietary flavor systems for their customers. Senomyx’s internal commercial organization will handle sales and marketing, as well as supply chain management of third party manufacturers. The direct sales strategy complements Senomyx’s existing collaborations, which are based on exclusive or co-exclusive commercialization licenses with partners that pay royalties to the Company.

Senomyx’s first product will be its S9632 sucrose modifier, which is expected to achieve its first commercial sale in late-2013 or early-2014. S9632 is being demonstrated to flavor companies for end-use in non-alcoholic beverages and powdered beverages. In addition, under the terms of the new Firmenich Amendment, after a period of exclusivity for Firmenich, Senomyx can begin selling other ingredients with sweet flavor modifying properties for use in food and selected beverage product categories. The Company also expects to expand its direct sales product portfolio with ingredients from its other taste programs. Flavor company evaluations of Senomyx’s S6821 bitter blocker and certain of its savory flavor ingredients are ongoing.

Sweet Taste Program: Senomyx has three ingredients with sweet flavor modifying properties that have received regulatory approvals and are available for commercialization under license agreements with Firmenich.

S6973 can be used to restore the desired taste profile of foods and selected beverages in which sucrose has been reduced. Products applicable for S6973 usage include virtually all food categories and selected beverages such as dairy beverages and ready-to-drink coffee and tea. Senomyx’s partner is conducting commercialization activities with S6973 in the Americas, Southeast Asia, Africa, and Australia. Market launches of retail products that incorporate S6973 have occurred in the U.S., Latin America, Asia, and South Africa. These products span a variety of categories including ready-to-drink and powdered beverages, dairy products, and baked goods. Products launched with S6973 are showing promising performance based on re-order patterns, and Senomyx earned a milestone related to commercial sales during the second quarter of 2013. Additional launches of products that utilize S6973 are expected during the year.

Senomyx’s S9632 sucrose modifier was granted a Generally Recognized As Safe (GRAS) regulatory designation during the third quarter of 2012. Like the S6973 sucrose modifier, S9632 can be used to restore the desired taste profile of products in which sucrose has been reduced; however, S9632 is applicable for a broader range of non-alcoholic beverages that includes powdered and concentrated beverages, along with ready-to-drink and powdered forms of dairy, coffee and tea products. The Company’s partner has exclusive rights during their “period of exclusivity” to commercialize S9632 for food applications and shares co-exclusive rights with Senomyx for powdered beverages.

 S2383 can be used to restore the desired taste profile of products in which sucralose, a commonly used high-intensity sweetener, has been reduced. Senomyx’s partner is currently commercializing S2383 for use in all food and beverage product categories. Products that contain S2383 are being marketed in North America and Latin America. Follow-on launches are being planned by manufacturers that currently use S2383 in their products, and additional product development work for potential usage of S2383 in a variety of products is underway.

Savory Taste Program: Senomyx’s Savory Flavors are intended to reduce or replace added monosodium glutamate (MSG) in foods. Each of the Savory Flavors provides a distinct new savory taste sensation. The Savory Flavors are very versatile and can be combined with other ingredients to create unique new flavor blends. They can be used in a variety of food products including sauces, frozen foods, cooking aids, soups, and snack foods.

Sales and product launches of new and reformulated established products that contain a Senomyx Savory Flavor are being conducted by two of the Company’s partners, both of which are global food companies. The marketed products have been launched into the retail, industrial, and food service channels in selected countries within Africa, Asia, Latin America, and the Middle East. Four of the Savory Flavors were approved for use in European Union countries as of April 2013.

Bitter Blockers Program:Senomyx’s Bitter Blockers are intended to reduce or block bitter taste and to improve the overall taste characteristics of foods, beverages, and ingredients. During the fourth quarter of 2012, Senomyx announced that a Company partner had initiated its first market launch of a retail product incorporating S6821 in a country in Southeast Asia. S6821 is currently being used in several products in this country. Marketing is continuing and the partner is currently evaluating the use of S6821 in additional products and geographies. S6821 has demonstrated activity against bitter-tasting ingredients such as soy and whey proteins, menthol, caffeine, cocoa, and Rebaudioside A (stevia), which are used in foods and beverages.

Sweet Taste Program: Senomyx is conducting development activities in support of regulatory filings for S617, a unique new flavor modifier intended to be used to restore the desired taste profile of products in which either high fructose corn syrup (HFCS) or sucrose has been reduced. Taste tests have demonstrated that S617 allows a very meaningful reduction of HFCS and sucrose in product prototypes while maintaining the desired sweet taste. Definitive safety studies, as well as additional regulatory-focused activities, are ongoing. Senomyx has also identified new promising HFCS modifiers that have distinct properties for restoring the flavor profile in reduced-sweetener products. Optimization and evaluations of multiple potential new sweet flavor modifiers are underway.

The goal of the Natural Products component of Senomyx’s Sweet Taste Program is to discover and develop novel no- or low-calorie natural high intensity sweeteners and natural sweet taste modifiers. The Company has achieved a taste proof-of-concept with the identification of its first natural sucrose modifier. Ongoing activities include further expansion of Senomyx’s natural products library, high-throughput screening of these plant-derived samples, and taste tests of samples of interest.

Cooling Taste Program: The goal of the Cooling Taste Program is to identify novel cooling agents that have advantages over currently available agents such as menthol. S2227, a new cooling agent, has been advanced into definitive safety studies in preparation for future regulatory filings. Firmenich has exclusive commercialization rights for certain selected new flavors developed under the Cooling Taste Program and is currently evaluating these cooling agents for potential future commercialization.

Salt Taste Program: The goal of Senomyx’s Salt Taste Program is to identify flavor ingredients that allow a significant reduction of sodium in foods and beverages yet maintain the salty taste desirable to consumers. This program is an important research focus for the Company’s longer-term pipeline. Senomyx has assembled a proprietary database of proteins found in taste buds and progress is being made exploring the role of a number of these proteins that may be involved in salt taste perception. Activities include targeted analytical approaches to discover specific proteins that could be viable candidates for the receptors or co-factors responsible for salt taste. The Company is currently focusing a greater effort on a smaller subset of taste bud proteins that includes potential lead candidates for the salt receptor, as well as candidates involved in signaling the sensory perception of saltiness.

Intellectual Property: Senomyx continues to be diligent in seeking protection for its intellectual property. As of June 30, 2013, the Company is the owner or exclusive licensee of 394 issued patents and several hundred pending patent applications in the U.S., Europe, and elsewhere related to proprietary taste science technologies.