For a very well written background on SNMX, I would refer you to EBML’s write up from Feb 2014 when the

stock was at $8.10 / share.  The important variables going forward for the value of the stock are likely to be:

 

Will Pepsi roll out Sweetmyx more broadly?

 

Will Senomyx be successful in advancing a natural high intensity, zero calorie sweetener derived from a plant

source?

 

Will Pepsi/Coke/Dr. Pepper sign a new sweet research collaboration agreement this year?

 

There are several other endeavors that could add value to SNMX shares – the salt research program,

Firminich’s rights to food and alcoholic beverage use for sweet modifiers, the program to develop an artificial sweetener enhancer, the bitter blocker, the cooling factor, etc. We believe they are important considerations but less so than the three listed above and so therefore won’t spend time on them.

Note: If you’d like the full timeline of events rather than just the events that pertain to the question being

considered, please skip to the bottom.

 

Will Pepsi roll out Sweetmyx more broadly?

 

November 6, 2014 – "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

Sweetmyx S617 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.

 

Feb 26, 2015 - Based on recent feedback from these partners we continue to expect that the first commercial sale of a product containing Sweetmyx S617 will occur mid-year 2015, although the specific timing remains outside of our control.

 

April 30, 2015 - Based on recent feedback from [Pepsi and Firmenich] Senomyx continues to expect that the

first commercial sale of a product containing Sweetmyx S617 will occur mid-year 2015, although the specific

timing remains outside of our control. We also continue to expect our commercial revenue growth in 2015

and beyond will be driven primarily by Sweetmyx S617 commercialization and the ramp-up of our direct sales revenues," Poyhonen concluded.

 

July 30, 2015 - "Since our last quarterly earnings report, our two partners have continued to execute their

plans in support of their commercialization of our new flavor ingredient,Sweetmyx® S617. Senomyx is

confident that the first commercialization of Sweetmyx S617 will occur in the third quarter of 2015.

 

August 2015 – Sugar prices trough in August 2015 and go on to rebound by 79% through early June 2016.

 

August 28, 2015 – SNMX announces that Pepsi will use Sweetmyx in Manzanita Sol nationally and Mug Root

Beer in 2 US test markets.

 

Oct 5, 2015 – From the Pepsi conference call

 

Bill Marshall – Analyst

Now, your last comment notwithstanding, I do have a question on carbonated soft drinks, just from a

qualitative perspective, obviously you’ve made the switch to aspartame-free on diet Pepsi. So I’m just

curious what the consumer reaction has been to the move?

And then broadening that out into other sweetener technology and you’ve used Stevia in some cases, just

where we should look at how this is developing and how the consumer is reacting to these new products?

Thank you

Indra Nooyi – CEO of Pepsi

Bill, it's too early to tell you exactly how the consumer is reacting, because our belief is that you’ve got to

wait a few cycles to see what the purchase repeat adoption cycle is. So at the end of Q4, when we go into

next year, we might be able to give you some more information, but at this point, it's way too early to talk

about how aspartame-free is performing in the marketplace.

And in terms of new sweetness, all the information is out there in the marketplace. We've been talking

about it. I don't see a zero calorie naturally sweetened CSD on the horizon in the next few years, but if you

want to talk about low-calorie naturally sweetener beverages, I think combination of sweeteners, tools,

techniques, we have probably the best portfolio of development tools to enable that to happen.

It may not always be in CSDs, but it will be a part of it in non-carbs, part in CSDs and you’ll start seeing

these innovations roll out as we speak. I mean, we’ve rolled out a couple of products this year in

Manzanita Sol and Mug with somebody’s tools. You’ll start seeing more of that as next year rolls by.

 

Oct 29, 2015

 

Poyhonen - In August we announced that we had earned a commercial milestone from PepsiCo for the first

sale of a concentrate using Sweetmyx S617.

In the United States, reformulated concentrates are being used in Manzanita Sol nationally and Mug Root Beer in two test markets, Denver and Philadelphia. Both products are just starting to roll into the market and we look forward to receiving feedback on the market acceptance of these lower calorie offerings.

We understand that there are questions around the first commercialization of Sweetmyx. But we do not have

any feedback at this time since the products have only recently been made available to consumers.

------------------------------------------

Serge Belanger

Hi, good morning. A couple of questions on 617 and recent Pepsi launch. I guess, first, I’m curious John if

you’ve had a chance to taste the new reformulated products in comparison to the original products and I

guess, if you saw any differences?

 

John Poyhonen

Good morning, Serge, yes, great question. As you would expect, we’ve been tracking it very closely. And

actually have brought in-house the reduced calorie forms of Manzanita Sol and Mug Root Beer. We did apply

the Taste Test within our organization. And we were unable to tell the difference based on taste that we were

really excited to see what the final product ended up. And hopefully it’s going to be very well received with

consumers.

 

Serge Belanger

Okay. Sure you listened to PepsiCo’s earning call few weeks ago. They proactively mentioned that they had

launched a reformulated Manzanita Sol and Mug Root Beer. But they also mentioned that additional

reformulated products would launch throughout 2016. I’m not sure how much you can comment on that

statement but I guess any color would be appreciated. And I guess you expect to make additional

announcements or press releases when they do launch additional products?

 

John Poyhonen

Well, starting with the question Serge, yes, we obviously listened to the PepsiCo earnings call every quarter.

And we were very excited to hear in the Q&A period their CEO and Chairman Indra Nooyi referenced two

products that include Sweetmyx S617. I really can’t get into any details regarding what their future plans may

be. I think that the one thing that we’ve talked about in the past is that PepsiCo continues to evaluate other

products and other markets. And we’re hopeful that those results and product launches in the future.

We think that we’ve got a pretty good method here now of how we communicate from a disclosure

standpoint. And hopefully we’ll be using the same method on a go-forward basis. So, I can’t give you any

specifics other than the fact that they continue to do product development work and we’re looking forward to

hearing feedback under initial launches.

 

March 3, 2016

 

John Poyhonen - Senomyx is monitoring the Mug Root Beer test market performance through Nielsen scanner data which reflects retail sales of the product in both test market. In order to measure performance we have evaluated sales trends for the 52 week period preceding the launch compared to sales trends after launch. In reviewing the numbers we are encouraged by the post-launch sales volume trends in both test markets.

We understand there are questions around the potential timing of a Mug Root Beer national launch as well as

the Nielsen data. However our partner is solely responsible for the national launch decision and we are

unable to provide any additional details or analysis at this time due to confidentiality requirements and

competitive considerations.

---------------------------------------------

Mike Malouf

And then my last question, just with regards to Pepsi, I know we don't want to talk about too many details

around that but I think in the past you had said that Pepsi is doing parallel internal testing. I'm sure that they

did internal testing with regards to Manzanita and Mug Root Beer before they did the launch in those select

areas. And they continue to do parallel testing on other beverages at this time?

 

John Poyhonen

So in my comments I indicated that both of our partners are continuing to do product development work for

potential launches in the future so yes that's happening with both partners right now. Obviously we want to

make sure that our partners are successful as possible. So maintaining confidentiality is critical but we are

very excited about future launches from either one or both of our partners.

 

April 18, 2016

From the Pepsi conference call transcript –

Indra Nooyi, CEO of Pepsi

We've invested in R&D to create advantaged sweetener solutions and lower-calorie products, and we're

aggressively moving our portfolio to package and product combinations with fewer calories. Mountain Dew

Kickstart, with just 40 calories per eight ounces, is a great example of our execution in this area. Now in its

third year, Kickstart generated more than $300 million in estimated retail sales in 2015 and posted 34%

volume growth in the first quarter of 2016.

 

April 28, 2016 –

 

John Poyhonen

Moving to an existing product, our flavoring ingredient Sweetmyx S617 was first commercialized by PepsiCo

and made available to consumers during the fourth quarter of 2015. The reformulated concentrates

containing Sweetmyx are being used in Manzanita Sol nationally and Mug Root Beer in two test markets;

Denver and Philadelphia. Senomyx continues to monitor the Mug Root Beer test market performance through Nielsen scanner data which reflects retail sales of the product in both test markets. In order to measure performance, we evaluated sales trends for the 52-week preceding the launch compared to sales trends after watch.

In reviewing the most recent numbers, we continue to be encouraged by the post launch sales volume trends in both test markets. Based on recent feedback, the Mug Root Beer test market plan remains on-track. We understand there are questions around the timing of a potential Mug Root Beer national launch. However, our partner is solely responsible for the national launch decision and we are unable to provide any additional details or analysis at this time due to confidentiality requirements and competitive considerations.

-------------------------------------

Serge Belanger

Hi, good afternoon. Just a couple questions, the first one on S617. John you talked a little bit about monitoring the Nielsen data for retail sales and looking at the 52-week period, prelaunch and post-launch, any additional color you can give us on trends between pre and post-launch? And is this one of the main metrics that you think Pepsi is using to evaluate whether these test market launches are a success?

 

John Poyhonen

Hi Serge, good question. So with respect to the Nielsen data, as you mentioned, we've get 52-weeks' worth of data that we set as a benchmark or baseline set, and in both, Philadelphia and Denver, we on our own have been monitoring the result of the Nielsen scanner level data. I would say that in both marketplaces we're encouraged by the results by that. We see the trends increasing to the baseline that were set on the 52-weeks prior to the launch. I really can't get into any specifics but of course, volume would be one metric that PepsiCo would be looking at as well as other feedback from consumers, market share data. They've got a very sophisticated way of looking at things. But we think this is a good proxy from our perspective to monitor the results.

 

Analysis –

We obtained a case of Mug Root Beer from Philadelphia and ran blind taste tests versus the regular

160 calorie version. Contrary to what SNMX said, every single person who participated was able to

detect a taste difference between the two root beers. Most preferred the 160 calorie version, but a

few preferred the 120 calorie version. All thought that both had acceptable tastes and no bad after

tastes.

 

Pepsi is not highlighting the usage of less sugar nor the fewer calories in the Sweetmyx version on its

packaging and does not appear to be promoting it in any special way. Because of that, we believe that

Pepsi will judge Sweetmyx to be a success so long as people continue purchasing it at roughly the

same sales volume they did prior to the change. They are likely waiting to see whether the frequency

of purchases has changed after consumers finish with their first case of Sweetmyx Mug Root Beer.

Without boasting of the fewer calories or less sugar and without changing the packaging, it is difficult

to see how Pepsi could expect a large increase in sales. On a side note, it is interesting that Pepsi

chose Philadelphia and Denver for their test markets given that Philadelphia and Boulder are

considering sugary soda taxes right now.

 

Based on the Nielsen data cited above, we expect that Pepsi will judge Sweetmyx a success and choose

to roll it out nationwide in the back half of 2016. Given that the Sweetmyx version doesn’t taste the

same, Pepsi will have to experiment with formulations to include it and therefore we don’t expect

them to announce additional products until 2017.

 

 

Will Senomyx be successful in advancing a natural high intensity, zero calorie

sweetener derived from a plant source?

 

July 30, 2015

 

"From a research and development perspective, we are making meaningful advances in our natural high

intensity, zero calorie sweetener discovery program. Our R&D team has identified multiple novel sweeteners

from plant sources known to have a sweet taste. Many of these sweeteners have demonstrated greater

potency and fewer off-tastes than stevia and other forms of rebaudioside in taste tests. Our next step is to

further evaluate the product performance of our current leads to determine whether any of our leads is a

viable product candidate. While the discovery and development timeline is uncertain, we remain optimistic

that we will identify a commercially viable natural high intensity sweetener with competitive advantages in

the market," Poyhonen concluded.

 

October 29, 2015

 

Shifting to our discovery and development activities we continue to make headway in our, zero calorie

natural high intensity sweetener discovery program. During our last call we announced that our R&D team

has identified multiple novel sweeteners from plant sources known to have a sweet taste. In taste test, many of these sweeteners have demonstrated greater potency and fewer off taste than Rebaudioside A, a primary component in stevia.

During the third quarter, we prioritized our current lead natural sweet candidates and expect to complete our

internal evaluations of the product performance by the end of the year [&] determine whether any of our

current leads is a viable product candidate. We remain optimistic that we will identify a commercially viable

natural high intensity sweetener with a competitive advantage in the market, although the discovery and

development timeline is uncertain.

 

March 3, 2016

 

Our R&D team has identified multiple novel sweeteners from certain plant sources known to have a sweet

taste. During the second half of the year, we prioritized our natural sweetener lead candidates and completed our internal evaluations of their performance. Several of these natural sweetener candidates have met our internal stability and solubility requirements. Our next step is further characterization of the taste profile and continued investigation of potential manufacturing scale-up routes.

 

-----------------------------------

Mike Malouf

And then with regards to the natural sweetener, it sounds like you've made some pretty good progress there. I don't think that you were sort of ready to give some timing but typically when we get to the stage what's the next milestone that we need to look for with regards to the natural sweetener?

 

John Poyhonen

I think we’re very excited about the progress that we made during the last year with the program. One of the key hurdles that we've passed internally is just meeting the internal requirements on solubility and stability. So that's very important to us. Really what we're looking at now is doing more characterization of the taste profile. We know that it's more potent and we know it has fewer off taste from [indiscernible] but we just want to further evaluate and see how strong it is. The other thing that we're looking at in parallel is really looking at our manufacturing process for scale of which will be critical because if we do decide to go forward we will need that process to develop the appropriate materials for safety studies and then eventually longer term for commercial supply.

-------------------------------------

Several of these natural sweetener candidates have met our internal stability and solubility requirements.

The next step is further characterization of the sensory profile including the sweet taste quality attributes.

Based on this evaluation we expect to determine whether to initiate preliminary product development for

one of these natural sweetener candidates at the end of the second quarter. If we proceed the next critical

step will be continued investigation and evaluation of potential methods to manufacture commercial scale

quantities. In addition to these activities we continue to evaluate potential novel natural sweeteners from

other plant sources. The discovery and development timeline is uncertain but we remain optimistic that we

will identify a commercial viable natural high intensity sweetener with competitive advantages to currently

available sweeteners.

 

April 28, 2016

From a research and development perspective, our sweet taste discovery program has been productive in the identification of natural high intensity zero calorie sweeteners. As part of this initiative we have identified a number of novel natural sweeteners from certain plant sources. In taste tests, many of these sweeteners have demonstrated greater potency and fewer off tastes than Rebaudioside A.

 

Last quarter we reported several of these natural sweetener candidates have met our internal stability and

solubility requirements. Our current efforts are focused on further characterization of the sensory profile

including the sweet taste quality attributes. Based on this evaluation, we expect to determine whether to

initiate preliminary product development for one of these natural sweetener candidates by the end of the

second quarter. If we proceed with a unit sweetener candidate from this particular plant source, the next

critical step will be continued investigation and evaluation of potential methods to manufacture commercial

scale quantities. In addition to the evaluation of these leads sweetener candidates, we have a significant

parallel effort where we are evaluating potential sweeteners from other plant sources. The discovery and

development timeline is uncertain but we remain optimistic that we will identify a commercially viable

natural high intensity sweetener with competitive advantages to currently available sweeteners.

 

Analysis –

Management is consistently optimistic about everything so we do not take their optimism as meaningful

without corrobating facts that we can understand - which are lacking in this case. That makes handicapping

their success very difficult. What is clear is that the upside is very large – one only has to note the value of

PureCircle ($870 million) to see that a successful natural sugar substitute could be worth hundreds of

millions of dollars. It’s unclear what probability of success to assign but it is likely worth a meaningful % of

the current $128 million enterprise value.

 

Will Pepsi/Coke/Dr. Pepper sign a new sweet research collaboration agreement this

year?

 

April 9, 2014 – SNMX enters into a partnership with Pepsi to identify salt flavor modifiers

 

May 19, 2014 – Pepsi exercises its option to extend the companies sweet taste technology partnership for two years. Pepsi paid $8.8 mm / year for the additional two years to extend the agreement. It now expires in August 2016.

 

January 2015 - Pepsi amends the salt collaborative agreement to extend through December 2015. It is later

extended to December 2016.

 

October 29, 2015

Scott Henry

Okay, thank you, that’s fair enough. And then just the final question, and I’m just wondering want some clarity because I heard the statement I read in the Q. The collaborations with Pepsi on Firmenich technically come to a close in the summer of 2016. The question is, what are the outcomes at that point, is it most likely they just roll these over into new collaborations or is there any risk that they don’t do that? Just any color you can provide on what exactly happens at that point in time?

 

John Poyhonen

Sure, you’re right in your analysis of that, Scott with Firmenich, their collaboration ends in July of 2016 and

PepsiCo in August of 2016. And both of our partners have already exercised the options that they had their

decisions exclusively on whether they wanted to extend the R&D funding period. And they’ve expired used up all the options that they have.

 

So, I think what we’re looking at is we’re looking into next year, we think that the non-alcoholic beverage

market is the most valuable market from our perspective. When we look at the Sweet Taste program, we’re

looking at collaborative agreements and we view them very broadly. It would be any new source of

collaborative revenue. It could be a commercial licensee, it could be R&D funding, it could be a first mover

advantage, it could be exclusive rights and then maybe with an existing partner or new collaborator.

Certainly, historically we’ve always looked at our current partners first but we also at this point have to make sure we’re doing what’s right by the company and being fair to everyone and between. So, we’ll examine all those options and hopefully you’ll hear more about that as we move into the summer of next year.

 

March 3, 2016

This is a pivotal year for Senomyx with the R&D funding period of our sweet taste program collaborations

coming to their natural conclusion this summer. There continues to be significant interest in the reduction of

carbohydrate sweeteners and calories in foods and beverages. In our discussions we hear many factors

driving this interest including global increases in obesity and diabetes rate. Pledges made by consumer

product companies to reduce sugar in their products and the recently issued government dietary guidelines.

We view continued expansion of the nonalcoholic beverage market opportunity as one of our top strategic

priorities. This market is extremely attractive based on the significant size of the category with over $1

trillion in retail sales globally. A high utilization of carbohydrate sweeteners creating a need for reduced

calorie offerings, the relative ease of formulation compared to food product categories and the potential to

generate cost savings for consumer products companies. With this in mind we’re aggressively pursuing new

collaborative agreement opportunities for our sweet taste program. This is an exciting time for Senomyx and I look forward to reporting on our business development progress as we move through the year.

------------------------------------------

Serge Belanger

A couple of questions, first one for John, you mentioned you're seeking new collaboration for the sweet taste

program. I know Pepsi's collaboration is ending this summer. Did they have any additional options to renew

the collaboration and or are you seeking new collaborations for specific programs like the national high

intensity zero calorie sweetener or just broadly the sweet taste program?

John Poyhonen

So first of all you're correct the PepsiCo research funding portion of the collaborative agreement expires on

its own natural course in August of this summer and then Firmenich also expires the research funding portion in July of this summer. So what we're doing is we're actively pursuing discussions with third parties right now. Have been doing this for some time with respect to how we're getting it up. We are open to all

alternatives whether it be solely for a natural sweetener program, the natural sweet modifier or the synthetic modifier program so we're looking at all different iterations and some companies are interested and all others are interested in specific areas so that makes it a very exciting time for us as we have these discussion.

I guess from our perspective we remain optimistic that we're going to get a new collaboration done at some

point in '16 based on the high level of interest that we have from third parties. We believe we've got the best

in class technology and I think also we've had a great track record of delivering on business development

results so needless to say it's an exciting year for the company.

 

April 28, 2016

Poyhonen - From a business development standpoint this is a pivotal year for Senomyx with the R&D funding period of our sweet taste program collaboration scheduled to come to their natural conclusion this summer.

There continues to be significant interest in the reduction of calories in foods and beverages driven by

pressure from NGOs, law makers, and consumers. We are actively pursuing collaborative relationships for our sweet taste program and we remain optimistic in our ability to deliver on this important goal this year.

--------------------------------------------------

Mike Malouf

 

Great, thanks for taking my questions. I'm wondering if we can focus in on the collaborative relationships for

just a second. I know that you've been talking pretty positive with regards to your expectations on that and

I'm just wondering can you give us any color on how those have progressed since the last quarterly call

couple of months ago? Have people dropped out? Have some people got more interested? And how broad-

based are the negotiations with regards to type of companies?

John Poyhonen

All good questions. And of course Mike, with this, the most detail we're going to be able to report is one of

deals actually done. So there is not a ton of detail I can give at this point but what I can say is we've known

that our sweet research funding was coming to its natural conclusion in the summer of 2016 for some time.

So last summer we began reaching out to companies. I think we cast what we would consider to be a broad

net including consumer product companies, flavor houses, as well as ingredients supply companies. We've

been very pleased to see the high level of interest from third-party. We think that's a testament to our best-in-class technology, and also their desire to reduce calories from their products. So I think right now that it's going very well and what I can say is that we have a number of very interested companies that are still in the mix somewhere at the stage of actually discussing financial terms and narrowing down on what the specific rights of interest would be. But beyond that I really can't go much further other than saying that we've been doing this for a while, we've got a great track record of delivering on business development, and we're very confident that we're going to deliver on this important goal in 2016.

Analysis –

Pepsi chose to renew their salt partnership late in 2015 with SNMX even though

development has been somewhere between disappointing and slow at best.

Partially due to our belief that Pepsi will choose to roll out Sweetmyx more broadly,

partially due to Pepsi choosing to renew a partnership showing much less progress,

partially due to the potential for a zero calorie natural sweetener, partially due to

the Poyhonen’s assurances and partially due to sugar being seen as more toxic and

subject to greater taxation, we believe that it is likely that SNMX will find partners to

subsidize their continued research into sweet enhancers and natural zero calorie

sweeteners.

 

Why do we believe owning SNMX is a good trade?

We believe that Pepsi will choose to roll out Mug Root Beer with Sweetmyx nationwide and will then

introduce other Pepsi products with Sweetmyx as well. Further, we believe that Senomyx will be successful

in forging new sweet taste research partnerships over the next 12 months that will reinforce the bullish

viewpoint.

EBML wrote that there was potential for $25 – $40 of earnings per share. Given where the stock traded last year and given some chance of a true blue sky scenario, we believe SNMX will trade back into the $8-$12 range if we are correct about Pepsi and the new partnerships.

If Pepsi chooses not to move forward and if they are unable to find new research partners, we believe the

stock will likely trade to $1 as liquidity concerns will become worrisome sometime in late 2017.

 

 

 

Events since EBML’s write up in early 2014

January 2014 – Mexico institutes a one peso per liter excise tax on sugar sweetened beverages.

March 11, 2014 Sweetmyx is determined to be generally recognized as safe (GRAS) by the Flavor and Extract Manufacturers of the US (FEMA).

April 9, 2014 – SNMX enters into a partnership with Pepsi to identify salt flavor modifiers

May 19, 2014 – Pepsi exercises its option to extend the companies sweet taste technology partnership for two years. Pepsi paid $8.8 mm / year for the additional two years to extend the agreement. It now expires in August 2016

July 31, 2014 - US Patent office grants a composition of matter patent for Sweetmyx that expires December

2033.

November 2014 – Berkeley passed a penny per ounce tax on sugary sodas with 75% of the vote approving the measure.

November 6, 2014 – "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 Sweetmyx S617 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.

December 2015 – Saudi Arabia’s economy minister says they are currently planning an extra tax on sugary

soda drinks.

January 2015 - Pepsi amends the salt collaborative agreement to extend through December 2015. It is later

extended to December 2016.

Feb 26, 2015 - Based on recent feedback from these partners we continue to expect that the first commercial sale of a product containing Sweetmyx S617 will occur mid-year 2015, although the specific timing remains outside of our control.

For the full year 2015, Senomyx expects:

Total revenues of approximately $25 million to $30 million, of which approximately $7 million to

$10 million are commercial revenues with gross margin percentage between 80% and 90%

Total operating expenses of $40 million to $43 million, of which approximately $6 million are non-

cash, stock-based compensation expenses

Net loss of $13 million to $15 million

Basic and diluted net loss of $0.28 to $0.35 per share

Year-end cash, cash equivalents and investments available for sale balance greater than $20 million

 

April 30, 2015

Based on recent feedback from [Pepsi and Firmenich] Senomyx continues to expect that the first commercial sale of a product containing Sweetmyx S617 will occur mid-year 2015, although the specific timing remains outside of our control. We also continue to expect our commercial revenue growth in 2015 and beyond will be driven primarily by Sweetmyx S617 commercialization and the ramp-up of our direct sales revenues," Poyhonen concluded.

SNMX reiterates its guidance from February 2015

July 30, 2015

"Since our last quarterly earnings report, our two partners have continued to execute their plans in support

of their commercialization of our new flavor ingredient,Sweetmyx® S617. Senomyx is confident that the first

commercialization of Sweetmyx S617 will occur in the third quarter of 2015.

"From a research and development perspective, we are making meaningful advances in our natural high

intensity, zero calorie sweetener discovery program. Our R&D team has identified multiple novel sweeteners

from plant sources known to have a sweet taste. Many of these sweeteners have demonstrated greater

potency and fewer off-tastes than stevia and other forms of rebaudioside in taste tests. Our next step is to

further evaluate the product performance of our current leads to determine whether any of our leads is a

viable product candidate. While the discovery and development timeline is uncertain, we remain optimistic

that we will identify a commercially viable natural high intensity sweetener with competitive advantages in

the market," Poyhonen concluded.

SNMX reiterates its guidance from February 2015

August 28, 2015 – SNMX announces that Pepsi will use Sweetmyx in Manzanita Sol nationally and Mug Root

Beer in 2 US test markets.

Oct 5, 2015 – From the Pepsi conference call

Bill Marshall – Analyst

Now, your last comment notwithstanding, I do have a question on carbonated soft drinks, just from a

qualitative perspective, obviously you’ve made the switch to aspartame-free on diet Pepsi. So I’m just

curious what the consumer reaction has been to the move?

And then broadening that out into other sweetener technology and you’ve used Stevia in some cases, just

where we should look at how this is developing and how the consumer is reacting to these new products?

Thank you

Indra Nooyi – CEO of Pepsi

Bill, it's too early to tell you exactly how the consumer is reacting, because our belief is that you’ve got to

wait a few cycles to see what the purchase repeat adoption cycle is. So at the end of Q4, when we go into

next year, we might be able to give you some more information, but at this point, it's way too early to talk

about how aspartame-free is performing in the marketplace.

And in terms of new sweetness, all the information is out there in the marketplace. We've been talking

about it. I don't see a zero calorie naturally sweetened CSD on the horizon in the next few years, but if you

want to talk about low-calorie naturally sweetener beverages, I think combination of sweeteners, tools,

techniques, we have probably the best portfolio of development tools to enable that to happen.

It may not always be in CSDs, but it will be a part of it in non-carbs, part in CSDs and you’ll start seeing

these innovations roll out as we speak. I mean, we’ve rolled out a couple of products this year in Manzanita

Sol and Mug with somebody’s tools. You’ll start seeing more of that as next year rolls by.

 

October 2015 – “Sugar is definitely toxic” study is published in Obesity magazine and broadly reported in the

media.

http://time.com/4087775/sugar-is-definitely-toxic-a-new-study-says/

http://onlinelibrary.wiley.com/doi/10.1002/oby.21371/abstract

 

 

Oct 29, 2015 – SNMX announces that the Sweetmyx versions of Manzanita and Mug are just starting to be

rolled into the marketplace.

During the third quarter, we prioritized our current lead natural sweetener candidates and we expect to

complete our internal evaluations of their product performance by the end of the year. This will enable us to

determine whether any of our current leads is a viable product candidate. We remain optimistic that we will

identify a commercially viable natural high intensity sweetener with competitive advantages in the market,

although the discovery and development timeline is uncertain," Poyhonen concluded.

Pepsi Co rollout

In August we announced that we had earned a commercial milestone from PepsiCo for the first sale of a

concentrate using Sweetmyx S617.

In the United States, reformulated concentrates are being used in Manzanita Sol nationally and Mug Root Beer in two test markets, Denver and Philadelphia. Both products are just starting to roll into the market and we look forward to receiving feedback on the market acceptance of these lower calorie offerings.

We understand that there are questions around the first commercialization of Sweetmyx. But we do not have

any feedback at this time since the products have only recently been made available to consumers.

-----------------------------------------

Serge Belanger

Hi, good morning. A couple of questions on 617 and recent Pepsi launch. I guess, first, I’m curious John if

you’ve had a chance to taste the new reformulated products in comparison to the original products and I

guess, if you saw any differences?

John Poyhonen

Good morning, Serge, yes, great question. As you would expect, we’ve been tracking it very closely. And

actually have brought in-house the reduced calorie forms of Manzanita Sol and Mug Root Beer. We did apply

the Taste Test within our organization. And we were unable to tell the difference based on taste that we were

really excited to see what the final product ended up. And hopefully it’s going to be very well received with

consumers.

Serge Belanger

Okay. Sure you listened to PepsiCo’s earning call few weeks ago. They proactively mentioned that they had

launched a reformulated Manzanita Sol and Mug Root Beer. But they also mentioned that additional

reformulated products would launch throughout 2016. I’m not sure how much you can comment on that

statement but I guess any color would be appreciated. And I guess you expect to make additional

announcements or press releases when they do launch additional products?

John Poyhonen

Well, starting with the question Serge, yes, we obviously listened to the PepsiCo earnings call every quarter.

And we were very excited to hear in the Q&A period their CEO and Chairman Indra Nooyi referenced two

products that include Sweetmyx S617. I really can’t get into any details regarding what their future plans may be. I think that the one thing that we’ve talked about in the past is that PepsiCo continues to evaluate other products and other markets. And we’re hopeful that those results and product launches in the future.

We think that we’ve got a pretty good method here now of how we communicate from a disclosure

standpoint. And hopefully we’ll be using the same method on a go-forward basis. So, I can’t give you any

specifics other than the fact that they continue to do product development work and we’re looking forward to

hearing feedback under initial launches.

 

Collaboration Partnerships

Scott Henry

Okay, thank you, that’s fair enough. And then just the final question, and I’m just wondering want some clarity because I heard the statement I read in the Q. The collaborations with Pepsi on Firmenich technically come to a close in the summer of 2016. The question is, what are the outcomes at that point, is it most likely they just roll these over into new collaborations or is there any risk that they don’t do that? Just any color you can provide on what exactly happens at that point in time?

John Poyhonen

Sure, you’re right in your analysis of that, Scott with Firmenich, their collaboration ends in July of 2016 and

PepsiCo in August of 2016. And both of our partners have already exercised the options that they had their

decisions exclusively on whether they wanted to extend the R&D funding period. And they’ve expired used up all the options that they have.

So, I think what we’re looking at is we’re looking into next year, we think that the non-alcoholic beverage

market is the most valuable market from our perspective. When we look at the Sweet Taste program, we’re

looking at collaborative agreements and we view them very broadly. It would be any new source of

collaborative revenue. It could be a commercial licensee, it could be R&D funding, it could be a first mover

advantage, it could be exclusive rights and then maybe with an existing partner or new collaborator.

Certainly, historically we’ve always looked at our current partners first but we also at this point have to make sure we’re doing what’s right by the company and being fair to everyone and between. So, we’ll examine all those options and hopefully you’ll hear more about that as we move into the summer of next year.

 

Natural Sweetener

Shifting to our discovery and development activities we continue to make headway in our, zero calorie

natural high intensity sweetener discovery program. During our last call we announced that our R&D team

has identified multiple novel sweeteners from plant sources known to have a sweet taste. In taste test, many of these sweeteners have demonstrated greater potency and fewer off taste than Rebaudioside A, a primary component in stevia. During the third quarter, we prioritized our current lead natural sweet candidates and expect to complete our internal evaluations of the product performance by the end of the year [&] determine whether any of our current leads is a viable product candidate. We remain optimistic that we will identify a commercially viable natural high intensity sweetener with a competitive advantage in the market, although the discovery and development timeline is uncertain.

 

 

SNMX updates guidance by lowering operating expenses to 38-40 mm and reducing net loss to 12-14 mm.

Based on current Senomyx operating plan assumptions, the Company continues to expect initial profitability

in the second half of 2016.

February 2016 – South Africa announces a tax on sweetened sugar beverages that will take effect in

April 2017.

 

March 3, 2016

Revenues come in at 24.9 mm for 2015 vs guidance of 25-30

Opex at 37.6 mm for the year vs guidance of 38-40

Announced the extension of the Salt taste program with Pepsi through December 2016

Natural Sweetener Program

Our R&D team has identified multiple novel sweeteners from certain plant sources known to have a sweet

taste. During the second half of the year, we prioritized our natural sweetener lead candidates and completed our internal evaluations of their performance. Several of these natural sweetener candidates have met our internal stability and solubility requirements. Our next step is further characterization of the taste profile and continued investigation of potential manufacturing scale-up routes.

----------------------------------------

Mike Malouf

And then with regards to the natural sweetener, it sounds like you've made some pretty good progress there. I don't think that you were sort of ready to give some timing but typically when we get to the stage what's the next milestone that we need to look for with regards to the natural sweetener?

John Poyhonen

I think we’re very excited about the progress that we made during the last year with the program. One of the key hurdles that we've passed internally is just meeting the internal requirements on solubility and stability. So that's very important to us. Really what we're looking at now is doing more characterization of the taste profile. We know that it's more potent and we know it has fewer off taste from [indiscernible] but we just want to further evaluate and see how strong it is. The other thing that we're looking at in parallel is really looking at our manufacturing process for scale of which will be critical because if we do decide to go forward we will need that process to develop the appropriate materials for safety studies and then eventually longer term for commercial supply.

 

 

On the rollout with Pepsi

Senomyx is monitoring the Mug Root Beer test market performance through Nielsen scanner data which

reflects retail sales of the product in both test market. In order to measure performance we have evaluated

sales trends for the 52 week period preceding the launch compared to sales trends after launch. In reviewing the numbers we are encouraged by the post-launch sales volume trends in both test market.

We understand there are questions around the potential timing of a Mug Root Beer national launch as well as

the Nielsen data. However our partner is solely responsible for the national launch decision and we are

unable to provide any additional details or analysis at this time due to confidentiality requirements and

competitive considerations.

----------------------------------------

Mike Malouf

And then my last question, just with regards to Pepsi, I know we don't want to talk about too many details

around that but I think in the past you had said that Pepsi is doing parallel internal testing. I'm sure that they

did internal testing with regards to Manzanita and Mug Root Beer before they did the launch in those select

areas. And they continue to do parallel testing on other beverages at this time?

John Poyhonen

So in my comments I indicated that both of our partners are continuing to do product development work for

potential launches in the future so yes that's happening with both partners right now. Obviously we want to

make sure that our partners are successful as possible. So maintaining confidentiality is critical but we are

very excited about future launches from either one or both of our partners.

 

Natural Sweetener update

Several of these natural sweetener candidates have met our internal stability and solubility requirements.

The next step is further characterization of the sensory profile including the sweet taste quality attributes.

Based on this evaluation we expect to determine whether to initiate preliminary product development for

one of these natural sweetener candidates at the end of the second quarter. If we proceed the next critical

step will be continued investigation and evaluation of potential methods to manufacture commercial scale

quantities. In addition to these activities we continue to evaluate potential novel natural sweeteners from

other plant sources. The discovery and development timeline is uncertain but we remain optimistic that we

will identify a commercial viable natural high intensity sweetener with competitive advantages to currently

available sweeteners.

 

Collaborations Update

This is a pivotal year for Senomyx with the R&D funding period of our sweet taste program collaborations

coming to their natural conclusion this summer. There continues to be significant interest in the reduction of

carbohydrate sweeteners and calories in foods and beverages. In our discussions we hear many factors

driving this interest including global increases in obesity and diabetes rate. Pledges made by consumer

product companies to reduce sugar in their products and the recently issued government dietary guidelines.

We view continued expansion of the nonalcoholic beverage market opportunity as one of our top strategic

priorities. This market is extremely attractive based on the significant size of the category with over $1

trillion in retail sales globally. A high utilization of carbohydrate sweeteners creating a need for reduced

calorie offerings, the relative ease of formulation compared to food product categories and the potential to

generate cost savings for consumer products companies. With this in mind we’re aggressively pursuing new

collaborative agreement opportunities for our sweet taste program. This is an exciting time for Senomyx and I look forward to reporting on our business development progress as we move through the year.

------------------------------------------------

Serge Belanger

A couple of questions, first one for John, you mentioned you're seeking new collaboration for the sweet taste

program. I know Pepsi's collaboration is ending this summer. Did they have any additional options to renew

the collaboration and or are you seeking new collaborations for specific programs like the national high

intensity zero calorie sweetener or just broadly the sweet taste program?

John Poyhonen

So first of all you're correct the PepsiCo research funding portion of the collaborative agreement expires on

its own natural course in August of this summer and then Firmenich also expires the research funding portion in July of this summer. So what we're doing is we're actively pursuing discussions with third parties right now. Have been doing this for some time with respect to how we're getting it up. We are open to all

alternatives whether it be solely for a natural sweetener program, the natural sweet modifier or the synthetic modifier program so we're looking at all different iterations and some companies are interested and all others are interested in specific areas so that makes it a very exciting time for us as we have these discussion.

I guess from our perspective we remain optimistic that we're going to get a new collaboration done at some

point in '16 based on the high level of interest that we have from third parties. We believe we've got the best

in class technology and I think also we've had a great track record of delivering on business development

results so needless to say it's an exciting year for the company.

 

2016 guidance for free cash flow positive is withdrawn

Serge Belanger

And one for Tony on the 2016 guidance. I guess, last fall about four months ago you reaffirmed the guidance for -- to reach cash flow positive status in the second half of this year. Just wanted to know what has changed in terms of the ability for the changes you made to the guidance today?

Tony Rogers

So first of all there has been no meaningful changes in the last four months since last year when we provided that guidance. I think what we've moved to is we talked about here on the call is really focusing on what we have visibility on, we have inherent limited control over the commercialization of our products. We remain optimistic, it's just the timing and magnitude is out of our control. Also the collaboration that John just talked about it's uncertain exactly how those will look. So really driven by those variables, we're just focusing on the near term where we can deliver results that we know we can meet or beat. So we are just really focused on the near term and not looking past where there's less clarity.

 

For the first quarter 2016, the Company expects:

Revenues to be at least $5.5 million, of which at least $1.4 million are commercial revenues; and

Net loss not to exceed $3.5 million or $0.08 per share.

March 2016 – The United Kingdom introduces a tiered sugary drink tax that will take effect in 2018.

http://www.bbc.com/news/health-35824071

 

April 18, 2016

From the Pepsi conference call transcript –

Indra Nooyi, CEO of Pepsi

We've invested in R&D to create advantaged sweetener solutions and lower-calorie products, and we're

aggressively moving our portfolio to package and product combinations with fewer calories. Mountain Dew

Kickstart, with just 40 calories per eight ounces, is a great example of our execution in this area. Now in its

third year, Kickstart generated more than $300 million in estimated retail sales in 2015 and posted 34%

volume growth in the first quarter of 2016.

 

April 28, 2016 –

Revenues of 6.3 mm, 2.1 mm are commercial. Net loss of 2.4 mm or .05 per share.

For the second quarter 2016, the Company expects:

Revenues to be at least $6.1 million, of which at least $2.0 million are commercial revenues; and

Net loss not to exceed $3.0 million or $0.07 per share.

 

From the conference call – Poyhonen - Moving to an existing product, our flavoring ingredient Sweetmyx

S617 was first commercialized by PepsiCo and made available to consumers during the fourth quarter of

2015. The reformulated concentrates containing Sweetmyx are being used in Manzanita Sol nationally and

Mug Root Beer in two test markets; Denver and Philadelphia. Senomyx continues to monitor the Mug Root

Beer test market performance through Nielsen scanner data which reflects retail sales of the product in both

test markets. In order to measure performance, we evaluated sales trends for the 52-week preceding the

launch compared to sales trends after watch.

In reviewing the most recent numbers, we continue to be encouraged by the post launch sales volume trends in both test markets. Based on recent feedback, the Mug Root Beer test market plan remains on-track. We understand there are questions around the timing of a potential Mug Root Beer national launch. However, our partner is solely responsible for the national launch decision and we are unable to provide any additional details or analysis at this time due to confidentiality requirements and competitive considerations.

-----------------------------------------------

Serge Belanger

Hi, good afternoon. Just a couple questions, the first one on S617. John you talked a little bit about monitoring the Nielsen data for retail sales and looking at the 52-week period, prelaunch and post-launch, any additional color you can give us on trends between pre and post-launch? And is this one of the main metrics that you think Pepsi is using to evaluate whether these test market launches are a success?

John Poyhonen

Hi Serge, good question. So with respect to the Nielsen data, as you mentioned, we've get 52-weeks' worth of data that we set as a benchmark or baseline set, and in both, Philadelphia and Denver, we on our own have been monitoring the result of the Nielsen scanner level data. I would say that in both marketplaces we're encouraged by the results by that. We see the trends increasing to the baseline that were set on the 52-weeks prior to the launch. I really can't get into any specifics but of course, volume would be one metric that PepsiCo would be looking at as well as other feedback from consumers, market share data. They've got a very sophisticated way of looking at things. But we think this is a good proxy from our perspective to monitor the results.

 

Update on natural sweetener candidates

From a research and development perspective, our sweet taste discovery program has been productive in the identification of natural high intensity zero calorie sweeteners. As part of this initiative we have identified a number of novel natural sweeteners from certain plant sources. In taste tests, many of these sweeteners have demonstrated greater potency and fewer off taste than Rebaudioside A.

Last quarter we reported several of these natural sweetener candidates have met our internal stability and

solubility requirements. Our current efforts are focused on further characterization of the sensory profile

including the sweet taste quality attributes. Based on this valuation, we expect to determine whether to

initiate preliminary product development for one of these natural sweetener candidates by the end of the

second quarter. If we proceed with a unit sweetener candidate from this particular plant source, the next

critical step will be continued investigation and evaluation of potential methods to manufacture commercial

scale quantities. In addition to the evaluation of these leads sweetener candidates, we have a significant

parallel effort where we are evaluating potential sweeteners from other plant sources. The discovery and

development timeline is uncertain but we remain optimistic that we will identify a commercially viable

natural high intensity sweetener with competitive advantages to currently available sweeteners.

 

Update on sweet taste program collaborations

Poyhonen - From a business development standpoint this is a pivotal year for Senomyx with the R&D funding period of our sweet taste program collaboration scheduled to come to their natural conclusion this summer. There continues to be significant interest in the reduction of calories in foods and beverages driven by pressure from NGOs, law makers, and consumers. We are actively pursuing collaborative relationships for our sweet taste program and we remain optimistic in our ability to deliver on this important goal this year.

---------------------------------------

Mike Malouf

Great, thanks for taking my questions. I'm wondering if we can focus in on the collaborative relationships for

just a second. I know that you've been talking pretty positive with regards to your expectations on that and

I'm just wondering can you give us any color on how those have progressed since the last quarterly call

a couple of months ago? Have people dropped out? Have some people got more interested? And how broad-

based are the negotiations with regards to type of companies?

John Poyhonen

All good questions. And of course Mike, with this, the most detail we're going to be able to report is one of

deals actually done. So there is not a ton of detail I can give at this point but what I can say is we've known

that our sweet research funding was coming to its natural conclusion in the summer of 2016 for some time.

So last summer we began reaching out to companies. I think we cast what we would consider to be a broad

net including consumer product companies, flavor houses, as well as ingredients supply companies. We've

been very pleased to see the high level of interest from third-party. We think that's a testament to our best-in-

class technology, and also their desire to reduce calories from their products. So I think right now that it's

going very well and what I can say is that we have a number of very interested companies that are still in the

mix somewhere at the stage of actually discussing financial terms and narrowing down on what the specific

rights of interest would be. But beyond that I really can't go much further other than saying that we've been

doing this for a while, we've got a great track record of delivering on business development, and we're very

confident that we're going to deliver on this important goal in 2016.

June 2016 – Philadelphia’s city council votes on a 3 cent per ounce tax on sugary drinks

July 2016 – Sweet taste program collarboration with Firmenich is set to expire

August 2016 – Sweet taste program collaboration with Pepsi is set to expire

November 8, 2016 – Boulder will likely vote on a 2 cent per ounce tax for beverages with at least 5 grams of

sugar.

November 2016 – San Francisco may vote on a 2 cent per ounce tax.

November 2016 – Oakland will likely vote on 1 cent per ounce tax.

December 2016 – Salt taste program collaboration with Pepsi is set to expire

April 2017 – South Africa’s sugar tax comes into effect

March 2018 – The exclusivity on Firmenich’s rights to Sweetmyx for the food and alcoholic beverage

categories expire