Senomyx Announces Second Quarter 2008 Financial Results

San Diego, Calif., Aug. 7 - Senomyx, Inc., a company focused on using proprietary taste receptor-based technologies to discover novel flavor ingredients for the food, beverage, and ingredient supply industries, today reported financial results for the second quarter ended June 30, 2008. Revenues were $9.6 million for the six months ended June 30, 2008, compared to $6.8 million for the six months ended June 30, 2007, an increase of 42%. The increase was primarily due to the expansion of Senomyx's collaboration with Ajinomoto in 2007. As of June 30, 2008, the Company had cash, cash equivalents, and short term investments of approximately $48.4 million.

“Senomyx has had a productive year thus far, highlighted by the recent initiation of development activities with our new sucrose enhancer, S6973,” said Kent Snyder, President and Chief Executive Officer of Senomyx. “We also made notable progress in each of our other Discovery & Development programs. In addition, as announced in July, we extended our collaboration regarding the discovery and commercialization of new flavor ingredients in the gum confectionery area with Cadbury plc, the world’s largest confectionery company.

“The discovery of an effective enhancer of sucrose (otherwise known as common table sugar) is an important achievement for Senomyx and reinforces the advantages of our proprietary taste receptor technology,” Snyder noted. “Taste tests demonstrated that S6973 enabled the reduction of up to 50% of the sucrose present in beverage, yogurt, cereal, and cookie prototypes with no off-tastes. We are excited about the potential of S6973 to help our current and potential future partners address the consumer need for lower calorie products that maintain the taste of natural sugar.”

Senomyx is also on-track with development activities to support regulatory filings and an anticipated GRAS (Generally Recognized As Safe) designation in the U.S. later this year for S2383, an extremely effective enhancer of the high-intensity sweetener sucralose. The Company has confirmed in taste tests that the use of S2383 allows the sucralose in simple product prototypes to be reduced by up to 75% while maintaining the desired sweet taste.

“Following the successful discovery of the sucrose and sucralose enhancers, the focus of our Sweet Enhancer Program discovery activities has now shifted to the identification of enhancers of fructose, a key component of the widely used sweetener high fructose corn syrup,” Snyder added.

“The beginning of 2008 was also notable for our business activities,” Snyder commented. “In addition to the extension of our partnership with Cadbury, we were pleased to extend our collaborative agreements with Nestlé, the world’s largest food and beverage company, and with The Coca-Cola Company, the world’s largest beverage company, both in April. We believe that our relationships with these exceptional companies are indicative of the value of our proprietary technologies, our business model, and the commercial need for the flavor ingredients we are pursuing,” said Snyder.

Also during the quarter, Senomyx increased its intellectual property portfolio of proprietary taste receptor technologies. As of June 30, 2008, Senomyx is the owner or exclusive licensee of 125 issued patents and 402 pending patent applications in the U.S., Europe, and elsewhere.

Financial Review:

Revenues were $3.6 million for the second quarter of 2008, compared to $3.7 million for the second quarter of 2007, a decrease of 5%. The decrease is primarily due to the earning of a non-recurring research milestone in the second quarter of 2007. Revenues were $9.6 million for the six months ended June 30, 2008, compared to $6.8 million for the six months ended June 30, 2007, an increase of 42%. The increase was primarily due to the expansion of Senomyx’s collaboration with Ajinomoto in 2007. In August 2007, Senomyx received an $8.0 million upfront payment related to this collaboration expansion. The upfront payment was recognized as revenue ratably over the nine month period from August 2007 through April 2008.

Research and development expenses, including non-cash stock-based compensation expense, were $8.1 million for the second quarter of 2008, compared to $7.0 million for the second quarter of 2007, an increase of 17%. Research and development expenses, including non-cash stock-based compensation expense, were $16.3 million for the six months ended June 30, 2008, compared to $13.8 million for the six months ended June 30, 2007, an increase of 18%. These increases were primarily due to higher personnel-related expenses associated with an increase in the number of employees engaged in research and development activities. Also contributing to these increases were higher patent and trademark expenses attributable to outsourced patent filing related activities associated with our expanding intellectual property portfolio.

General and administrative expenses, including non-cash stock-based compensation expense, were $3.4 million for the second quarter of 2008, compared to $3.5 million for the second quarter of 2007, a decrease of 1%. This decrease was primarily due to reductions in non-cash stock-based compensation expense. General and administrative expenses, including non-cash stock-based compensation expense, were $6.7 million for the six months ended June 30, 2008, compared to $7.2 million for the six months ended June 30, 2007, a decrease of 6%. This decrease was primarily due to reductions in non-cash stock-based compensation expense, facilities costs and personnel-related expenses.

The net loss for the second quarter of 2008 was $0.25 per share, compared to a net loss of $0.19 per share for the second quarter of 2007. The net loss for the six months ended June 30, 2008 was $0.41 per share, compared to $0.41 per share for the six months ended June 30, 2007.

“The second quarter financial results continued to meet the Company’s expectations,” said John Poyhonen, Senior Vice President, Chief Financial and Business Officer. “Looking forward for the year, total expenses are on-track, and while we reiterate the following financial guidance that was provided at the beginning of the year, the achievement of these goals continues to be dependent upon the success of business development activities.”

• Total revenues of $20 million to $24 million
• Total expenses of $50 million to $53 million, of which $7 million to $8 million is non-cash, stock-based compensation expense
• Net loss of $23 million to $26 million
• Basic and diluted net loss of $0.75 to $0.85 per share
• Net cash used in operating activities to average between $1.0 million and $1.5 million per month

About Senomyx, Inc. 

Senomyx is a leading company using proprietary taste receptor technologies to discover and develop novel flavor ingredients in the savory, sweet, salt, bitter, and cooling areas. Senomyx has entered into product discovery and development collaborations with seven of the world's leading food, beverage, and ingredient supply companies: Ajinomoto Co., Inc., Cadbury plc, Campbell Soup Company, The Coca-Cola Company, Firmenich SA, Nestlé SA, and Solae. Nestlé is currently marketing products that contain one of Senomyx’s flavor ingredients.