(Adds analyst and Pepsi comment)
March 11 Senomyx Inc said the U.S. Food
and Drug Administration had declared that its Sweetmyx food
flavoring was safe, paving the way for customers such as PepsiCo
Inc to add it to drinks to reduce the use of sugar and
Senomyx shares jumped as much as 26 percent to their highest
in nearly seven years after the U.S. Food and Drug
Administration determined Sweetmyx to be Generally Recognized As
Safe (GRAS) under the Federal Food, Drug and Cosmetic Act.
Sweetmyx, not a sweetener itself, works by enhancing the
characteristics of other flavors such as sucrose or fructose,
allowing for reduced use of sweeteners in drinks.
A growing body of research has identified sugary drinks as
the biggest contributors to added, empty calories in the
American diet, and as a major culprit in a range of costly
health problems associated with being overweight.
"The new Sweetmyx flavor ingredient will enable the creation
of lower-calorie beverages and foods that have reduced
sweeteners without sacrificing taste," Chief Executive Officer
John Poyhonen said on Tuesday.
Soft drink makers PepsiCo and Coca Cola Co have been
increasingly seeking to develop natural sweeteners as people
ditch even diet sodas for juices, teas and naturally sweetened
"We see strong potential with Sweetmyx, and this provides us
with yet another option for our innovation teams to develop
flavor systems that help meet consumer desire for tasty
beverages with less sugar and lower calories," PepsiCo
spokeswoman Aurora Gonzalez told Reuters.
PepsiCo has exclusive rights to use Sweetmyx worldwide in
all non-alcoholic beverages.
PepsiCo Chief Executive Indra Nooyi has expressed in the
past the need for "a new, more natural, low-calorie sweetener."
Senomyx shares have more than tripled in value in the past
year as investors pinned hopes on the sweetener enhancer.
Janney Capital analyst Jonathan Feeney said Senomyx's
prospects are still undervalued based on its improved commercial
stance and significant collaborations, in particular PepsiCo.
"Given the size of PepsiCo's carbonated soft drinks platform
and the potentially central role of Senomyx's sweeteners, a
roll-out of Sweetmyx would likely reach a significant scale and
drive significant returns for Senomyx shareholders," Feeney
Geneva, Switzerland-based Firmenich also has lifetime rights
to commercialize the flavor for food product categories and
In the United States, food flavors are considered either a
food additive or are granted GRAS status, following testing by
Companies can also declare their ingredients safe based on
their own research or that of hired consultants. But the FDA has
the option to challenge such declarations.
Senomyx shares were up 26 percent at $11.81 in late morning
trading on the Nasdaq. PepsiCo shares were up 1 percent.
(Reporting by Aditi Shrivastava and Natalie Grover in
Bangalore; Editing by Saumyadeb Chakrabarty)