One of the advantages of my role here at Cambridge Consultants is getting to swap thoughts and opinions with some of the brightest minds in the bioeconomy. Collaborating with members of the SynBioBeta network is a case in point – it attracts ingenious innovators, investors, engineers and entrepreneurs who share our passion for using biology to build a better, more sustainable world.
Building the business of biodesign
It was a privilege – as well as a real eye-opener – to chair a panel discussion at SynBioBeta’s Global Synthetic Biology Summit in San Francisco. As I landed, I couldn’t mistake the buzz of anticipation wafting in from Silicon Valley as ambitious players gathered to advance the conversation around how synthetic biology will continue to disrupt consumer products, food, agriculture, medicine, chemicals and more.
I took the opportunity to pitch in with my thoughts on how best to navigate the significant challenges involved in bringing a bioproduct to market. Expanding on my three top traits – perseverance, flexibility and execution – seemed to strike a chord with interested parties contemplating the complex steps necessary for success. As I sat down with colleagues in the Bay Area’s hip new SVN West conference venue, I was keen to extend the commercial focus with a specific debate around disruptive chemicals and materials.
My starting point was the dilemma faced by innovators wanting to translate technology into commercial success. Is it best to use the power of synthetic biology to create something entirely novel, or create a replacement for an existing product that already has a commercial structure around it?
Vince Sewalt, Global Lead in Regulatory Science and Advocacy at DuPont, is a seasoned professional wise to the pitfalls as well as the opportunities. For him, it’s not a matter of either/or when choosing between game changing, disruptive technology and what he describes as incremental improvements. You aim for both.
“When you first start out, you might identify a disruptive technology and enter that space but beyond that you start to apply the synbio cycle of design-built, test-learned and redesigned,” he explained. “When we first started out as Genencor about 37 years ago we took the existing fermentation technology and we married that with what was then very disruptive bio technology to really scale up the production of chemicals and enzymes.
“Obviously, we got together with a number of channel partners – those selections are really important – and were so successful in doing so that after a while several larger suitors, including in the later years a company like DuPont ended up acquiring us. Nowadays a lot of our products suggest industrial enzymes and we continue to improve through that cycle so that we can adapt them, perfect them, to make them suitable to the application conditions of many of our customers in many different applications.”
Replacing an incumbent product
Gavin McIntyre is co-founder and Director of Business Development at New York-based Ecovative Design, a company dedicated to growing and developing high-performance and environmentally conscious new materials. When it comes to replacing an incumbent product, his advice is to focus on the pain point being solved for the customer. It simply must outweigh the perceived pain of adoption.
“When you are working against an incumbent material, first there is an existing supply chain and there are materials that are already being integrated into final products. So as a small company when you are looking to displace an incumbent material, typically what you have to look at is not just the price point but also the entirety of the supply chain because when you are a new entrant you likely don’t have the scale or the distribution reach that an existing technology already has.”
As an example, Gavin described how Ecovative’s primary value proposition differentiates it from conventional chemistry or traditional small molecule fermentation. His team can not only create small molecules but can assemble them in situ, creating the final product and reducing the total amount of processing to help deliver more value.
Amy Trejo expanded on the theme and was able to add the larger scale perspective of Procter & Gamble, where she works as open innovation manager. Her view was that it’s more challenging for an operation like P&G to replace incumbents with synbio materials. That said, there are still certain areas where consumers are so open to new materials that the new products might be able to command the necessary cost premiums.
Focusing on performance benefits
“I think that those consumers are very driven by performance,” she said. “And what I really love about synthetic biology is the opportunity to do new things with these materials that the incumbents can’t do. So we like to focus on – as we think about that – what are the performance benefits that we can get from these synbio materials as opposed to just using them a replacement for incumbent materials.”
The attraction of a premium positioning was picked up by Alex Lorestani, CEO of Geltor Inc, a Californian company currently developing its breakthrough idea of using biological information and fermentation to produce high-performance consumer proteins. He advocated the strategy of start-ups ‘plugging their flywheel’ into the scale and clout of bigger hitters such as P&G.
“That way you can figure out how to generate revenue early, build that commercial muscle – alongside the technical muscle that most of these businesses start out with – and then use that premium entry point, where a start-up is kind of uniquely advantaged. Then partnering with a big company and then using that to expand throughout the enterprise.”
So much for the positive aspects of partnering. For balance, I probed Amy on the other side of the coin and asked her specifically about what doesn’t work. She warned against the danger of a multinational getting involved too early and becoming impatient without something tangible to work with, such as formulation.
“We have struggled a little bit when we get involved too early for small companies when they don't yet have the scale. I think what we have been learning a little bit more is that when companies are slightly more mature, we can have some kind of transactional relationship. They have a material that they are able to sell to us that we can explore with maybe put it into one of our smaller product lines or something to test, learn and experiment with. That’s where we've seen more success lately.”
Ensuring financial wellbeing
On the back of his experience, Vince emphasised the importance of having a trustworthy and established channel partner when developing disruptive technology with new applications: “It removes that uncertainty of being able to sell your product once you have actually developed it and met all the milestones. So that partnership with Procter & Gamble in those early days worked really, really well. In fact, they ended up funding or major portion of our R&D programme. And it really ensured our financial wellbeing for quite a while.”
The debate was bringing me to the conclusion that timing is everything when it comes to a start-up or smaller company pressing the button on a commercial partnership. The smart thing might be to hold fire and delay the decision, even when those around you assume you want to get into a relationship with a large company as soon as possible.
Gavin agreed: “In terms of the delaying the decision, it really relates to what the technology readiness level is and what the value proposition is. Not only what we can provide to the party but also what that partner can bring to the table for us. Could it provide an accelerant, are we going to have mutual understanding that might help enhance our product development in order to make it superior when it does make it to the market as well as just understanding of that particular market vertical – because every single vertical has its own unique requirements and considerations.”
Gavin’s sound advice and insight brought that part of the debate to a close – leaving me better informed and inspired by the nuanced approach needed to derive commercial value from biological innovation. Please don’t hesitate to drop me an email if you’d like to discuss any of the topics above, or indeed talk more broadly about early-stage commercialisation across life sciences and healthcare.