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Senomyx expects PepsiCo or Firmenich to commercialize sweet taste modifier S617 in 2014

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By Ben Bouckley+

Last updated on 14-Aug-2014 at 10:12 GMT

Senomyx: PepsiCo or Firmenich to commercialize sweet taste modifier

Senoymx says it expects either PepsiCo or flavor house Firmenich to commercialize proprietary sweet taste modifier Sweetmyx S617 in 2014 but is tight-lipped over who will be first to market.

What is S617 and how might Pepsi use it to shake up the soda market? Well, taste technology firm Senomyx describes it as a ‘novel flavour with modifying properties’ that can be used to maintain taste in products where sweetener levels have been reduced.

Firmenich has exclusivity for S617 in regard to food and alcoholic drinks, while PepsiCo has a parallel deal in place for non-alcoholic beverages. Announcing Senomyx’s Q2 2014 results on July 31, CEO John Poyhonen said he expects a ‘partner’ to commercialize S617 by the end of 2014.

In May PepsiCo took up an option to extend a collaboration with Senomyx signed in 2010 out from 2014 to 2016 – the soda giant will have paid the San Diego firm $32m to fund research by the end of this year, and the extension will net Senomyx an extra $18m, in addition to $30m in upfront costs.

US patent ‘notice of allowance’ for S617 – July 2014

Confidentiality agreements prevent Senomyx discussing details of what PepsiCo is working on, but it has said that S617 allows firms to cut levels of high fructose corn syrup (HFCS) and sucrose in applications including soft drinks – US patent 8,592,592 also states that S617 can be used with ‘sugar alcohol’ and artificial sweeteners.

Senomyx won a Flavor and Extract Manufacturers (FEMA) GRAS determination in March that allows it to commercialize S617 in the US and other markets.

In July the US Patent & Trademark Office (USPTO) sent the company notice of allowance for the patent (linked above) covering composition-of-matter claims for S617. Valid until December 2033, this also includes composition-of-matter claims for similar flavor modifiers for use with sucrose, fructose and sucralose.

Curiously, when she discussed PepsiCo’s Q2 results on July 23, CEO Indra Nooyi made no mention of the “product disruption and differentiation through science-based R&D, especially in the area of sweetener innovation” that she flagged-up in the Q4 2013 call on February 13.

A PepsiCo spokeswoman told last night that it had "nothing new to share at this time", when asked if/when the company might launch a beverage using S617.

Confidentiality agreements mean cagey investor calls

Senomyx’s recent Q2 investor call was a cagey affair in relation to S617 – with analysts probing for information on a potential Pepsi launch in particular, and management replying in fairly cryptic terms – balancing the need to honor confidentiality clauses against the desire to tell the market what it wants to hear.

Discussing Senomyx’s financial outlook, Tony Rogers, CFO, said: “Our guidance assumers that Sweetmyx S617 will be commercialized by one of our partners in the second half of 2014.”

Expanding on this point in the later Q&A, Poyhonen told analysts that Senomyx, “continues to have routine updates with both of our partners on their internal evaluation and plans for commercialization”.

“We remain confident that Sweetmyx S617 will be commercialized by one of our partners before the end of 2014,” he added.

In April Senomyx clinched a further deal with PepsiCo to identify flavors allowing the CPG giant to cut salt levels in products while retaining their taste profile.

The San Diego company has programs for developing sweet, savory, salt reduction, cooling and bitter-blocking flavors.

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