Senomyx, Inc. Q1 2010 Earnings Call Transcript

| About: Senomyx, Inc. (SNMX)

Senomyx, Inc. (NASDAQ:SNMX)

Q1 2010 Earnings Call

April 29, 2010 11:00 am ET


Gwen Rosenberg - VP, IR and Corporate Communications

Kent Snyder - CEO and Chairman

John Poyhonen - President and COO

Tony Rogers - VP and CFO


Andrew Vaino - Roth Capital

Pamela Bassett - Cantor Fitzgerald

Doug Thomas - JET Investment Research


Good morning, we will now begin the Senomyx first quarter 2010 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. (Operator Instructions)

I would now like to turn the call over to Ms. Gwen Rosenberg, Senomyx's Vice President of Investor Relations and Corporate Communications.

Gwen Rosenberg

Good morning and welcome to the Senomyx first quarter 2010 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; and Tony Rogers, Vice President and Chief Financial 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 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 may be accessed via our website at

I'd now like to turn the discussion over to Kent Snyder, CEO of Senomyx.

Kent Snyder

Thank you, Gwen. Good afternoon 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 2010, including comments regarding Senomyx business strategy and corporate collaborations. This will be followed by a question-and-answer session.

I'll start by discussing the recent progress with our sweet enhancer program and its relevance through our announcement on Monday about the term sheet Senomyx signed with Coca-Cola regarding the financial continuation and expansion of our collaborative research program related to our sweet taste technology.

We continue to be especially excited about Senomyx's success in developing sweet enhancers and the potential long-term value of these ingredients as a reminder our S2383 Super Less enhancer which enables us to a 75% reduction of the high-intensity sweetener sucralose in many products received GRAS or Generally Recognized As Safe regulatory status in the fourth quarter of 2008.

Our completions with S2383 were followed by Senomyx's discovery and development of novel sucralose enhancers. Our S6973 sucralose enhancer allows the sugar content of certain products to be reduced by up to 50% without altering the desired sweet taste.

During the fourth quarter of 2009, Senomyx received GRAS determination for the use of S6973 in a large number of food products. In the first quarter of this year the GRAS designation for S6973 was extended to instant coffee and tea as well as imitation dairy products such as non-dairy creamers and whiteners.

In addition to S6973, Senomyx has identified a very promising family of alternative sucrose enhancers that enables up to a 40% reduction of sugar in preliminary taste test. These new sucrose enhancers have distinct physical properties that maybe advantageous for a broader range of beverages and other product applications that has specific requirements due to special packaging and storage conditions.

We were also pleased to announce last month that Senomyx has identified the first favor ingredient that demonstrates statistically significant enhancement of the sweet taste of fructose, this taste proof-of-concept is a noteworthy achievement for the company because fructose is a key component of high fructose corn syrup, a sweetener used lightly in beverages and other large product category.

The new fructose enhancers will be optimized to increase their potency and evaluated further in taste tests. These innovations are very important for Senomyx, limiting the consumption of carbohydrate sweeteners as a priority for many consumers and our enhancers could get through beverage manufacturers in novel means to create appealing products with lower calories. Our three enhancers therefore provide the company with a substantial, commercial opportunity.

(Inaudible) profitability will depend upon the commercialization of our novel ingredients, we believe that our sweet enhancer program is the most valuable of all of our programs and that the beverage category is the most valuable product category that could benefit with Senomyx sweet enhancers.

With this in mind we continually evaluate all alternatives to maximize the royalty potential of the sweet enhancer program. A key goal for all Senomyx program is to enter into collaborations that will result in the greatest possible use of our flavor ingredients in food and beverage products.

Our primary consideration to achieve this goal include accelerating the speed to market, maximizing the penetration rate of our flavors in a large number of product categories and accessing the marketplace as broadly as possible across many geographies, these considerations are of high importance to Senomyx when evaluating collaborative agreements.

The market for sweet enhancers is especially for non-alcoholic ready-to-drink beverages which is a $600 billion industry that is growing faster than all other consumer packaged goods. This industry is projected by industry's analysts to exceed $1 trillion by the year 2020. In addition to being a significant financial opportunity for our sweet enhancers, the global beverage market has a number of distinctive and important characteristics.

In particular, the market is quite fragmented with even market leaders only reaching a portion of the global markets. In addition, the types of beverages that use sweeteners are wide range including carbonated beverages, juice, drinks, flavored water, sports drinks, energy drinks and flavored milk drinks. Based on this diversity, our analysis shows that certain companies that are strong in some segments such as carbonated beverages maybe limited in other segments, an example, being flavored milk.

Finally this sizeable market is comprised of numerous manufacturers both branded and private label which often have different geographic signs. This leads me to Senomyx's recent announcement concerning our collaboration with Coca-Cola, a longstanding and value partner for eight years. The original agreement provided Coca-Cola with an exclusive right to our sweet enhancers including all of our sucralose and fructose enhancers, in virtually all non-alcoholic beverage categories.

As we announced earlier this week, a research period of our collaboration expired on April 22nd and as a result, the agreement terminated on that date. On April 23rd, we signed a term sheet with Coca-Cola that includes key commercial and financial term for the potential continuation and expansion of our collaboration, importantly the term sheet contemplates that at the end of the new proposed agreement Coca-Cola's rights for the use of Senomyx flavor ingredients will be exclusive in certain non-alcoholic beverage categories and co-exclusive or non-exclusive in other categories.

Limiting the exclusivity gives Senomyx the freedom to pursue a range of additional potential opportunities in this extensive beverage category. Taking into consideration the speed to markets and maximizing the use our sweet enhancers in many beverage products.

The term sheet also contemplates that Senomyx S6973 sucrose enhancer will not be part of any collaboration agreement between Senomyx and Coca-Cola. And that Senomyx will have the right to commercialize this novel flavor ingredient for use of non-alcoholic beverage categories through other channels. This has been efficient for Senomyx because S6973 has GRAS status or certain beverages.

These include the dairy beverage as such as chocolate flavored milk along with instant coffee and tea. Senomyx is now pleased to enter into one or more collaborative agreements regarding commercialization of S6973 for use in the GRAS approved categories.

Lastly regarding the term sheet with Coca-Cola, both companies have agreed to use commercially reasonable efforts to negotiate the definitive terms of a new collaborative agreement during the 60 day period after the signing of the term sheet. During this period Senomyx will continue to receive funding from Coca-Cola, at the same rate that was provided under our 2002 collaboration agreement. I'd like to note that we appreciate the commitment that Coca-Cola has shown to our collaboration during the past eight years and we welcome their continuing interest in our sweet taste technology.

Moving on, the beginning of 2010 has also been very eventful for Senomyx in other aspects. For the first time in the history of the company three of our collaborator, Nestle, Ajinomoto and Firmenich, are conducting new market introduction of product that contain Senomyx flavor ingredients. We also strengthened our balance sheet in the first quarter through our financing in February and received nearly $10 million in milestone and license fee payments from collaborators. We ended the first quarter with approximately $54 million in cash.

I'll now review the recent advances in our other Discovery & Development programs, after which John and Anthony will provide business and financial updates. We are pleased at the anticipated timing to regulatory files has been accelerated in our Bitter Blocker program since our last earnings call. The primary goals to this program are to reduce or block bitter taste and to improve the overall taste characteristic at foods, beverages and ingredients.

On our last earnings call we stated that we expected to conclude development activities with our S6821 Bitter Blocker by year end in preparations pursue regulatory filings in the US and elsewhere during 2011. These are the considerable progress made since the beginning of the year, we now project that Senomyx will be in a position to submit regulatory applications for S6821 during the fourth quarter of 2010.

In addition, S0812 another promising Bitter Blockers has met the company's requirement for advancements into the development side. We believe, the development activities with S0812 will conclude by year end and regulatory filings will be made in early 2011. 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, various proteins, and the sweeteners Rebaudioside-A, which is a derivative of the stevia plant, Acesulfame potassium known as Ace-K, and saccharine.

As you know, our Salt Enhancer Program continues to be an important focus for Senomyx. The goal of this 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. We have identified enhancers of the sodium chloride that are active in the Senomyx's proprietary screening assays that are based on SNMX-29.

In addition, to conducting taste tests, our scientists are using a number of 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.

A Cooling Flavor Program continues to make significant movements forward. The goal of this is to identify novel cooling flavors that do not have the limitations of currently available agents. We reported previously that Senomyx had identified cooling flavors from six different sample classes that demonstrated a taste proof-of-concept. In cooperation with our partner for this program Firmenich we now have prioritized three sample classes that we'll be just focus of further optimization. We are encouraged at some of these new cooling flavors have displayed cooling properties that exceed those of commonly used agents.

Lastly, regarding our Discovery & Development activities, Senomyx has increased our intellectual property portfolio during this past quarter. As of March 31, 2010, Senomyx is the owner or exclusive licensee of 189 issued patents and 383 pending patent applications related to proprietary taste receptor technologies in the US, Europe, and elsewhere. Technologies covered in the patents include taste receptor sequences and functions, screening assays, new flavor ingredients, and product applications.

I'll now turn the discussion over to John Poyhonen, who will provide an update on commercialization and business activities. John.

John Poyhonen

Thank you, Kent. I'll begin my remarks with a review of our partner's commercialization activities and then I'll provide updates regarding our collaborations in our business development efforts. We are very pleased to announce that Firmenich's has initiated commercial activities for our sucralose enhancer S2383. Firmenich's trained their sales forced and manufactured commercial launch quantities of the products.

As you may, recall Firmenich's exclusive worldwide rights to commercialize sucralose enhancer and virtually all product categories. They will pay Senomyx's royalties on all sales of this enhancer whether it's sold on a standalone basis, (Inaudible) labor systems we expect to begin receiving royalty revenues in the second half of this year. In addition to our agreement regarding the sucralose enhancer, last summer Senomyx entered into a new collaboration, under which Firmenich has exclusive rights for worldwide commercialization of selected Senomyx's sweet enhancers including S6973 of sucralose enhancer and virtually all food product categories.

Firmenich's has initiated pre-commercialization activities with S6973 that includes product application work, manufacturing scale up scallop and demonstrations for the customers. These preparations are in fact anticipated product launches during 2011. Regarding other commercialization activities, significantly the world's largest food and beverage company continues to market products containing Senomyx's savory flavor ingredients.

The primary applications of the company's every flavor ingredients are to reduce or replace added monosodium glutamate also known as MSG and to enhance the savory taste of foods are combined in Senomyx's savory flavors with other ingredients creates the new flavor.

Nestle's marketing activities are currently focused on new products that contains Senomyx's business savory flavor ingredients including bouillon and culinary aid food products. These products are being sold in the Pacific Rim, Latin America and Africa. Nestle has informed us that they're also working on incorporating our savory flavor ingredients into additional new products as well as established products that are already in market. Senomyx anticipates that Nestle will continue to initiate commercial launches of products continuing our savory flavor ingredients in the current and new geographic areas on an ongoing basis.

As we've discussed previously, Nestle also has rights to market our savory flavor ingredients in Europe. Senomyx is in the queue with many other companies that are seeking reviews of their flavor ingredients are the European Food Safety Authority also known as EFSA. Based on data from the EFSA website, we anticipate the publications of the positive list including our savory flavor ingredients before the end of 2010.

In addition to the commercialization efforts underway by Firmenich, Nestle, Ajinomoto is continuing initial commercial introduction of products that contain a Senomyx's flavor ingredients. Ajinomoto is a Japan-based leading manufacturer of food and culinary with a global reach. The first product marketed under our collaboration is an ingredient mix being introduced in China. This was followed by the commercial launch of products that contained in Senomyx's flavor ingredients in another key region.

Senomyx anticipates that Ajinomoto's commercial activities will expand to additional product offerings in countries overtime. Firmenich collaborations in March, our collaboration with the Campbell Soup Company was extended for an additional year through March 2011. During the extension period, we will continue to work with Campbell's on the discovery of Salt Enhancer for use in wet soups and savory beverages and Campbell's will continue to provide research funding.

Campbell's now retains two one-year options that could further extend the collaborative period for up to two additional years. We are pushed of our long relationship of Campbell's and look forward through ongoing work with them.

We've also had recent developments regarding our partnership with Solae in a Bitter Blocker Program. As you may recall, in April 2007, Senomyx entered into a collaboration agreements with Solae, the leading supplier of soy protein for food-based products, for the discovery in exclusive worldwide commercialization of novel flavor ingredients for soy proteins.

The research phase of the collaboration has been concluded and Solae now has the opportunity to select specified Bitter Blockers develop under the agreement for future developments. Senomyx remains eligible for milestone payments upon the achievements of predefined goals and in the event of commercialization we're entitled to receive loyalty payments based on sales of Solae products to continue Bitter Blocker developed under the agreements.

We believe that the completion of the research phase of the collaboration and the potential selection of Bitter Blockers for future developments is a successful outcome for the project thus far. This leads me to our business development activities. As Kent explained earlier on the call, based on our term sheet of Coca-Cola, we have the freedom to pursue other opportunities for S6973 and certain beverage category such as dairy beverages and flavored beverages, as well as instant coffee and tea. We will pursue this opportunities with the focus on accelerating the future market and maximizing the use of S6973 in beverage products.

We've been carefully analyzing various options to capitalize on this important opportunity with S6973 and we've already initiated business development discussions. The principal alternatives include entering into ingredients supply collaboration were by one or more progress could excess the market very broadly, a great invites to selected beverages companies that progress secular strength in certain geographic areas for product segments. We also have other creative idea that we will continue to evaluate that on a number of critical factors, including the long term value of the opportunities.

Finally, we're continuing to actively seek new collaborations with targeted retail in ingredient supply partners for several Senomyx Discovery & Development programs. As mentioned during our last earnings call, we're discussing a potential new opportunity with Cadbury. In addition to a number of open product categories that could benefit from our existing bitter blockers and our goal remains to add partners for this program. In summary, we believe our Flavor programs offered valuable opportunities for perspective partners and we are encouraged by the interest in our technologies.

This completes my updates and I'll now ask Tony Rogers, Senomyx's CFO, to provide an update of the financial overview of the company.

Tony Rogers

Thank you, John. Revenues were $7.7 million for the first quarter of 2010, compared to $3.5 million for the first quarter of 2009, an increase of 120%. The increase was primarily due to the recognition of $4.7 million in license fee, milestone, cost reimbursement and R&D funding revenue related to the company's August 2009 Sweet Enhancer collaboration with Firmenich. First quarter 2010 revenues also include a total of $2.4 million in non-recurring milestone payments and cost reimbursements from collaborators.

Research and development expenses, including non-cash stock-based compensation expense, were $6.4 million for the first quarter of 2010, compared to $7.6 million for the first quarter of 2009, a decrease of 16%. This decrease was primarily due to lower personnel expenses and lower expenditures for outside services and research supplies.

General and administrative expenses, including non-cash stock-based compensation expense, were $3.1 million for the first quarter of 2010, compared to $3.3 million for the first quarter of 2009, a decrease of 5%. The net loss for the first quarter of 2010 was $0.05 per share, compared to a net loss of $0.24 per share for the first quarter of 2009.

This first quarter operating results were inline with the company's expectations. We significantly improved our balance sheet through our financing in February and through payments from our collaborators. During the first three months of the year, we increased our cash position by about $23 million to end the first quarter with approximately $54 million in cash, cash equivalents and investments. With our strong balance sheet, we are well positioned to continue our discovery and development activities and to advance additional flavor ingredients toward commercialization.

Looking forward, we are reiterating our guidance for 2010 revenues, expenses, net loss and cash utilization, Based on the issuance of common stock in February associated with our financing transaction, we are accordingly revising our net loss per share guidance. For the full year 2010, Senomyx now expects total revenues of $20 million to $24 million. Total expenses of $42 million to $44 million, of which $5 million to $6 million is non-cash, stock-based compensation expense, net loss of $18 million to $21 million. Basic and diluted net loss of $0.48 to $0.56 per share and net cash used in operating activities between $14 million and $16 million

Finally, I'd like to point out that under GAAP, the proceeds from our financing transaction are not included in cash used in operating activities and therefore, our financing transaction does not necessitate a change to our cash utilization guidance.

I will now turn the call back over to the operator to open it up for questions.

Question-and-Answer Session


Thank you (Operator Instructions) Your first question comes from the line of Andrew

Vaino, representing Roth Capital; please proceed

Andrew Vaino - Roth Capital

(Inaudible) memory and if you guys do actually submit the GRAS application for S6821 by the end of the year, can you just remind me how long that takes to be adjudicate?

Kent Snyder

Andrew, this is Kent, we haven't given any guidance in terms of when that approval might occur. It comes down to timing of when the Expert Panel FEMA actually meet, so the only thing that we stated up to this point as we expected some of the application by end of the year. We haven't provided any guidance here in the terms of when expected the problem might occur.

Andrew Vaino - Roth Capital

On the permanent commercialization of sucralose, is that being carried out only in Europe or what geographic regions?

John Poyhonen

Yes, this is John. So with respect to the commercialization activity of sucralose enhancers S2383; the primary opportunity based on sales of that sweetener within the United States, that represents about two-thirds of the overall market opportunity and because we do have seeing the GRAS determination for that sweet enhancers within the United States, that would be their initial focus.


Your next question comes from the line of Pamela Bassett, representing Cantor Fitzgerald; please proceed.

Pamela Bassett - Cantor Fitzgerald

What prompted the change, the renegotiation with Coke and I apologize if you address this earlier in the call, I missed out.

Kent Snyder

Pamela, as we mentioned, the natural conclusion of the existing arrangement of Coke occurred at late April and so the agreement actually expired at that point in time. It's very complex agreement and two companies were compensating an extension and also an expansion of the collaboration and so we saw some result that important to give ourselves enough time to sort out a number of the important components. I should add that term sheet that includes a number of key commercial and financial parameter. So we feel that a lot of the ground that we would need to cover has already been covered, but need to say, we've got on an additional 60 day period, and it was appropriate.

Pamela Bassett - Cantor Fitzgerald

So if I understand correctly the last agreement did have commercial terms in it?

Kent Snyder

That is correct.

Pamela Bassett - Cantor Fitzgerald

So, why not simple extend the existing terms, and then build on a new expansion piece.

Kent Snyder

(Inaudible) saying to him because it's changes in terms of categories that were exclusive to curve or contemplated to be exclusive to curve and other that of curve exclusive or non-exclusive, but certainly had an impact on the financial terms going forward and so some of those components certainly are expected to change.

Tony Rogers

I think it's a little different or additional perspective on that as well. As Kent mentioned during his comments, the overall size of the ready to drift market is about a $600 billion market, since the fastest growing of the package, food and beverage markets right now with industry analyst projecting, it could grow up to $1 trillion by 2020.

I think what we wanted to do is to make sure we were in a position to really maximize the penetration as many product category as possible on a broad geographic basis and also due to as quickly as possible protecting activities to accelerate of the speed to market and we think that was one of the key reason that some of the components of the existing agreement with Coca Cola will be different, than the original.

Pamela Bassett - Cantor Fitzgerald

So, Senomyx went to Coke, with a desire for change in the agreement, do I understand correctly?

Kent Snyder

I think it's fair to say that both companies view their potential continuation and again expansion as being a little bit different than the existing agreement. So I think the components that we've discussed are contained in the term sheet really an agreement based upon both the companies needs in requirements.

Pamela Bassett - Cantor Fitzgerald

So, will they be using S6973 at all, or they're not going to use it?

Kent Snyder

What we agreed to is that S6973 is not expected to be part of any potential new agreements.

Anthony Rogers

So, that being said, as we mentioned during the call there are number of different alternatives that we may use to commercialize this, one is an ingredient supply type arrangement the others are looking at licensing it to our individual beverage companies in specified product categories. This was actually an ingredient supply arrangement then we would anticipate that Coca-Cola would have the opportunity to use of 6973 as part of that arrangement.

Pamela Bassett - Cantor Fitzgerald

So, they can still access this if they want to, but otherwise a return in right life, like it's already approved, they just have a head start on putting new products in the market with us, why would they return it?

Anthony Rogers

Pam, I think it's important to keep in mind that S6973 has GRAS status for certain in beverage categories, which includes chocolate flavored milk and coffee and tea as well as imitation dairy products. However, it doesn't have GRAS tactics for carbonated beverages, and if you look at Coke's portfolio there, it's concentrated primarily in carbonated beverages.

Pamela Bassett - Cantor Fitzgerald

So, this agreement doesn't spill over into some of the other groups like the Minute-Made Group or?

Anthony Rogers

As I mentioned the GRAS status for S6973 is only in those categories, which I mentioned that. Fully that our follow on Sucralose Enhancer will better address that because of unique storage to requirements of beverages so, we think those new Sucralose Enhancers that are being developed with more et cetera in a carbonated beverage, fruit juices, energy drinks whatever the case maybe.

Pamela Bassett - Cantor Fitzgerald

So both non-carbonated and carbonated, would end of with new enhancers and 6973 is going to be more focused on dairy based?

Anthony Rogers

Dairy based as well as coffee and tea based ready to drink products.


You have a follow-up question from the line of Andrew Vaino representing Roth Capital; please proceed.

Andrew Vaino - Roth Capital

I think just a quick follow-up, how many with the size of sales force for municipal use for Sucralose product?

Anthony Rogers

We certainly have good visibility into that answer for them unfortunately based competitive issues that would confidential information that we're not able to talk about at this time.


Your next question comes from the line of Doug Thomas representing JET Investment Research; please proceed.

Doug Thomas - JET Investment Research

I was just wondering I know, a lot of people are always focused on this quarter, or next quarter I guess where I'm coming from is -- since I guess I was lost visit you, but certainly even in the last six or so months, I mean the level of conversation in news flow, the discussion of all these health and wellness issues combined with, I mean I saw four articles and news programs over the week end devoted to salt reduction.

Combined with all of the commercial issues surrounding everything from soy to what coke has made changes in their own portfolios to address some of their taste issues. What are you guys seeing in terms of level of conversations out there on the part of perspective foot and beverage companies, are you seeing heightened level of discussion? I mean, I cover a lot of food companies and I am here, that's a lot what they're talking about right now.

I'm just curious from your perspective, has your time really come in the sense that some of these issues are really at the forefront of what a lot of commercial product development guys are focused on?

Anthony Rogers

Doug, I think we've obviously observed the heightened level of discussion communication of what you see in the press, and what governments may or may not do with -- regarding the health environment relative to various products and I think it's safe to say that we've seen the same types of issues come up with or the discussions come up with our partners and perspective partners.

So we continue to believe that we have that if you can increase or improve the nutritional profiles of products by reducing for example, carbohydrates sweeteners, it's certainly benefits two companies and gives consumers additional opportunities in the market place, so we continue to believe that what we are doing is important and will continue to be important with what food and beverage companies will offer to consumers?

John Poyhonen

This is John, Dark, my group really does a lot of the work with collaborations and taking to different potential partners and I think we are absolutely in the right place at the right time with all the changes and continuing focus if you look at all the major food companies, all of them have some sort of health initiative looking for foods that are better for you and creating choice of our consumers. So we feel like we are in a very good position, in fact certain companies that [may not have] been as open to royalties in the past, maybe five years ago now have changed their position, so we like the position we are in right now.

Doug Thomas - JET Investment Research

You mentioned, that the expectation is that the list of European approvals would come, or in Europe would come by the end of the calendar year and clearly I mean you guys have faced the issues with delays before is there something with regard to your particular outlook that gives you more confidence than you've had in the past, this is a good date?

Kent Snyder

Well, that's a fair question, the dates that we provided in the past are from the same organization. So we certainly do it cautiously, but a couple of years back actually split the committee into two different groups that allowed them to accelerate the review of flavor ingredients. So we feel like they've make significant progress (inaudible), we are just providing guidance on that based on the EFSA website and I guess we only did is that the data that has been shared with us, but in talking to other companies in that flavor industry as well, I think all of us are hopeful that will occur by that time and that clearly opens the door for commercialization within EU.

Doug Thomas - JET Investment Research

Okay and then my final question is, I think you on the last call talked a little bit about or I think it was in a presentation. I heard you talk about the efforts underway to develop natural types of products within the portfolio and intellectual properties and so forth. Can you discuss when you are talking to potential customers, what is the give and take with respect to synthetic versus natural, and in light of some other discussion, for example, that have surrounded DHA and ARA and so forth, products that actually go into natural and organic finished products, but are themselves sort of synthetically derived. I'm just curious what's going on out there with respect to that, that particular category?

Kent Snyder

Yes, it's a really good question on something that we frequently discuss with [current] and potential partners. I think consumers are increasingly looking for natural solutions. That being said, like everything in life there is a trade off and really what we are finding is we believe there will be a space in the market for both. If you look at the economic climate, the cost of goods and food and beverage products will always be critical to buying decisions and based on all the experience and we've certainly believe that synthetic solutions would be more cost effective and more readily available where as natural certainly can contain a peace of the market to probably more on a niche type market opportunity and certainly may have to be higher price depending on the yields of the enhancer that we discovered. So in all the discussions that we've had with companies there is really a desire to have both with the focus more on the short-term solution being the synthetic ingredients that we're discovering in a longer term solution with naturals.


At this time, there are no further questions. So I'll turn the call back over to Mr. Snyder to conclude.

Kent Snyder

First off, I'd like to thank all of you for participating in Senomyx call today. I'd also like to acknowledge the long-term shareholders who participated in our recent financing and to welcome our new investors. We appreciate your support at the company. We are pleased with the ongoing product launches by our partners and we're excited that our success on the R&D front is providing us with new opportunities for commercialization and coloration.

In addition to the potential continuation and expansion of our collaborative research program with Coca-Cola and new collaborative agreements with other companies, value drivers that may occur within the coming months include filing for GRAS status for our S6821 Bitter Blocker, completing key development activities for the S0812 Bitter Blocker initiating development face activities within the sucralose enhancer, continued progress with our fructose enhancers advances and our Salt Enhancer Program and achievement on our Cooling Flavor Program as well.

We're looking forward to updating you further at the end of the next quarter. And if you have any additional questions, please feel free to contact us directly or through our website. Again, thank you very much.


Ladies and gentlemen, this concludes our conference call for today. All parties may now disconnect. Have a great day.

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