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Why Senomyx, Inc. Shares Skyrocketed

By Brian Pacampara – Mar 11, 2014 at 2:36PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Senomyx (NASDAQ: SNMX) soared 25% today after its Sweetmyx flavoring ingredient was determined to be safe by the U.S. Food and Drug Administration.

So what: Beverage gorilla PepsiCo (PEP -0.03%) -- which has exclusive rights to Sweetmyx -- will now be allowed to pursue commercialization of the new flavor, reinforcing the high degree of optimism over Senomyx's revenue prospects. In fact, Sweetmyx's new designation should also assist with approvals in other parts of the world, giving investors plenty of good vibes over its blockbuster potential as well.

Now what: Senomyx will now be fully engaged with its partners to evaluate different product opportunities. "The new Sweetmyx flavor ingredient will enable the creation of lower-calorie beverages and foods that have reduced sweeteners without sacrificing taste," said Senomyx President and CEO John Poyhonen. "We are particularly excited about the versatility of Sweetmyx since it allows for the reduction of either sucrose or fructose in products." Of course, with the shares up a whopping 250% over the past six months, I'd wait for some of the excitement to fade before jumping in.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of PepsiCo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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