November 14, 2023 PAO-08-23-CL-05
Thomas Yezzi (TY): At the highest level, the vision for Nu-Tek is to create a true end-to-end biomanufacturing company that is fully integrated from critical raw materials all the way to the active pharmaceutical ingredients (APIs). When most people talk about end-to-end manufacturing, their starting point is the cell lines and/or culture media — we are looking at taking that concept farther upstream. The road to achieving that vision will involve three primary steps: first, peptones, which are critical raw materials; second, expansion into cell culture media; and third, developing a biomanufacturing platform to function as a contract manufacturing organization (CMO).
Today, we’re focused on the peptones and are looking closely at moving into culture media. Our peptone business involves producing the peptones, hydrolysates, and yeast extracts that are used for cell culture media. We are strongly focused on meeting the growing need for animal-free products, and we anticipate that this emphasis and our new facility will help us become the market leader in animal-free peptones.
TY: We currently see an opportunity to leverage our upstream technology to work with customers in culture media development all the way to the CMO offering. We believe that if we can move end-to-end manufacturing farther upstream, we should be able to help a customer bring a product or a drug to market faster than anyone else. By virtue of reducing formula changes during scale-up, reducing tech transfers, or not having to use additional sites for certain unit operations, the process can move faster and more efficiently. It’s really a solutions-driven program, and we have an A-list of customers because we provide them transparency and effective, streamlined solutions.
TY: The seed of the idea was that many of what we thought were prospective customers knew very little about peptones. Their focus was on strain or cell line development, and they were not as focused on the components of the culture media. We identified the opportunity to leverage our customers from the raw material — peptones — into culture media.
We floated that idea to the customers: How about if we work with you on a culture media base? You can still supplement it or make proprietary changes, but we provide more consistency in the media by working in that direction. When it comes to media, the large pharmaceutical companies either buy it from the supply houses, which is easier, or formulate it themselves, which is more economical. We saw a real opportunity to work with them, providing an easier, economically sound solution that was also customizable for their needs.
TY: Initially, the U.S. FDA had been pushing for a mandate to eliminate the use of any animal component material in media used for biologics manufacturing. This arose from concern about bovine spongiform encephalopathy (BSE or mad cow disease) and other animal diseases transferring into the human genome. The mandate that they sought didn’t come to pass, but they did make a strong recommendation.
Because of this concern and recommendation, the industry has been moving toward animal-free media ever since. The largest area for growth in culture media is in animal-free and serum-free culture media. Another driver is the desire to remove fetal bovine serum (FBS) from the culture media. It is animal based and there is only a finite amount of that serum available, so there are sustainability issues. As these drugs and platforms grow, will there even be enough FBS available? Fortunately, soy peptone has become the most commonly used substitute for FBS, addressing both the disease and sustainability issues. If you look at the dynamics of the market, more traditional culture media is growing very slowly, yet serum-free and animal-free media are growing over 14% per year.
TY: Our products are generally customer driven. Our proprietary enzyme system is pretty raw material agnostic, so if we see requests from customers for a particular product, we can utilize our enzyme platform on most proteins to produce peptones, with performance that is consistently equivalent to or better than what our competitors can offer. We followed what customers were looking for from soy and into pea and yeast. The next product we are getting ready to launch is a wheat peptone, which was also driven by customer interest.
The enzyme platform — and the selection of enzymes that comprise it –– is really the key to everything. When we pivot to a new product, we are able to rapidly and consistently start in the lab, take it to pilot, and scale it very easily.
We can use almost any protein, but, in some cases, we may have to clean things up a little more or make some adjustments. People manipulate strains in so many different ways today that there will never be one peptone that will fill everybody’s needs. The customization work that we do is very important, since many times a customer might have done some manipulation to their strain that changes the way it metabolizes the cell culture media, and so the media needs to change accordingly.
TY: One of the interesting things about the peptone industry is that, for the largest market-share leaders, it is not their primary business. They are typically dedicated to the food industry, flavorings, or infant and geriatric nutrition or are former dairy co-ops. Our focus on the pharmaceutical industry is a clear differentiator. Additionally, we have a new, fit-for-purpose facility, whereas our competitors are all working out of facilities that are at least 80 years old. We have the latest technology from a design and engineering standpoint, which makes us very attractive to new customers as either a primary or secondary supplier. Another big differentiator is capacity. Generally, owing to capacity constraints, the industry typically faces long lead times and a lot of forecasting; we have considerable capacity and hence flexibility and agility.
Finally, the largest producers are all foreign-owned, although some have manufacturing in the United States. We’re the only company that is U.S. owned, is focused on animal-free, and is manufacturing here.
TY: Because everything is brand new and was built at a greenfield site, we have been able to utilize the latest technology in manufacturing, which ultimately leads to better quality, performance, and consistency. Serialization has been a big concern for some time: how do we track and trace the process from the raw materials all the way to the API? Our facility is built with so many more ways to collect the data. The plant has the capability and is implementing electronic recordkeeping. This is becoming an increasingly important driver for some of the large pharmaceutical companies as we move into the future.
That’s something that will continue to give Nu-Tek an edge going forward. You can’t really retrofit an old plant to electronically monitor and record as much data as a new plant; it’s just too costly. When we are manufacturing products, we generate tremendous amounts of data. We don’t have a use for a lot of that data today, but it is collected and stored for when it will be needed to track and trace every batch that’s ever been made at the facility. At some point, those data will be used to evaluate changes in processes that will allow manufacturers to determine whether any upstream factors may have affected outcomes.
We invite our customers to our facility and see what we’re doing. Truthfully, 100% of the time that people have come in, someone within a group of four will say it’s the nicest facility they’ve ever seen in this type of business. It is a great selling tool for us to get people to come to the facility, because there’s really nothing quite like it, and once people see it, they are convinced. In contrast, most of our competitors are still working out of older multi-use manufacturing plants.
TY: The key to these ingredients is quality, performance, and consistency. People want every batch to work exactly the same, and that’s our focus. With our new facility, we have such better control of that. A good example of the performance of our products is a patent granted to Sanofi for their meningitis vaccine Menactra in which they explicitly name our soy peptone as having provided a 40% improvement in polysaccharide production using our product. That’s a great example that is out there publicly, but more broadly, we have seen customers achieve significantly better performance in both growth and protein production in both CHO cell and E. coli platforms.
TY: As I mentioned, beyond new variations of the products we already provide, the wheat peptone is the next new product to launch. We do receive a tremendous amount of requests for some really odd stuff, but they’re often not what we view as commercially viable .
We are focused on plant-based proteins. We see rice as one viable future product; cottonseed is another. However, we don’t develop them until it looks like there’s a commercial volume associated with it. We find that, once we have worked with these very large customers and delivered for them, they start bringing more projects to us.
And beyond that, we’re now focusing more on that move into cell culture media, working on projects to better understand how our products are affected when we introduce other components of the cell culture media: do we find new synergies or inhibitions?
TY: I think it will be a slow process that will constantly evolve. The associated costs on the pharma side may prove to be prohibitive — there will need to be very distinct differentiation to justify changes. This is a very unique industry. I originally came out of the industrial food ingredients sector, where cost and capacity are paramount. In pharma, performance and consistency are more important. The impact of the raw material in the pricing of a drug is tiny compared with the model in food. With food, a small cost differential can justify a change in raw materials; pharma is far more averse to change, and managing risk can be more of a factor than ingredient cost.
So, while we do expect to continue to expand to new sources of protein, that expansion will be slow. I don’t ever foresee a time when we would investigate 10 or 20 new peptones in a given year; it’s more on the order of one every few years. Even with the pea protein, it took about five years to get to actual commercial sales.
TY: Overall, with our unique enzyme platform, we utilize relatively basic unit operations, which we have been using for over 15 years. We have an extremely strong foundation in taking things from the lab to pilot and onto commercial production. When we designed the facility, we built in flexibility to manufacture smaller batches and have that ability to scale easier. The sizing of the equipment and the operating parameters give us more flexibility. We can scale more easily and produce qualification batches that can move quicker with less risk.
But we also have tremendous capacity to support customer growth. The capacity is in place to support product needs for many years to come. This really reduces the risk of a customer having to re-qualify a new facility to meet their growth needs.
TY: Most often, things begin with the customer presenting us with a problem that they are experiencing: issues with product availability and capacity for a platform they expect to grow, or consistency issues with a single-source supplier. Whatever that opening is, we start working closely with that customer and become familiar with their needs and their challenges.
That’s where the differentiation kicks in, because we aren’t just a supplier; we are a solutions provider. That has a lot to do with how we are able to work with these mega-size companies as a small company –– because we’ve been able to deliver on what we say we’re going to deliver, and our products perform.
One space in which we played an integral role was with one company’s COVID vaccine manufacturing. That was a perfect example, a crisis situation, in which things moved along very fast to get us as a supplier and required very close collaboration, including things like pre-shipment samples to make sure a given lot would qualify.
We feel that the value of the dedication to partnerships will only grow in significance. We feel we are the most customer-centric peptone supplier. We look to understand our customers problems and help them to solve them. We think that we are very well positioned with the new facility and our products to deliver the best quality, performance, and consistency. That’s why we truly believe that we will become the market leader in animal-free peptones. I believe our competitors are taking notice. We have an extremely bright future!
Mr. Yezzi serves as the President of Nu-Tek BioSciences and Nu-Tek Fibers and was a co-founder of Nu-Tek Salt, where he served as President through the start-up and commercialization phases of the Company. Throughout his career, Thomas has also held senior management positions, including Vice President of Operations at Protient, Inc. and Director of Process and Product Development at Northern Food & Dairy, Inc. Mr. Yezzi holds bachelor’s and master’s degrees in food science from the University of Minnesota, where his research focus was food and industrial microbiology.