The agreement announced Tuesday includes a $30 million upfront payment, of which $7.5 million was already paid. Senomyx, which develops flavors, flavor-enhancers and bitter taste blockers, will be entitled to $32 million more over the four years.
In premarket trading, shares of Senomyx soared 59 cents on the news, or 15.5 percent, to $4.40. PepsiCo shares rose 7 cents to $65.50.
PepsiCo will retain the option to extend the collaboration two more years, which would result in more research funding. Senomyx also will be eligible for additional payments if it meets certain goals, and for royalties.
Senomyx develops savory, sweet and salt flavor ingredients intended to allow for reduction of monosodium glutamate, sugars and salt in food and beverages, according to its website.
In April, the company said it had signed a preliminary agreement with PepsiCo rival Coca-Cola Co. to continue working on developing sweeteners. Terms were not disclosed.
Soft drink makers are trying to find new ways to reduce calories or switch to noncaloric or low-calorie sweeteners in their drinks, without sacrificing taste.
PepsiCo chief scientific officer Mehmood Khan said the company is optimistic the collaboration will help it achieve its goal of cutting sugar per serving by 25 percent in key brands in certain markets in the next decade.
PepsiCo will have exclusive rights to the ingredients Senomyx develops under the new collaboration.
