SAN DIEGO, Nov. 6, 2014 /PRNewswire/ -- Senomyx, Inc. (NASDAQ: SNMX), a leading company using proprietary taste technologies to discover, develop, and commercialize novel flavor ingredients for the food, beverage, and ingredient supply industries, today reported financial results for the third quarter 2014. The Company ended the third quarter with $31 million in cash and highly liquid investments.
“Senomyx has two partners preparing for the commercialization of Sweetmyx®S617. We had expected that one of our partners would be able to complete steps to commercialize SweetmyxS617 before the end of 2014,” said John Poyhonen, President and Chief Executive Officer of the Company. “Based on recent feedback from our partners we now expect the first commercial sale of a product containing Sweetmyx S617 will occur mid-year 2015, although the specific timing remains outside of our control.
“Our partners continue to make meaningful progress towards the commercialization of SweetmyxS617,” Poyhonen said. “One of our partners has taken critical steps to support its commercialization plans, including receipt of commercial-scale quantities of SweetmyxS617 and conducting consumer product testing.
“Preparing for commercialization is a dynamic process that involves many activities with variable timeframes, and some activities have taken longer than originally expected. We remain very excited about the prospects for SweetmyxS617 and believe that the additional time will ultimately lead to a more successful product launch and a broader use in the future,” Poyhonen noted.
“Senomyx’s direct sales program has been gaining traction with the flavor industry,” stated Sharon Wicker, Senior Vice President and Chief Commercial Development Officer. “During the third quarter, we achieved repeat sales by a key flavor company and other flavor companies placed initial orders. Flavor house evaluations and product development activities with Complimyx ingredients are ongoing in the U.S. and other geographies. In addition, flavor houses have been introducing flavor solutions that include Senomyx’s ingredients to their consumer product company clients. As a secondary focus, Senomyx’s sales team is also conducting demonstrations directly with consumer products companies to generate awareness of our flavor ingredients,” Wicker commented.
Financial Review:
At September 30, 2014, Senomyx held $31.0 million in cash, cash equivalents and investments available-for-sale.
Total revenues were $5.9 million for the third quarter ended September 30, 2014 and $6.7 million for the third quarter ended September 30, 2013. Total revenues for the nine months ended September 30, 2014 were $21.4 million compared to $21.9 million for the nine months ended September 30, 2013.
Development revenues were $4.5 million for the third quarter of 2014 and $5.9 million for the third quarter of 2013. Development revenues for the nine months ended September 30, 2014 were $17.2 million compared to $18.1 million for the nine months ended September 30, 2013. The decreases were primarily attributable to an extension of the service period over which the $30 million upfront license fee related to the PepsiCo Sweet Taste Program collaboration is being recognized in accordance with PepsiCo’s election in May 2014 to extend the service period of the collaboration an additional two years to August 2016. Specific to the PepsiCo upfront license fee, the company recognized $1.7 million less in the third quarter of 2014 compared to the same period in 2013 and $2.2 million less in the nine months ended September 30, 2014 compared to the same period in 2013. There was no impact on cash flow because the $30 million of upfront license payments were received in 2010. The decreases for the nine month period were partially offset by $1.8 million in development milestones earned in the first half of 2014.
Commercial revenues were $1.4 million for the third quarter of 2014 and $867,000 for the third quarter of 2013. Commercial revenues were $4.2 million for the nine months ended September 30, 2014 and $3.8 million for the nine months ended September 30, 2013. The increases were primarily due to direct sales revenues and increased royalty payments from a collaborator related to products from our Sweet Taste Program.
Research, development and patents expenses, including stock-based compensation expenses, decreased to $6.7 million for the third quarter of 2014 from $7.1 million in the third quarter of 2013. For the nine month periods ended September 30, research, development and patents expenses decreased to $20.3 million in 2014 from $21.4 million in 2013. The primary factor for the decreases from 2013 to 2014 was reduced outside services costs for safety studies to support product candidate regulatory filings.
Selling, general and administrative expenses, including stock-based compensation expenses, were $3.4 million for the third quarter of 2014 and $3.1 million for the third quarter of 2013. Selling, general and administrative expenses for the nine months ended September 30, 2014 were $9.7 million compared to $9.1 million for the nine months ended September 30, 2013. The increases from 2013 to 2014 were primarily due to increased non-cash, stock-based compensation expenses in 2014.
Total non-cash, stock-based compensation expenses increased to $1.7 million for the third quarter of 2014 from $1.0 million in the third quarter of 2013. For the nine-month periods ended September 30, such expenses increased to $4.6 million in 2014 from $2.9 million in 2013. The increases resulted from a higher fair value for stock options granted in 2014 based on the higher price of Senomyx’s common stock.
The net loss for the third quarter ended September 30, 2014 was $0.10 per share compared to $0.09 per share for the third quarter ended September 30, 2013. The net loss for the nine months ended September 30, 2014 was $0.21 per share compared to $0.22 per share for the nine months ended September 30, 2013.
Financial Outlook:
“Senomyx anticipated earning commercial revenues in 2014 related to the commercialization of Sweetmyx S617. Primarily due to the revision in the anticipated commercialization timing for Sweetmyx S617, we are revising our guidance for 2014. We now expect commercial revenues to be approximately $6 million in 2014 and accordingly, we are also revising our overall 2014 revenue guidance to be approximately $28 million. We are also favorably reducing our expense guidance. The net result of these changes is an increase to our net loss guidance for the year. We are not revising our cash guidance as we remain confident that we will end the year with more than $25 million in cash,” stated Tony Rogers, Senior Vice President and Chief Financial Officer.
For the full year 2014, Senomyx now expects:
- Total revenues of approximately $28 million, of which approximately $6 million are commercial revenues
- Total operating expenses of $41 million to $42 million, of which approximately $6 million are non-cash, stock-based compensation expenses
- Net loss of $13 million to $14 million
- Basic and diluted net loss of $0.31 to $0.33 per share
- Year-end cash, cash equivalents and investments available for sale balance greater than $25 million
“In addition, we are reevaluating our 2015 financial guidance based on the new information,” Rogers noted. “We currently believe it is unlikely that Senomyx will achieve the previously expected commercial revenue or full year profitability guidance provided for 2015. New guidance for 2015 will be provided during our fourth quarter earnings call based on feedback from our partners and the ramp-up of our direct sales.
“During the third quarter we continued to grow our direct sales business, including follow-up sales related to the meaningful sales order we described last quarter, as well as additional sales to other flavor companies. We remain optimistic about the ability to generate substantial commercial revenues going forward. Our optimism is based on feedback from our partners and from the customers we call on under our direct sales program. We continue to expect that growth in commercial revenues over the next several years will be primarily driven by direct sales and the Sweet Taste Program collaboration with PepsiCo. With $31 million in cash and no debt, as well as $24 million in committed development payments and $28 million in potential milestone payments under current collaborations, Senomyx remains well-positioned to achieve our goals and we do not have plans to raise money through the issuance of equity or debt to fund the current scope of our operations,” Rogers concluded.
Commercialization Updates:
Senomyx Direct Sales Program:
Senomyx intends to leverage its proprietary taste technologies to become a leading commercial provider of novel flavor ingredients to the flavor industry. The Company’s Complimyx® brand of flavor ingredients, which include Sweetmyx, Savorymyx®, and Bittermyx® offerings, are being marketed to flavor houses for incorporation into customized flavor solutions for food and beverage companies. The Complimyx flavor ingredients allow manufacturers to create great tasting products with reduced calories and other beneficial attributes.
Sweetmyx ingredients are used with other flavor ingredients to boost the sweetness of products in which sucrose (table sugar) or other sweeteners have been reduced. Having multiple Sweetmyx offerings allows the Company to address specific food or beverage product requirements and broadens the potential applications for Senomyx’s flavor ingredient portfolio. The primary drivers for interest in the Sweetmyx offerings are the need for lower calorie products that satisfy consumer tastes, pricing stability, and potential cost savings compared to sugar. Sweetmyx SR96 (S9632) is currently being considered for end-use in non-alcoholic beverages and Sweetmyx SR69 (S6973) evaluations are focused on usage for both food and select beverage product categories.
Savorymyx flavors provide distinct new savory (umami) taste sensations and can be combined with other ingredients to create unique new flavor blends. They are applicable for a variety of products including sauces, frozen foods, cooking aids, soups, and snack foods, and can be used to reduce or replace added monosodium glutamate (MSG). Interest in Savorymyx UM80 has exceeded expectations.
Bittermyx bitter blockers are used to reduce the bitterness of ingredients that impart a bitter taste or have a bitter lingering effect such as soy and whey proteins, menthol, caffeine, cocoa, and Rebaudioside A (stevia). Senomyx is conducting evaluations of Bittermyx BB68 (S6821) with flavor companies for multiple potential usages. During the third quarter we received commercial supply to support direct sales orders from flavor houses.
Royalty-Based Collaborations:
Senomyx has collaborative agreements and has received commercial revenues on sales of products incorporating its flavor ingredients from Firmenich SA, Nestlé SA, and Ajinomoto Co., Inc. S6973 is being used in a variety of product categories including ready-to-drink and powdered beverages, dairy products, and baked goods in the Americas, Southeast Asia, Africa, and Australia. S9632 is being evaluated for use in foods, alcoholic beverages, and powdered beverages. S2383 is being used primarily in sucralose-reduced beverage products marketed in North America, Latin America, Asia, and Europe.
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