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Executives

Kent Snyder - Chief Executive Officer

John Poyhonen - President & Chief Operating Officer

Tony Rogers - Vice President & Chief Financial Officer

Don Karanewsky - Senior Vice President, Discovery

Sharon Wicker - Senior Vice President & Chief Commercial Development Officer.

Analysts

Andrew Vaino - Roth Capital Partners

Dalton Chandler - Needham & Company

Adam Fisher - BSI

Steve Brozak - WBB Securities

Senomyx Inc. (SNMX) Q3 2010 Earnings Call November 4, 2010 11:00 AM ET

Operator

Good morning. We will now begin the Senomyx third 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. At the request of the company, we will open the conference up for questions and answers after the presentation. (Operators Instructions).

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

Gwen Rosenberg

Good morning and welcome to the Senomyx’s third 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; Tony Rogers, Vice President and Chief Financial Officer; Don Karanewsky, Senior Vice President, Discovery 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 uncertainty.

The company’s actual results may differ materially from the projections described in the press release and on this conference call. Factors that might cause the 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 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 will provide you with a general business and financial update for the third quarter of 2010, including comments regarding Senomyx's business strategy and corporate collaborations. This will be followed by a question-and-answer session.

First, we are proud to announce today we received a GRAS or Generally Recognized as Safe regulatory determinations for two Senomyx's Bitter Blockers, S6821 and S7958. These are the first Senomyx's Bitter Blockers to go through the regulatory process and we have been granted GRAS status for all of the users and use levels requested.

Senomyx has now achieved GRAS designation for eight novel ingredients, which includes four savory flavor ingredients our S2383 sucralose enhancer and our S6973 sucrose enhancer. We believe the new approvals reflect the company’s growing, discovery, development and regulatory experience.

The GRAS regulatory status allows usage of the Bitter Blockers for a variety of product categories in the U.S. and numerous other countries. S6821 have demonstrated activity against bitter-tasting foods and beverages that include soy and whey protein, menthol, caffeine, cocoa and Rebaudioside A, a major component of the sweetener stevia. S7958, which is related to S6821 and has similar functionality, is distinguished by alternative desirable physical properties that may be useful in certain product applications.

We are very pleased to be able to provide current and potential new collaborators with two GRAS approved Bitter Blockers for evaluation in a broad range of product category. In conjunction with the GRAS designation, Senomyx will receive a $500,000 milestone payment from one of our collaborating partner. The partner, whom we cannot name at this time due to confidentiality consideration, has selected S6821 for potential development and has been engaged in internal evaluation. With this GRAS designation, our collaborator will have greater flexibility to conduct more extensive evaluations regarding possible uses of the Bitter Blockers with its products. However, it is too early to comment regarding timing for potential commercialization. We will provide additional information about the activities when possible.

As you may recall, Senomyx has been conducting development activity with another Bitter Blocker S0812. These activities include assessments of physical characteristics, solubility, stability and functionality under various conditions, safety and other attributes.

We have decided not to proceed with further development of S0812, because it has not met all of the company’s development and commercialization criteria. However, we have identified additional Bitter Blockers that are being evaluated for possible development based on their favorable properties and potential commercial applications.

Moving to our Sweet Taste Program, in late October we are very pleased to expand our collaboration with Firmenich for the S6973 sucrose enhancer. In addition to their previous rights related to commercial development of S6973 for virtually all food product categories and select powdered beverages, Firmenich has been granted an exclusive worldwide license to commercialize S6973 for use in instant and ready to drink milk, tea and coffee beverages and over-the-counter pharmaceutical products, some of which contain high sugar content.

We believe that Firmenich will be an excellent partner to commercialize S6973 for the new beverage applications in light of their experience preparing for commercialization of S6973 for food category. We are confident that extending our partnership to improve a new category will increase a long-term potential value of S6973.

Referring to our last earnings call, Senomyx entered into a major new collaboration with PepsiCo, the world’s second largest food and beverage company. PepsiCo is an innovative company, a company whose research and development approach and goals are synergistic with ours.

PepsiCo’s corporate commitment to reduce added sugar for serving by 25% in key local brands is a perfect complement to the goals of Senomyx Sweet Taste program, which is focused on identifying new flavor ingredients that will allow a significant reduction of sweeteners in food and beverage products while maintaining the desired sweet taste. Our collaboration includes the discovery and development of new artificial sweet enhancer, natural sweet enhancer and natural high-potency sweeteners for use in PepsiCo’s beverages.

Importantly, PepsiCo’s participation gives us additional resources to accelerate our natural products research program. The commitment of our collaborative activities have been very encouraging and we are looking forward to a productive and mutually beneficial partnership. John will discuss some of the financial aspects of this collaboration later during the call.

Our agreement with PepsiCo does not include the S6973 sucrose enhancer, which is best for use in food categories and select non-carbonated beverages. However, we are excited about a newly identified family of sucrose enhancers with distinct physical properties that may be advantageous for a broader range of beverages and other product applications.

Several of the new sucrose enhancers that enable us to 50% reduction of sugar in preliminary taste tests are being evaluated for their development. This evaluation includes assessing their physical properties and utility and product prototypes that would address the needs of our partners.

Senomyx has also identified flavor ingredients that demonstrate a statistically significant amplification of the sweet taste of fructose, a key component of high-fructose corn syrup. High-fructose corn syrup is the primary sweetener used in carbonated and certain other beverages, especially in North America. We are pursuing several strategies to evaluate a number of samples that showed activity in screening assays designed to identify fructose enhancers. The most promising samples are being optimized followed by evaluation and taste tests.

Turning to our other discovery and development programs, 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 salt taste desirable to consumers. We are exploring the role of a number of proteins that may be integral to the sensation of salty taste. This high priority, longer-term effort involves various chemistry and biology approaches including assessing components of Senomyx's proprietary database of proteins found in taste buds.

We believes that discovery of the protein or proteins that function as the salt taste receptor could lead to identifying a salt taste enhancer that provides a valuable benefit for consumers seeking to limit their sodium intake without sacrificing taste.

Our Cooling Flavor Program has been making considerable progress. The goal of this program is to identifying novel cooling flavors that do not have limitations of currently available agents. Senomyx has discovered new cooling flavors that demonstrate a taste proof-of-concept and display cooling properties that exceed those of commonly used agents.

In conjunction with our partner for this program Firmenich, we have prioritized sample classes that are focused on further optimization. Taste tests with promising new cooling flavors are being conducted by both Senomyx and Firmenich. In other activity, Senomyx is diligent in taking protection for our intellectual property.

As of September 30, 2010, the company is the owner or exclusive licensee of 216 issued patents and several 100 pending patent applications related to proprietary taste receptor technology in the U.S., Europe and elsewhere. Technologies covered in our 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 updated on our business and commercialization activities. John?

John Poyhonen

Thank you, Kent. I’ll begin my remarks with few comments of our new collaboration agreements and then I’ll discuss our partner’s commercialization efforts. Senomyx’s business development activities were a highlight of the past few months. We viewed the financial provisions of our expanded agreement with Firmenich as potentially very beneficial for Senomyx.

Under the amended agreement, we will see an additional license fee, incremental milestone payments and minimum annual royalties, as well as royalties on sales of S6973 for use in the additional product categories. We believe this broadening of the collaboration with Firmenich to include selective beverage applications will accelerate commercialization and maximize commercial revenue for this unique sucrose enhancer

Our third quarter partnership with PepsiCo is a highly valuable asset for Senomyx both in the near-term and for the future. We have already received a $30 million upfront payment and PepsiCo have committed $32 million in Research & Development funding over the full year research period.

In addition, they have agreed to reimburse for specified out of pocket expenses that Senomyx may incur during the course of the research program and we will be eligible for milestone payments based on achievements of predetermined goals.

As we’ve discussed on our conference call following initiation of the agreement, PepsiCo will have exclusive rights to use selective Senomyx enhancers and natural high-potency sweeteners developed under the collaboration for all non-alcoholic beverages other than powdered beverages. The exclusive categories include carbonated beverages, fruit drinks, cheese waters and sports drinks. It will share co-exclusive rights for powered beverages with Firmenich. Importantly, in addition to PepsiCo’s exclusive rights to our sweet flavor ingredients it will sub license their rights to selected sweetness enhancers to at least one-third party ingredient supplier for use in certain other beverage category.

This arrangement allows Senomyx to further take advantage of a $600 billion market a sub license the ingredient supplier would be able to sell a Senomyx sweetness enhancer alone or in combination with other flavors to any manufacturer for using functional beverages, coffee based drinks, milk and soy based beverages and sour milk beverages.

Senomyx will receive royalties based on the ingredient supplier’s sales of this product that incorporate the sweetness enhancer. Senomyx will also receive royalty payments based on the sales of PepsiCo products that contained a flavor ingredients developed under the collaboration. The ingredients include minimum annual royalties for flavor ingredients that PepsiCo elects for license in the beverage categories. Royalty payments will continue throughout the patent life for the given Senomyx flavor ingredient.

We believe that this collaboration with PepsiCo coupled with their desire to commercialize lower sugar products rapidly and broadly will allow Senomyx to drive substantial, additional value from our sweet taste program. Lastly, regarding our business development efforts, our flavor programs continue to draw answers from prospective partners.

In addition, we are proactively seeking new collaborations with retail and ingredient supply companies. We believe, our business model and proven discovery and development expertise are attractive to manufacturers and can provide Senomyx potential new revenue opportunities.

Regarding current commercialization activities as we’ve discussed previously and obviously the world’s largest food and beverage company has been conducting marketing activities with Senomyx’s Savory Flavored Ingredients. These ingredients are intended to reduce or replace added monosodium glutamate commonly known as MSG in foods and beverages. Nestlé’s commercialization efforts have been expanded to reformulated established product in markets that are large users of MSG.

In addition their ongoing activities includes launches of new product that incorporate Senomyx’s Savory Flavor Ingredients in the Pacific Rim, Latin America and Africa. As announced last quarter, the European Food Safety Authority or EFSA has provided a favorable opinion for Senomyx’s S336 and S807 savory flavor ingredient, which means that no further evaluation is required. Final regulatory approval and commercialization in the European union that’s contingent upon the ingredient being included in the EFSA Union List, which EFSA has targeted for publication by the end of 2010.

Approval to use these ingredients in Europe could create a new market opportunity for Nestlé. Ajinomoto, a leading global manufacturer of food and culinary products is also conducting commercialization activities with Senomyx ingredients. Ajinomoto has been introducing products that contain a Senomyx flavor ingredient in Asia and in another key region. Ajinomoto has increased the number of product launched during the year and we anticipate that their commercialization activity will expand to additional offerings in countries overtime.

As I mentioned, Firmenich have initiated pre-commercialization activities for our S6973 sucrose enhancer and food products. These activities include product development, manufacturing scale up and demonstrations with key clients. We are encouraged by the significant investment of time, energy and resources, that Firmenich is making to develop a commercial opportunity for S6973 and we believe they remain on track to record their first commercial sale of the product during 2011.

Firmenich also has an exclusive worldwide right to market S2383, an extremely effective enhancer of the high-intensity sweetener sucralose as either a stand-alone ingredient or as part of a flavor system in all food and beverage product categories.

Firmenich has begun commercializing flavor solutions that includes S2383 they are currently pursuing market opportunities to use the sucrose enhancer in beverages cereals dairy products baked goods and confectionary products. This completes my update. Tony Rogers, Senomyx’s CFO will now provide a financial overview of the company.

Tony Rogers

Thank you, John. Revenues were $5.8 million for the third quarter of 2010, compared to the $4.2 million for the third quarter of 2009, an increase of 40%. Revenues were $19.2 million for the nine months ended September 30, 2010, compared to $10.6 million for the same period of 2009, an increase of 80%.

The increase in the revenues for the third quarter and the year-to-date were primarily due to the recognition of license fee and R&D funding revenues related to the company’s August 2009 sweet program collaboration with Firmenich and the August 2010 collaboration with PepsiCo.

License fees and R&D funding related to these collaborations contributed $4.6 million and $10.8 million for the three and nine month periods ending September 30, 2010, respectively. Also contributing to the year-to-date increase was a total of $3.3 million in non-recurring milestone payment and cost reimbursements from collaborators.

Research and development expenses, including stock-based compensation expense, were $6.5 million for the third quarter of 2010, compared to $7 million for the third quarter of 2009, a decrease of 7%.

The decrease was primarily due to reduced personnel related expenses and reduced expenditures for compound acquisition and related high-throughput screening activities. This was partially offset by increased costs for contracted development activities related to regulatory submissions.

Research and development expenses including stock-based compensation expense were $20 million for the nine months ended September 30, 2010, compared to $22.4 million for the same period of 2009, a decrease of 11%. The decrease is primarily due to reduced personnel related expenses and reduced expenditures for compound acquisition and related high throughput screening activities.

General and administrative expenses including stock-based compensation expense was $3.1 million for the third quarter of 2010, compared to $3.5 million for the third quarter of 2009, a decrease of 13%.

General and administrative expenses including stock-based compensation expense were $9.5 million for the nine months ended September 30, 2010, compared to $10 million for the nine months ended September 30, 2009, a decrease of 5%. These decreases were primarily due to lower stock-based compensation expense.

The net loss for the third quarter 2010 improved to $0.10 per share, compared to a net loss of $0.20 per share for the third quarter of 2009. The net loss for the nine months ended September 30, 2010 improved to $0.27 per share, compared to $0.70 per share for the same period in 2009.

Turning to our balance sheet highlights. We ended the quarter with $75.5 million in cash and highly liquid U.S. Government-backed to short-term investments, as well as $42.1 million in deferred revenue.

Deferred revenue represents the payments received from collaborators prior to the end of the third quarter that are recognized as revenue in future periods. Our deferred revenue balance is primarily comprised the upfront payments received from PepsiCo and Firmenich, which we intent to recognize as revenue over the respective collaborative R&D funding periods.

We expect the deferred revenue balance of $42.1 million to be recognized as revenue as follows; $7.6 million in the fourth quarter of 2010, $14.5 million in 2011, and $20 million in 2012 through 2014. These estimates are subject to revision if the applicable collaborative R&D period is extended or otherwise modified.

In addition, we also expect to receive additional research and development funding milestones cost reimbursement and commercial revenue payments from collaborators that will contribute to our cash balance and revenue going forward.

On August 18, following the announcement of our new agreement with PepsiCo, we updated our guidance for 2010 fiscal year, which include in an increase to our revenue projection and a significantly improved outlook for our cash position. At this time, we are reiterating this guidance and we look forward to providing additional guidance during the first quarter of 2011.

For the full year 2010, Senomyx expects total revenues of $27 million to $29 million, total expenses of $42 million to $43 million, of which approximately $5 million is non-cash stock-based compensation expense.

Net loss of $14 million to $15 million, which results in a basic and diluted net loss of $0.37 to $0.40 per share. Net cash provided by operating activity to range between $16 million and $18 million and we expect to end the year with cash, cash equivalents and investments available for sales balance between $65 million and $67 million.

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

Operator

Thank you. (Operator Instructions) Mr. Snyder, our first question comes from Andrew Vaino of Roth Capital Partners. You may proceed.

Andrew Vaino - Roth Capital Partners

Hey just a quick question on the revenue. Is it possible to get a breakdown of the revenues, how much works for collaborative revenues and how much was from sales of both the sweetener and savory products?

Kent Snyder

I’m going to take that. I think, you started answering that.

Tony Rogers

We can’t break it down by program. But I can tell you for the nine months, the $19.2 million of revenue, $17.7 of that was development revenue and $1.5 million was commercial revenues, related to product sales.

Andrew Vaino - Roth Capital Partners

Okay. Thank you.

Operator

Your next question comes from the line of Dalton Chandler of Needham & Company. You may proceed.

Dalton Chandler - Needham & Company

Good morning and congratulations on your new GRAS approvals. And just, I guess related to that, you mentioned in the press release and then in your prepared remarks some of the specific flavors that, does compounds might apply to, but can you talk about what sort of foods we should expect [Inaudible].

Kent Snyder

John you want to address that?

John Poyhonen

Sure, I think if you look at it Dalton, there is a continuing interest in the marketplace, you add protein to food flavor. I think that whether its soy or whey protein could be in a wide variety of foods including beverages, snack bars, anything associated with nutritional benefits.

If you look at that caffeine, obviously a caffeine is a very large component of many hot drinks as well as carbonated beverages and energy type drinks. With respect to menthol, that would be something that primarily would have the function within confectionary type products, but also you might see it in all type healthcare, whether its toothpaste or mouthwash with respect to coco, I think that’s more of the chocolate flavored type products and then last is the Rebaudioside A, which you could look at anything that uses an added sweetener as a potential source of opportunity for that.

Dalton Chandler - Needham & Company

Okay, thanks that’s helpful. And, also the products that you mentioned Ajinomoto is launching. Are those new products, reformulated products or a mix of those?

Kent Snyder

Sharon, do you want to take that question please?

Sharon Wicker

Talking to-date with Ajinomoto, the majority of their work is really been focused on new products and then expanding from there.

Dalton Chandler - Needham & Company

Okay and then just last question. You reiterated, do you expect the European approval by the end of the year? We only have a few weeks left and they’ve slipped many times. Is there something that get their confidence, to finally going to meet their deadline? Or could we see them potentially slip again?

Kent Snyder

Dalton, I think that’s still to be determined. They probably said at the end of the year, but I think we need to wait and see whether they actually get that timeline or whether it goes beyond the end of the year.

Tony Rogers

They have certainly made good progress in reviewing, as you recall Dalton it’s not just our products, but it’s all of the flavor, ingredients, use in the EU, they’ve made great progress in reviewing those. But actually getting the publication out is the rate limiting factor right now.

Dalton Chandler - Needham & Company

Okay. Thanks. Congratulations again.

Kent Snyder

Thank you.

Operator

Your next question comes from the line of Adam Fisher of BSI, you may proceed.

Adam Fisher – BSI

Hi, how are you?

Kent Snyder

Good.

Adam Fisher– BSI

Kent, I have a couple questions. Can you maybe talk about, there is a lot of moving parts, maybe kind of what the annual minimum now we can expect for 2011? I think you talked about $14.5 million from deferred revenue, is that just Pepsi or is that Firmenich and Pepsi?

Kent Snyder

That would be a combination of both Firmenich and Pepsi. The upfront that we received in association with the collaborative agreement and recall that the way we recognized that is over the service period that we amortize that. With respect to the actual minimum royalty requirements, we haven’t provided any guidance for 2011 at this time, Adam and we would expect during the first quarter or actually at the year-end call in the first quarter of 2011 to provide guidance for 2011.

Adam Fisher– BSI

Can you talk at all what the minimum royalties were in this quarter?

Kent Snyder

No, we have not disclosed any of the minimum annuals based on the confidentiality provisions of our agreement.

Adam Fisher – BSI

So the way I should be thinking about kind of minimum for next year, as I should take deferred revenue, the $14.5 million and then whatever you guys may – whatever the royalty, the royalty minimums are but those are the two components of it.

Kent Snyder

Well, actually it’s more than that because we have R&D funding that’s coming in, in addition to the deferred revenue and we recognize that and at the time that’s received to cover the work that’s done in that quarter.

Adam Fisher– BSI

Okay. And then you haven’t disclosed what the breakdowns of that yet, correct?

Kent Snyder

No. I think you can see some additional information just based on looking through our SEC documents.

Adam Fisher– BSI

Sure, okay. And then just on the cash position, you guided $65 million down from $75 million this quarter, I’m having trouble reconciling that in my mind in that you guided to revenues center of $8 million in the quarter I think, I think you got a $0.5 million milestone payment in the fourth quarter, we should get a few million dollars additional from the most recent Firmenich agreement. Reconcile for me how we are going to – the $75 million that we have today versus your guidance given all the cash flow that’s going to be coming in.

Kent Snyder

Adam, I’ll take a shot at this. So one way to think about this is if you look at the cash-based expenses in our guidance that’s going to be at the high 30s and our expenses are pretty consistent quarter-to-quarter. So you think about the expenses they are going to happen quarter-to-quarter.

Whereas in the revenue side, the cash flow associated with revenues are inconsistent and varied by collaborations, so there may be some quarters where you burn more cash than other quarters and so intimated by our guidance, the fourth quarter this year would be one of those quarters, but each quarter is different.

Adam Fisher – BSI

Okay. So is there anything unusual about that we will be spending cash on this quarter or is it just kind of way that the flows work?

Kent Snyder

Well, I think it’s the way the flows work and I would say again it’s intimated by our guidance, nothing unusual in the fourth quarter.

Adam Fisher – BSI

Okay, that covers it for me. Thank you.

Operator

Your next question comes from the line of Steve Brozak of WBB Securities, you may proceed. Steve Brozak, your line is open. Please check the mute function on your phone.

Steve Brozak – WBB Securities

Thanks for reminding me about the mute function. We have got brand-new phones here. Hey, good morning gentlemen. I rather than go into the partners that you have in terms of, let’s say, the GRAS-approved Bitter Blockers.

Could you give some granularity on the types of products that you would be looking at and also, there is this – the GRAS system has obviously got a weird system in terms of, it allows for you to obviously go out there and provide products at a pace that is significant by comparison to Phase I, Phase II, Phase III. So can you talk about the pharmaceutical link up it might take place with the Bitter Blocker, something along those lines?

Kent Snyder

John touched on the product question a little bit earlier in the call, maybe you can go through that.

Steve Brozak – WBB Securities

Sure.

Kent Snyder

So Steve if you look at it, the different bitter patents we’ve shown very good results with our – the different types of added protein, whether they be soy or whey and I think you are really looking at the consumer industry that’s looking to add protein and improved nutrition of their products so that could be anything from a snack bar to beverages or any nutritional type drink.

If you take a look at the Menthol, that’s something that, it’s primarily focused at the confectionary products as well as oral healthcare including mouthwash and tooth paste, caffeine is something that is a function of many soft drinks as well as the carbonated beverages and energy drinks. Coco tends to be more anything that has been involvement with chocolate in it and then Rebaudioside A would just be a function of any products that are looking to add a sweetener could be potential opportunities including beverages were probably the key opportunity there.

Steve Brozak - WBB Securities

So the point I am trying to circum venture original answer with is, basically you’ve got a wide open covered in terms of who you could go after in terms of partnering with along with product lines, is that?

Kent Snyder

Yes, there is a lot of opened space. I am not sure you’re right Steve and like we do with all of our programs, we have a number of irons and the fire and we’re pursuing both retail companies as well as ingredient supply companies. So we are looking to create the greatest value for the company with this program.

Steve Brozak - WBB Securities

Got it, okay. So as far as that goes, that ends that question. Second question, going back on the, specifically on the pharmaceutical side, how does the -- how are the integration work there, can you give us just a general idea of integration on that side?

Kent Snyder

Steve, this is Kent. I mean obviously the bitter blockers are considered flavor ingredients and [Inaudible] to this, the GRAS process, are you referring more to the recent publications running better receptor in long [Inaudible] or in my…

Tony Rogers

The bitterness of pharmaceutical…

Steve Brozak - WBB Securities

Pharmaceutical products.

Kent Snyder

Okay, well there are…

Steve Brozak - WBB Securities

A lot of products that are out there in terms of let say for products that, specifically with pediatric indications, the way they go up there and the way they’re put together is they just, well, load them with sugar or some kind of sweetener to make them powdered because if of the bitter taste.

In this particular case you would now have a situation where you could actually go out there and mitigate that bitterness and make a product that might be more acceptable and the pharmaceutical industries we’d now be looking at an entirely different tranche of potential products. Can you give us any, any idea how that, something like that, my plan to your corporate business development picture?

Kent Snyder

You know we thought about that a lot in the past and certainly, represents an opportunity we are really not prepared to this point in time to talk about, what those opportunities might be and how those might need to be studied, but certainly the fact that two bitter blockers have now received GRAS determination makes that process in terms of further evaluation in potentially a pharmaceutical product at least we have a starting point now.

Kent Snyder

And you are right Steve, we’ve actually published some more of that even medicine is better hand we know the receptor that activated. So but just the one example of the types of things that you would find and over-the-counter products that could potentially be interesting for companies to block the bitterness.

Steve Brozak - WBB Securities

And to reiterate it would basically be under GRAS status that you would look to see about incorporating your product into that product.

Kent Snyder

Right, it would be done that way generally, that would have to be a very short and quote studies done just looking to make sure there is no interaction with the active ingredients of the products but that’s something pretty simple to do and the GRAS status would allow you to use it within those products.

Steve Brozak - WBB Securities

Great, thanks gentlemen.

Kent Snyder

Okay, thank you.

Operator

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

Kent Snyder

Well, thank you all for participating in the Senomyx call today. The recent accomplishments with the bitter blocker and sweet taste programs, the GRAS approvals to two bitter blocker’s expansion of our S6973 agreement with Firmenich and exceptional new collaboration with PepsiCo are certainly major milestones for Senomyx.

In the longer-term, we believe these events will open up new opportunities with these two commercialization of our flavor ingredients and just as importantly in the near-term we have strengthened our balance sheet to support our ongoing development effort. We appreciate your time and interest in the company. And if you have any additional questions, please feel free to contact directly or through our website. Thank you very much and we’ll talk to you next time.

Operator

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

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