Take the Test: Evaluating Commercial Readiness, Pt I

By Mark Warner, PE, Founder, Warner Advisors LLC

Special to The Digest

In my previous series What makes the scale-up of industrial biotechnology so difficult?, I discussed the need for a fully integrated pilot plant and reviewed common pitfalls that companies face on their path to commercialization. The series generated the obvious question as to how and when a company can be confident it is prepared to take the leap of faith and spend big money on commercializing its technology.

The focus of this series will be to provide a framework to allow ventures to assess their current state of process development and whether they are ready to make the next step on the commercialization path from a technology standpoint. There are significant product sales and commercial issues that need to be considered in any commercialization determination which drive technical requirements; however this series will focus just on the technology portion of the evaluation. The final installment of the series will provide a self-assessment tool to evaluate overall readiness and highlight gaps.

The evaluation process begins by determining expectations. Ventures come prepared to present a large data set of fermentation titers, unit operation yields and throughputs, along with product quality information, asking if they are ready to take the next step in commercialization. While technical data is important to the evaluation process, the first question to be answered is what does success look like? A company cannot determine if they are ready to start the next step in the commercialization journey unless they understand the realistic goal.

If the decision is made to build a demonstration or commercial scale plant, what are their expectations that define success? The more rigid and aspirational the expectations, the longer it will take and the less likely the venture is to meet the goal. Many years commercializing advanced biotechnology has taught me that being aggressive or conservative are both valid commercialization strategies, as long as the approach to commercialization matches the company goals and the expectation of success, let me explain.

The most common factors that come into play when determining expectation of scaling-up a process are capital cost, project timeline, manufacturing cost and projected production capacity. The level of certainty that is required for each of these criteria at the front-end of the process will set the overall definition of success. This can generally be broken into 3 categories:

High probability (slow and easy wins the race) – having a high confidence in the capital cost, project timeline, manufacturing cost and ultimate capacity of the facility before commercialization begins. Common among large, establish businesses. There is an expectation that the project cost will be fixed, the timeline highly probable and the facility will produce near capacity soon after being released for operations. This is the typical expectation for debt funded projects like traditional corn ethanol, but is generally aspirational for advanced biotechnologies. As new biotechnologies represent processes that have never before been built, the technology risk makes reaching this standard very difficult.

Balanced (no risk, no reward) – willing to accept some level of uncertainly in capital cost, timeline, manufacturing cost and schedule, usually dependent on risk-based decisions and trying to bound the uncertainty. Company has reasonable equity reserves to be able to take modest risks and can absorb increased capital cost, extended timeline and slower than projected production ramp-up. Project can be done quicker than the high probability approach, if level of uncertainty is acceptable.

Speed to Market (ready, fire, aim) – ability and willingness to accept higher level of risk in commercialization to keep first mover advantage. Often early leaders in technology areas that are able to raise significant venture funding have such a forward lean towards rapid commercialization, they are willing to accept cost, schedule and production risks to get product on the market as soon a possible and keep their first-mover advantage over competitors. This typically involves making the go/no-go on major portions of the facility when they are ready and filling in the gaps (hopefully) during engineering and construction. Only a viable option for equity funded projects.

As noted previously, each of these approaches has advantages and disadvantages. There is no generic “best” option, but rather the option selected must fit the company business objectives. The problem comes when companies want the high probability outcome without putting the time and resources in up front.

One final point I want to make in preparation for the technology readiness assessment that will come in subsequent parts of the series is what I call the drivers license test. There will be many questions that deal with current state of technology and what has been proven to date. It is critical that realistic data be used in the assessment and to highlight the concern, lets consider a person’s weight on their drivers license as an example of perception versus reality. Most people (myself included) have a weight on their driver’s license that represents what they believe they should weigh or what they aspire to. Unfortunately, that usually conflicts with the blinking digital numbers between their toes when stepping on a scale. In conducting the evaluation, it will only be as valuable as the current state of reality that is used for the process, so this is a polite way of saying to use the numbers on the scale, not the drivers license.

The second part of the series will walk through criteria used to determine your state of readiness and provide a link to an interactive tool to perform a calculated assessment. It is an excel based spreadsheet that will ask for key process criteria and generate a numeric score. Given the level of information, it will only be a high level assessment, but can provide valuable insight into which areas of technology development require the most attention to reach commercialization successfully.

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.