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Senomyx sees Q2 slump, enters new royalties deal

By Caroline Scott-Thomas , 06-Aug-2009

Senomyx revenues fell by 17 percent in the second quarter of 2009 compared to the same period last year, primarily due to a 2007 payment from Ajinomoto that bolstered previous revenue, the company said.

Now the company is optimistic that a similar deal with Firmenich, signed earlier this week, will bring a similar financial boost, as it saw revenues fall by 33 percent for the six months ended June 30 compared to last year, from $9.6m to $6.5m.

In a conference call with analysts, chief financial officer John Poyhonen said: “The higher quarterly and six month revenue in 2008 were primarily due to an upfront payment of eight million dollars associated with the expansion of Senomyx’s collaboration with Ajinomoto in August 2007. The upfront payment was seen as revenue…to August 2008.”

Senomyx and Ajinomoto’s research, development, commercialization and license agreement was designed to bring novel flavor ingredients to a number of food product categories in North America, including soup and bouillon, sauce and culinary aids, noodles, snack food, and frozen foods.

Ajinomoto agreed to pay Senomyx an initial license fee to access the North American rights.

In addition, upon commercialization, Senomyx was entitled to a milestone payment from Ajinomoto as well as ongoing royalty payments based on sales of Ajinomoto products containing Senomyx flavor ingredients.

Decreased R&D spending

Senomyx also reported a five percent decrease in R&D expenditure for the six months ending June 30, compared to that six-month period in 2008. This was partly due to staffing cuts, it said.

The company has 391 pending patent applications worldwide but Poyhonen said: “Also contributing to these decreases were lower patent and trademark expenses, primarily attributable to decreased patent legal expenses associated with the timing of patent prosecution of the company’s intellectual property portfolio.”

Firmenich collaboration

Senomyx was given a boost this week when it entered into an agreement with Firmenich over the development and commercialization of sweetness enhancers, with a view to helping reduce levels of sucrose, fructose and rebaudioside.

"Senomyx is very pleased with the financial impact of the new agreement with Firmenich as it provides for both immediate and ongoing non-dilutive cash," said Poyhonen. "The agreement also provides the opportunity for an additional substantial cash payment in the near-term and, importantly, the basis for potential future royalties."

The two companies are to share the research costs associated with the new enhancers, and Firmenich will pay Senomyx a license fee and royalties on sales of products developed under the collaboration.

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