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Senomyx Announces Fourth Quarter And Full Year 2012 Financial Results And Initiation Of New Direct Sales Strategy



  Senomyx Announces Fourth Quarter And Full Year 2012 Financial Results And
                   Initiation Of New Direct Sales Strategy

Recent Highlights Include:

- New Direct Sales Strategy intended to accelerate and expand
commercialization of Senomyx's flavor ingredients

- 2012 achievements include new regulatory approvals, significant progress in
R&D, and market launch of a product incorporating Senomyx's S6821 Bitter
Blocker

- Ended year with approximately $42 million in cash and investments

PR Newswire

SAN DIEGO, March 15, 2013

SAN DIEGO, March 15, 2013 /PRNewswire/ -- Senomyx, Inc. (NASDAQ: SNMX), 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 fourth quarter and
full year ended December 31, 2012. The Company ended 2012 with $41.8 million
in cash and highly liquid investments.  

The Company announced today that it is initiating a new direct sales strategy
intended to accelerate Senomyx's transformation into a profitable company by
expanding its focus from discovery and development to commercialization. 
Rather than relying solely on licensing collaborations for commercialization,
Senomyx will sell certain of its flavor ingredients directly to flavor
companies for re-sale to food and beverage companies, expanding the market and
creating new opportunities to increase total usage of Senomyx's products. 

"Senomyx intends to leverage our proprietary taste discovery technologies to
become a leading commercial provider of novel flavor ingredients to the flavor
industry," stated Kent Snyder, Chief Executive Officer of the Company.  "The
direct sales strategy complements our existing collaborations, which are based
on exclusive or co-exclusive commercialization licenses with our partners, who
pay royalties to Senomyx. 

"The new strategy is expected to allow Senomyx to have a greater role in the
commercialization process and realize more value from our discoveries.  Having
numerous flavor companies marketing our flavor ingredients is expected to
enable deeper and broader penetration of the food and beverage industry.
 Senomyx will focus on sales of our pure, also commonly referred to as 'neat',
ingredients to flavor companies, who can then add value to the offerings by
incorporating them into proprietary flavor systems for their customers,"
Snyder said. 

Senomyx has made progress towards implementing the direct sales strategy by
proactively reacquiring rights to certain flavor ingredients to build its
product portfolio.  The Company's first product will be its S9632 sucrose
modifier for use in non-alcoholic and powdered beverages.  In addition,
Senomyx may also decide to directly commercialize its S6821 bitter blocker and
several of its savory flavor ingredients to expand the product portfolio and
further support the direct sales strategy. 

"We are eager to move forward with our direct sales strategy," Snyder
commented.  "The timing is especially favorable for Senomyx's marketing of
S9632, a unique flavor ingredient that allows manufacturers to restore the
flavor profile in their reduced-sugar products.  The growing consumer focus on
health and wellness is continuing to increase the demand for foods and
beverages with reduced calories.  We believe S9632 will allow Senomyx to
capitalize on this demand by providing solutions for manufacturers seeking to
create new offerings that meet these needs while maintaining the taste
consumers enjoy.

"2013 promises to be an exciting year for Senomyx as we build on the advances
made during 2012 and initiate the new direct sales strategy announced today,"
Snyder said.

In management news, Catherine (Katia) Tachdjian, Ph.D., has been promoted from
Executive Director to Vice President, Chemistry.  Dr. Tachdjian received her
Ph.D in Chemistry in 1989 from the University of Paris Sud (France), followed
by a postdoctoral appointment at Texas A&M University.  Since 1993, Dr.
Tachdjian has worked as a medicinal/lead optimization chemist contributing to
the development of novel molecules and leading top-performing discovery teams
at several biotechnology and pharmaceutical companies.

Dr. Tachdjian joined Senomyx in October 2003 and has played an important role
in the success of the Savory, Bitter Blocker, and Sweet Taste programs.  Her
efforts at Senomyx have led to approximately 35 issued patents and scientific
publications.  "We appreciate the numerous significant contributions that
Katia has made to Senomyx and welcome her to the management team," Snyder
stated.

Commercialization Updates:

Sweet Taste Program:  Senomyx has three sweet flavor modifiers that have
received regulatory approvals and are available for commercialization.

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.  Firmenich 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 additional
launches of products that utilize S6973 are expected during the year. 

During the third quarter of 2012, S9632, a new sucrose modifier, was granted a
Generally Recognized As Safe (GRAS) regulatory designation, which allows
commercialization in the U.S. and other countries.  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.  Firmenich has exclusive rights to commercialize S9632 for food
applications and shares co-exclusive rights with Senomyx for powdered
beverages.  Firmenich has started demonstrating the capabilities of S9632 to
manufacturers for use within their licensed fields.  Senomyx intends to
implement the direct sales strategy to sell S9632 to flavor companies for
end-use in non-alcoholic beverages and 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. 
Firmenich 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 Senomyx 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, with
additional product launches expected during this year.  Four of the Savory
Flavors will be considered legal for use in European Union countries as of
end-April 2013.  Senomyx's partners for this program are exploring further
opportunities to expand their customer bases and increase the number of
product offerings.

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.  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.   

Discovery & Development Program Updates:

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.  Evaluations
of S617 in a variety of products of interest are underway.  Definitive safety
studies, as well as additional regulatory-focused activities, are ongoing.  In
addition, Senomyx is continuing to optimize multiple potential new sweet
flavor modifiers that have desirable properties for restoring the flavor
profile in reduced-sweetener products.

The goal of the Natural High Intensity Sweetener component of Senomyx's Sweet
Taste Program is to discover and develop novel no- or low-calorie natural high
intensity sweeteners.  The Company continues to make good progress with these
efforts. 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.  Senomyx has identified several sample classes of new cooling
agents that demonstrate a taste proof-of-concept and display preferred cooling
properties, and the Company is in the early stages of the development process
with a new cooling agent. Firmenich has exclusive commercialization rights for
new flavors developed under the Cooling Taste Program and is currently
evaluating additional cooling agents for potential future development.

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.
 Current activities include targeted analytical approaches to discover
specific proteins that could be viable candidates for the receptors or
co-factors responsible for salt taste.  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.  In addition, the Company is currently focusing a greater effort
on a smaller subset of proteins that includes potential lead receptor
candidates.

Intellectual Property:  Senomyx continues to be diligent in seeking protection
for its intellectual property.  As of December 31, 2012, the Company is the
owner or exclusive licensee of 354 issued patents and several hundred pending
patent applications in the U.S., Europe, and elsewhere related to proprietary
taste science technologies.  

Financial Review:

The Company has modified the presentation of its statements of operations.
 Historically, commercial revenues have been presented net of related direct
costs, which to date have been comprised of royalty payments related to
certain in-licensed technologies.  Effective with these 2012 financial results
and for previous periods to which these results are compared, the related
direct costs will be reported as a component of operating expenses defined as
cost of commercial revenues.  This modification does not have an impact on
cash flow or net results.  The financial results described below reflect this
modification.

Total revenues were $31.3 million for 2012 compared to $31.6 million for 2011.
 Total revenues were $8.2 million for the fourth quarter of 2012 compared to
$8.6 million for the fourth quarter of 2011.

Development revenues were $27.0 million in 2012 compared to $28.2 million in
2011.  Development revenues were $6.7 million in the fourth quarter of 2012
compared to $7.7 million in the fourth quarter of 2011.  The decrease in the
fourth quarter is primarily due to lower upfront license fee revenues
recognized in 2012 compared to 2011.  Specifically, the Company recognized
approximately $200,000 and $900,000 in the fourth quarter of 2012 and 2011,
respectively, related to the $20 million in license payments under the 2009
Sweet Program collaboration with Firmenich.  There was no impact to cash flow
as the license payments were received prior to 2011.

Commercial revenues were $4.3 million for 2012 compared to $3.4 million for
2011.  Commercial revenues were $1.5 million for the fourth quarter of 2012
compared to $940,000 for the fourth quarter of 2011. These increases resulted
from higher commercial revenues related to our Savory Taste and Sweet Taste
programs, as well as royalties from sales related to the market launch of a
product containing a flavor ingredient from our Bitter Blocker program.

Costs of commercial revenues were $303,000 for 2012 compared to $219,000 for
2011.  Costs of commercial revenues were $100,000 for the fourth quarter of
2012 compared to $66,000 for the fourth quarter of 2011.  These increases are
consistent with the corresponding increases in commercial revenues.  These
amounts are comprised entirely of royalty payments related to certain
in-licensed technologies.     

Research and development expenses, including stock-based compensation expense,
were relatively flat at $28.6 million for 2012 compared to $28.7 million for
2011.  Research and development expenses, including stock-based compensation
expense, were $7.2 million for the fourth quarter of 2012 compared to $7.1
million for the fourth quarter of 2011.

General and administrative expenses, including stock-based compensation
expense, were relatively flat at $11.6 million for 2012 compared to $11.5
million for 2011.  General and administrative expenses, including stock-based
compensation expense, were $3.1 million for the fourth quarter of 2012
compared to $3.2 million for the fourth quarter of 2011.

The net loss for 2012 was $0.23 per share, compared to $0.22 per share for
2011.  The net loss for the fourth quarter of 2012 was $0.06 per share
compared to a net loss of $0.04 per share for the fourth quarter of 2011.

Financial Outlook:

"Senomyx ended 2012 with a healthy balance sheet, including nearly $42 million
in cash and no debt.  For the full year 2012, the Company delivered results
in-line with financial guidance," stated Tony Rogers, Senior Vice President
and Chief Financial Officer.

For the full year 2013, Senomyx expects:

  o Total revenues of $31 million to $34 million
  o Total operating expenses of $41 million to $43 million, of which
    approximately $4 million is non-cash, stock-based compensation expense
  o Net loss of $8 million to $10 million
  o Basic and diluted net loss of $0.20 to $0.25 per share
  o Year-end cash, cash equivalents and investments available for sale balance
    greater than $30 million

Revenues:

"We expect development revenues in 2013 will be comprised of approximately $19
million in committed R&D funding and license fee revenues from existing
collaborations, and we anticipate $6 million to $9 million in additional
license fees, R&D funding, milestones and cost reimbursements," Rogers noted. 

"We forecast the vast majority of 2013 commercial revenues to be based on
existing collaboration agreements.  While it remains difficult to forecast
commercial revenues due to uncertainties around product launch timing, the
number of product lines that will include our flavor ingredients, and other
factors, we are currently estimating 2013 commercial revenues to be
approximately $6 million.

"2013 should prove to be a transitional year for Senomyx as we implement our
direct sales strategy," Rogers stated.  "While direct sales are not expected
to yield significant results in 2013, our goal is for direct sales to be a key
driver of meaningful commercial revenues in future years.

Expenditures:

"Looking at expenditures, as we consider our resource requirements over the
next several years for R&D, G&A and Commercial Operations, excluding the cost
of commercial revenues, we expect we will be able to manage our expenses to be
generally in-line with our 2013 expense guidance range, subject to quarterly
fluctuations and increases for inflation.   With respect to the expanded
commercial organization activities in support of our direct sales strategy,
many of the functions will be handled by existing Senomyx personnel.  In other
cases, such as supply chain and account management, we will add dedicated
resources to support these functions.  We expect that our costs of commercial
revenues will be comprised of royalty payments related to in-licensed
technologies and the cost of goods sold related to our direct sales strategy. 
As we increase commercial revenues, these expenses will increase accordingly,"
Rogers added.

Cash Balance:

"We continue to maintain a keen focus on our cash balance and cash
requirements.  Based on our strong balance sheet, which includes approximately
$42 million in cash and no debt, as well as approximately $15 million in
additional cash commitments from collaborators; and considering our long-range
financial expectations, we do not have plans to raise additional capital from
investors to fund existing operations," Rogers added.

In addition to its year-end cash balance, the Company has potential future
sources of cash including the following:

  o $15 million in commitments from current collaborators for research and
    development funding, license fees and milestones achieved
  o $24 million in potential milestone payments under current collaborations
  o $22 million related to extension options under current collaborations

Conference Call:

Senomyx will host a conference call at 11:00 a.m. Eastern Time (8:00 a.m.
Pacific Time) today to discuss these financial results and provide an update
on the Company.  To participate in the live conference call, U.S. residents
should dial (888) 680-0892, and international callers should dial (617)
213-4858, at least 10 minutes prior to the call start time.  The participant
passcode for this conference call is 74341080.

Participants may pre-register for the call at any time, including up to and
after the call start time, at
https://www.theconferencingservice.com/prereg/key.process?key=PLQBV9XBC. 
Pre-registrants will be issued a pin number to use when dialing into the live
call, which will provide quick access to the conference. 

To access the live Internet broadcast or a subsequent archived recording,
please log onto the Investor Relations section of Senomyx's website at
http://investor.senomyx.com. 

Presentation slides that will be referenced during the call are available in
PDF format at http://investor.senomyx.com.  The archived webcast and slides
will be available for 30 days following the earnings call.  Please connect to
Senomyx's website prior to the start of the webcast to ensure adequate time to
download any software that may be necessary.

Senomyx Glossary:

SWEET TASTE PROGRAM
                        Flavor ingredient with modifying properties that is
Sweet Flavor Modifiers  used to restore the desired taste profile of  products
S2383                   in which sucralose, a commonly used high-intensity
                        sweetener, has been reduced
                        Flavor ingredient with modifying properties that is
S6973                   used to restore the desired taste profile of products
                        in which sucrose (table sugar) has been reduced
                        Flavor ingredient with modifying properties that is
S9632                   used to restore the desired taste profile of products
                        in which sucrose (table sugar) has been reduced
S617                    Flavor ingredient with modifying properties that is
                        intended to restore the desired taste profile of
                        products in which both high fructose corn syrup (HFCS)
                        and sucrose have been reduced
SAVORY TASTE PROGRAM
Savory Flavors           

S336, S807, S263, S976, Flavor ingredients that are very versatile and can be
S9229, S5456            used to create new savory blends
BITTER BLOCKERS PROGRAM
                        Flavor ingredients with modifying properties that are
Bitter Blockers         used in foods and beverages to reduce the bitterness
                        of bitter tasting ingredients, e.g., soy & whey
S6821, S7958            proteins, menthol, caffeine, cocoa, Rebaudioside A
                        (stevia)
COOLING TASTE PROGRAM
Cooling                 Flavor ingredients intended to overcome the
                        limitations of currently available agents, e.g., by
 Agents                 having greater potency, longer cooling duration, or
                        lack of aroma

About Senomyx, Inc. (www.senomyx.com)

Senomyx is using proprietary taste science technologies to discover, develop,
and commercialize novel flavor ingredients.  These include modifiers of Sweet
and Salt flavors as well as Savory Flavors, Bitter Blockers, and Cooling
Agents.  The Company is also engaged in a new effort to discover and develop
natural high-potency sweeteners.  Senomyx sells its flavor ingredients
directly to flavor companies.  In addition, Senomyx has collaborative
agreements with global food, beverage, and ingredient supply companies, some
of which are currently marketing products that contain Senomyx's flavor
ingredients.  Its corporate socially responsible activities are described on
the Senomyx Cares blog at http://www.senomyx-csrblog.com/.  For more
information, please visit www.senomyx.com. 

Forward-Looking Statements

Statements contained in this press release regarding matters that are not
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Because such statements are
subject to risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements. Such statements
include, but are not limited to, statements regarding our projected financial
results and anticipated financial condition for 2013 and future periods; the
anticipated funding under existing collaboration agreements; the anticipated
benefits of Senomyx's direct sales strategy; the anticipated timing and scope
of commercial launch of products containing Senomyx's flavor ingredients,
including S6973, S2383, S9632, S6821 and our Savory Flavors; whether the
research under the Company's sweet taste research program, including ongoing
safety studies and other regulatory-focused activities for S617, will be
successful and lead to the commercialization of any new flavor ingredients or
natural sweeteners; the progress and capabilities of Senomyx's discovery and
development programs generally, including without limitation ongoing research
to evaluate and potentially develop new Bitter Blockers and Cooling Agents, as
well as our ability to identify proteins primarily involved in the perception
of salt taste in humans. Risks that contribute to the uncertain nature of the
forward-looking statements include: Senomyx has no experience in
manufacturing, marketing, or selling flavor ingredients on a commercial scale
and may not successfully implement its direct sales strategy; Senomyx is
dependent on its product discovery and development collaborators for all of
Senomyx's development revenues; Senomyx is currently dependent on its current
and any future product discovery and development collaborators to develop,
manufacture, and commercialize any flavor ingredients Senomyx may discover;
Senomyx may not be able to establish new collaborations or other business
arrangements and/or maintain existing collaborations on acceptable terms; 
large companies are typically conservative when implementing changes to their
branded products, and may not begin or expand their use of Senomyx flavor
ingredients when expected or at all; development activities for newer flavor
ingredients, including S617, may not demonstrate an acceptable safety profile
or meet other commercialization criteria; Senomyx or its collaborators may be
unable to obtain and maintain the regulatory approval required for flavor
ingredients to be incorporated into products that are sold; even if Senomyx or
its collaborators receive a regulatory approval and incorporate Senomyx flavor
ingredients into products, those products may never be commercially
successful; Senomyx flavor ingredients may not be useful or cost-effective for
formulation into products; Senomyx or its collaborators may be unable to
manufacture Senomyx flavor ingredients at commercial scale; Senomyx's ability
to compete in the flavor ingredients market may decline if Senomyx does not
adequately protect its proprietary technologies; and Senomyx's discovery and
development programs may not be successful or result in the discovery of new
flavor ingredients that are commercially viable. These and other risks and
uncertainties are described more fully in Senomyx's most recently filed SEC
documents, including its most recent Annual Report on Form 10-K under the
headings "Risks Related to Our Business" and "Risks Related to Our Industry."
All forward-looking statements contained in this press release speak only as
of the date on which they were made. Senomyx undertakes no obligation to
update such statements to reflect events that occur or circumstances that
exist after the date on which they were made.

(Financial Information to Follow)

 

Contacts:
Financial                  Investor Relations
Tony Rogers                Gwen Rosenberg

Senior Vice President and  Vice President, Investor Relations &

Chief Financial Officer    Corporate Communications
Senomyx, Inc.              Senomyx, Inc.
858-646-8304               858-646-8369
tony.rogers@senomyx.com    gwen.rosenberg@senomyx.com

 

 

Selected Financial Information

Condensed Statements of Operations

(in thousands, except for per share amounts)

 
                               Three Months              Year Ended
                               Ended December 31,
                                                         December 31,
                               2012         2011         2012       2011
                               (unaudited)  (unaudited)
Revenues:
Development revenues           $  6,734     $  7,669     $ 26,981   $ 28,182
Commercial revenues            1,450        940          4,332      3,372
Total revenues                 8,184        8,609        31,313     31,554
Operating expenses:
    Cost of commercial         100          66           303        219
revenues
Research and development
(including $514, $452, $1,876
and $2,129, respectively, of   7,186        7,058        28,644     28,687
non-cash stock-based
compensation)
General and administrative
(including $662, $682, $2,594
and  $2,678, respectively, of  3,121        3,171        11,619     11,500
non-cash stock-based
compensation)
Total operating expenses       10,407       10,295       40,566     40,406
Loss from operations           (2,223)      (1,686)      (9,253)    (8,852)
Other income                   10           29           67         128
Net loss                       $  (2,213)   $  (1,657)   $ (9,186)  $ (8,724)
Basic and diluted net loss     $  (0.06)    $  (0.04)    $ (0.23)   $ (0.22)
per share
Weighted average shares used
in computing basic and         40,100       39,752       39,956     39,571
diluted net loss per share

 

 

Condensed Balance Sheets

(in thousands)

 
                                                   December 31,  December 31,
                                                   2012          2011
                                                   (unaudited)
Cash, cash equivalents and investments             $   41,823    $   55,106
available-for-sale
Other current assets                               3,547         3,140
Property and equipment, net                        7,910         9,400
Total assets                                       $   53,280    $   67,646
Accounts payable, accrued expenses and other       $   6,538     $   6,117
current liabilities
Deferred revenues                                  15,580        25,282
Deferred rent                                      1,321         1,426
Leasehold incentive obligation                     4,113         5,100
Stockholders' equity                               25,728        29,721
Total liabilities and stockholders' equity         $   53,280    $   67,646

SOURCE Senomyx

Website: http://www.senomyx.com
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