By Mark Warner, PE, Founder, Warner Advisors LLC, Special to The Digest
What does a relationship book from the 1990’s have to do with successfully scaling up biotechnology? More than you would expect. In this case, we are substituting engineers and business developers, then focusing on the differences in how they view biotechnology commercialization and the resulting impact on their ability to successfully scale-up technology as a team. Just like John Gray’s book, the key to engineers and business developers working together is first to understand their perspectives and how those alternate views impact success. As I have experience in both roles within advanced biotechnology, I will attempt to play the role of Rosetta Stone, bridging the gap between the different worlds.
In my recent publication what makes scale-up of industrial biotechnology so difficult, I focus primarily on the key technical issues in scaling biotechnology. Discussing why fully integrated pilot operations are critical, along with perspectives on why some engineers who come from chemicals and petrochemicals often enter the industry with differing views. In this installment, I shift to another area that impacts a company’s ability to scale-up its process: the interface of technical staff (engineers) with the commercial side of the company (business development staff).
The most significant area where these two groups interact in a biotechnology startup is around the Techno-Economic Model (TEM), which is a mathematical representation of how a proposed process will operate with forecasted financials. The TEM is intended to be an interactive tool that helps direct and focus development efforts, with key inputs such as process yields, sales price, raw material specification and capital costs. Some of the TEM components come from the technical side and others from the commercial, so this is often an area of robust discussion between the groups. It would be worthwhile to look at each group’s perspective and how their views impact results.
First, let’s focus on how engineers view an input like yield (amount of product that can be made from a unit of raw material). To an engineer, yield is usually a matter of pure stoichiometry, the balancing of chemical elements. In the case of fermentation, it is the amount of final product that can be recovered per unit of fermentable sugar used. If the raw materials or products contain impurities, they are adjusted to reflect the pure compounds. This is done to determine the theoretical maximum and use it as a benchmark to work towards.
Let’s contrast that with how business developers view yield. Often products may contain inert materials like water. When a business developer looks at yield, they consider how much revenue the product will bring, compared to the cost of raw material, whether based on pure chemical content or not. From a business perspective, the feedstock having impurities or the product’s inert compounds are not a concern, as long as they do not impact the net price. If the product specification allows moisture (say 5%) and optimizing this will produce more saleable product for the same raw materials, all the better.
While both of these approaches to yield are understandable and reasonable, unfortunately they are not consistent and have different implications on the TEM. These differences create a situation where the key criteria that the operations staff use to manage costs and production do not align with the way financials are calculated, and thus the TEM is fodder for differing interpretation of key risks. Most importantly, both sides must understand the differences and take them into account, not incorrectly assume that the view from the other planet is the same as theirs. If an understanding of each group’s perspective does not occur, a series of unexpected results and negative implications will occur:
The first step is admitting there is a problem – One of the biggest challenges for early stage startups is to express a positive outward appearance and confidence, while maintaining a reality of risks for commercialization. This is especially difficult when fundraising and trying to demonstrate that everything is on track. As the company message continues to be overwhelmingly positive and repeated continuously, leaders can begin to take the message as a base case (aka, drinking their own Kool-Aid), as opposed to the aspirational goal it is. New facility startup dates are one of the most common examples of optimism in advanced biotechnology. The push for speed to market often has companies listing the most aggressive (soonest possible) timeline, as opposed to the timeline with the highest probability (most likely) date. What starts out as an aspirational target for a facility being online, becomes an expectation unlikely to be achieved. You can only manage risk if you believe it exists and continue to ground-truth the base assumptions of engineers and business developers.
Failure is an option – Just to clarify, I am not saying that overall failure of the venture is an option, but there will be a long list of what many view as “failures” along the path to success. An experiment or pilot run that does not return the results desired is not a failure, but rather one more valuable piece of information that needs to be evaluated. In biotechnology scale-up, it is often as important to determine what does not work, as well as what does. Further, gaining an understanding of why it does not work can often provide valuable insight to solving process challenges. One of the best examples I have seen was a large scale fermentation trial where a mechanical problem led to a cooling valve being stuck open and the fermentation operated significantly lower than the target temperature range. While most considered the run a waste (i.e., dump it and move on), review of the data indicated favorable results on certain key parameters. Further investigation and analysis led to significant improvements in overall fermenter performance.
Known-unknowns – After 10 years in advanced biotechnology, there is only one certainty I have found, no matter how well an execution plan is designed, it will not be the exact path that leads to success. Things will change, unexpected factors develop, new investors direct an altered path, or truths previously understood as fact turn out to be fiction. It is important for the team of engineers and business developers to understand that changes will come and they need to be addressed without derailing efforts or causing frustration of the team. If running into roadblocks on a regular basis is something that frustrates a person, advanced biotechnology commercialization is probably not the right vocation. Maintaining a focused team that addresses adversity as it comes (and it will) is the road to commercial success.
Voodoo Economics – The power of the biotechnology platform is phenomenal, with a mind boggling range of compounds and materials that can be produced. It leads many to focus too much on “if” their target product can be made and not enough on how can it be made economically. The birth of biotechnology has come primarily from pharmaceuticals, where the value of the product produced is very high, justifying significant capital investment and operating expense. This is seldom true in industrial biotechnology. Taking a process that works in pharma grade equipment and replicating it for a fraction of the capital and operating cost is difficult, but not impossible. It requires drive and commitment of the team, and cannot be done by simply assuming away key risks in the TEM.
When fact becomes fiction – Don’t assume something is fact once it is proven. This is common in traditional science, but synthetic biology has such an innovative ability, it can change this paradigm. The best example is a well-developed organism that produces near the productivity and quality that is required. The downstream recovery process is vetted and there is just a need for that last 30% of performance improvement from the organism for the technology to be economically viable. Sound familiar? Unfortunately, there is often an assumption that the genetic changes made to the organism will only improve the desired criteria, without any undesirable implications. It is always wise to confirm base assumptions as the process continues to develop, because you will often find the definition of fact has changed.
Agnostics are seldom Agnostic – Base technologies may be able to take feedstocks from a range of sources (aka “feedstock agnostic”), but commercial projects seldom can. This is an example of where a company perspective that is continuously conveyed can set unrealistic expectations. It is typically viewed more favorably from the business staff than engineers. A commercial facility usually has to be designed to a specific feedstock to be commercially viable. The changes required to design a facility that can accept diverse feedstocks (like MSW, wood chips and agriculture residues) can drive the capital cost to levels that are not financially justified. Be very careful pushing the feedstock flexibility of your technology too far, it can often paint a venture into a corner that is not successful.
It is important to understand that none of the examples should be considered a situation where one side is right and the other wrong, but cases where their mutual inability to view another perspective can hurt the ability of the organization to succeed. The financial reality of early stage biotechnology startups are such that ventures usually get only one shot at commercial success and need to make the most of it. This places understanding and integrating contrary perspectives on the same level as technological innovation for commercial success. Quite simply, a successful scale-up is more likely when the planets are aligned.
Mark Warner is a registered professional engineer with 30 years of experience in process commercialization, focusing for the last 10 years on taking first-of-a-kind-technologies from bench-top to commercial operation. He has worked for four companies who have held the #1 spot in biofuels digest’s top company list, in a range of advanced biotechnologies including biodiesel, cellulosic ethanol, phototrophic algae, heterotrophic algae and innovative food products. He is the founder of Warner Advisors, providing consulting services and acting in interim engineering leadership roles for advanced bioeconomy clients. He can be reached at [email protected] or visit www.warneradvisorsllc.com.
This articles was originally posted at: http://www.biofuelsdigest.com/bdigest/2016/01/10/engineers-are-from-mars-business-developers-are-from-venus/ on