Senomyx Reports 39% Increase in Revenues in Q4 2009
Revenues were $4.9 million for the fourth quarter of 2009, compared to $3.5 million for the fourth quarter of 2008. The increase was primarily due to the recognition of revenue related to the Company’s 2009 Sweet Enhancer collaboration with Firmenich.
5 Feb 2010 --- Senomyx, Inc., a company focused on using proprietary taste receptor-based technologies to discover novel flavor ingredients for the food, beverage, and ingredient supply industries, provided a corporate update and reported financial results for the fourth quarter and year ended December 31, 2009. Revenues were $4.9 million for the fourth quarter of 2009, compared to $3.5 million for the fourth quarter of 2008, an increase of 39%. As of December 31, 2009, the Company had cash, cash equivalents, and short term investments of more than $31 million. In the first quarter of 2010, Senomyx will receive an $8 million payment from Firmenich SA, the world's largest privately-owned fragrance and flavor company, in conjunction with Firmenich’s decision to commercialize Senomyx’s S6973 Sucrose Enhancer. Senomyx will also receive additional payments from Firmenich for the achievement of milestones, as well as specified expense reimbursements. S6973 has demonstrated the ability to reduce up to 50% of the sucrose (table sugar) in numerous products while maintaining the taste of natural sugar.
“Senomyx is beginning 2010 with important progress regarding commercialization of our flavor ingredients,” stated Kent Snyder, Chief Executive Officer of the Company. “We are excited that after a comprehensive evaluation, Firmenich has selected S6973 as the first Senomyx sucrose enhancer to be commercialized. We believe Firmenich’s strong full-service capabilities, expertise in providing sweet flavor solutions, and roster of major clients makes them the ideal partner to maximize the revenue potential of this unique flavor ingredient.
“We are also pleased to start the year with three of our partners, Nestlé, Ajinomoto, and Firmenich, moving forward with new market introductions of products that contain Senomyx flavor ingredients,” Snyder noted. Nestlé SA, the world’s largest food and beverage company, has recently introduced products that contain Senomyx savory flavor ingredients in Africa, as well as countries in the Pacific Rim and Latin America. Ajinomoto Co., Inc., a leading global manufacturer of food and culinary products, has initiated commercialization of products that contain a Senomyx flavor ingredient in Asia and an additional key region. Firmenich is preparing for initial market introduction of S2383, a highly effective enhancer of the high-intensity sweetener sucralose.
“In addition to our collaborators’ commercialization efforts, Senomyx is looking forward to continued progress with our Discovery & Development programs,” Snyder stated. “S6821, a promising bitter blocker, has met our requirements for advancement into the development phase, which includes final safety studies in preparation for regulatory filings. We believe our development activities with S6821 will conclude by year-end, at which time we would be in position to pursue regulatory filings.” Senomyx has also identified S0812, which interacts with other bitter receptors and has been assessed in successful initial safety studies. Taste tests have demonstrated that S6821 and S0812, alone or in combination, can provide statistically significant reductions in the bitterness of a variety of product prototypes and food ingredients including tea, cocoa, menthol, Rebaudioside-A (a derivative of the stevia plant), and the widely used sweeteners Acesulfame potassium (Ace-K) and saccharine.
Senomyx is diligent in its efforts to obtain patent coverage for its discoveries and inventions, including taste receptor sequences and functions, screening assays, new flavor ingredients, and product applications. As of December 31, 2009, Senomyx is the owner or exclusive licensee of 178 issued patents and 322 pending patent applications related to proprietary taste receptor technologies in the U.S., Europe, and elsewhere.
Discovery & Development Program Updates:
Sweet Enhancer Program: The primary goal for this program is to identify flavor ingredients that allow a significant reduction of sweeteners in food and beverage products while maintaining the desired sweet taste. Senomyx received a GRAS (Generally Recognized As Safe) regulatory designation for the Company’s S6973 sucrose enhancer in the fourth quarter of 2009. The GRAS designation allows S6973, which enables up to 50% reduction of sugar in certain foods and beverages, to be incorporated into specified products in the U.S. and in numerous other countries. S6973 may now be used in baked goods, cereals, gum, condiments and relishes, confectioneries and frostings, frozen dairy offerings, fruit ices, gelatins and puddings, hard and soft candy, jams and jellies, milk products, and sauces. The Company is also assessing several promising new sucrose enhancers with desirable physical properties that may be advantageous for an even wider variety of applications, including a range of beverages.
Senomyx is achieving very encouraging results from its efforts to discover enhancers of fructose, a key component of high fructose corn syrup, a widely used sweetener. High fructose corn syrup is the primary sweetener used in carbonated and certain other beverages, especially in North America. Taste tests are continuing with potential fructose enhancers in order to identify lead candidates for optimization. The Company is also working to discover enhancers of Rebaudioside-A (also known as Reb-A or rebiana), a sweetener often associated with off-tastes and a lingering aftertaste. A Reb-A enhancer could allow the usage of lower quantities of Reb-A, maintaining the desired sweetness while reducing unwanted tastes. Potential enhancers of Reb-A that are active in Senomyx’s screening assays are undergoing further evaluation.
Bitter Blocker Program: The primary goals of this program are to reduce or block bitter taste and to improve the overall taste characteristics of foods, beverages, and ingredients. S6821 has been advanced into final development activities intended to support regulatory filings. Another promising bitter blocker, S0812, has demonstrated the ability to block the bitterness of a variety of products and has completed successful initial safety studies. Senomyx is continuing to evaluate S0812 and other bitter blockers for further development.
In addition, Senomyx is collaborating with Solae on the discovery and development of bitter blockers that modulate and control bitterness in certain soy-based products. Senomyx bitter blockers have demonstrated a taste proof-of-concept with several representative soy samples from Solae, as well as soy-based product prototypes.
In a new development, Senomyx recently demonstrated that its bitter blockers can provide a statistically significant reduction in the bitterness of certain forms of hydrolyzed whey protein that are used in a variety of nutritional, sports, and diet foods and beverages.
Salt Enhancer Program: The goal of the Salt Enhancer 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. Senomyx is conducting taste tests with enhancers of both sodium chloride (table salt) and potassium chloride that are active in the Company’s proprietary assays based on SNMX-29, a protein Senomyx believes is involved with human salt taste perception. In addition to these activities, Senomyx is using various chemistry and biology approaches to explore the role of SNMX-29 and other proteins that may contribute to the perception of salt taste, with the objective of demonstrating a taste proof-of-concept.
Cooling Flavor Program: The goal of the Cooling Flavor Program is to identify novel cooling flavors that do not have the limitations of currently available agents. In 2009, Senomyx identified cooling flavors from six different sample classes that demonstrated a taste proof-of-concept. The Company is currently conducting preliminary taste tests on a subset of these ingredients in order to identify lead candidates for further optimization.
Financial Review:
Revenues were $4.9 million for the fourth quarter of 2009, compared to $3.5 million for the fourth quarter of 2008. The increase was primarily due to the recognition of revenue related to the Company’s 2009 Sweet Enhancer collaboration with Firmenich. In 2009, the Company received $12 million in license fee payments related to this collaboration, of which $1.4 million was recognized as revenue in the fourth quarter of 2009. Revenues were $15.5 million for the year ended December 31, 2009, compared to $17.2 million for the year ended December 31, 2008. Annual revenue in 2008 included $3.6 million of revenue related to an $8.0 million upfront payment associated with the expansion of the Company’s collaboration with Ajinomoto in August 2007. The upfront payment was recognized as revenue ratably over the nine month period from August 2007 through April 2008. This was partially offset by the recognition of revenue in 2009 related to the Company’s 2009 collaboration with Firmenich. As noted above, in 2009, the Company received $12 million in license fee payments related to this collaboration, of which $2.3 million was recognized as revenue in 2009.
Research and development expenses, including non-cash stock-based compensation expense, were $5.8 million for the fourth quarter of 2009, compared to $7.9 million for the fourth quarter of 2008, a decrease of 26%. This decrease was primarily due to lower personnel expenses and lower expenditures for research supplies and outside services. Research and development expenses, including non-cash stock-based compensation expense, were $28.2 million for the year ended December 31, 2009, compared to $31.8 million for the year ended December 31, 2008, a decrease of 11%. This decrease was primarily due to lower patent expenses associated with the timing of prosecution of the Company’s intellectual property portfolio and lower expenditures for research supplies. Also contributing to this decrease were lower personnel expenses.
General and administrative expenses, including non-cash stock-based compensation expense, were $3.7 million for the fourth quarters of 2009 and 2008, a decrease of 1%. General and administrative expenses, including non-cash stock-based compensation expense, were $13.7 million for the year ended December 31, 2009, compared to $13.6 million for the year ended December 31, 2008, an increase of 1%.
The net loss for the fourth quarter of 2009 was $0.15 per share, compared to a net loss of $0.26 per share for the fourth quarter of 2008. The net loss for the year ended December 31, 2009 was $0.85 per share, compared to $0.88 per share for the year ended December 31, 2008.
“Looking back at our 2009 financial results, most importantly, we achieved notable progress in our programs while using significantly less cash than anticipated at the beginning of the year,” said Tony Rogers, Vice President and Chief Financial Officer. “With respect to revenue, new collaboration revenue was led by our 2009 Sweet Enhancer collaboration with Firmenich. Under this collaboration, in addition to R&D funding we received $12 million in license payments during the year, of which $2.3 million was recognized as revenue in 2009. The remaining $9.7 million is included in deferred revenue on the year-end balance sheet and will be recognized as revenue in 2010 and 2011. Our net loss was in-line with our expectations and within our guidance range, primarily due to our continued focus on expense management.”
