How to Choose a Spray Drying CDMO and Spot the Red Flags

TL;DR

According to Hendrik Grobler of Advanced Powder Dynamics, a spray drying CDMO differs from a toll dryer in the questions it asks. A toll dryer asks about volumes and time frames, while a CDMO asks about objectives, challenges, delivery systems and yield. His clearest red flag is a provider that claims it can dry anything at any scale without process development. CEO Will West adds that intellectual property ownership should be settled upfront, and that a good partner gives the client clear certainty about outcomes, for example 5 to 7 kilos of powder very likely within spec.

• A conventional toll dryer does not own the formulation or the product. Its questions center on the product, volumes, yield requirements and time frames, so it can fill the purchase order on time.
• A CDMO asks about the customer’s objectives, challenges, delivery system, product performance and yield, and aims to build a long term relationship and create differentiation for the customer.
• Clients with broad portfolios may need tight-parameter tolling for established, highly regulated products and flexible CDMO support for newer lines entering international markets. A versatile provider can supply both within one shop.
• At APD, IP each side brings to the table stays with that side, and the mix is established upfront. APD offers a license to its technology that depends on APD producing the material.
• A provider claiming you can scale from a pilot dryer to full production without process development, process engineering or equipment optimization is a red flag.
• APD’s detailed intake form can add three days to a week at the start. Will West says it eliminates gray areas, so the client does not later find that the result was not what they expected.

How is a spray drying CDMO different from a toll processor?

Hendrik Grobler: The basic difference lies in the questions that they will ask potential customers and the deliverables. A conventional toll dryer doesn’t own the formulation. It doesn’t own the product. He delivers a service, a spray drying service. Typical questions that they would ask would be based on what is the product, what are the volumes, what are the yield requirements, and what are your time frames. Basically, they’re looking at what are the purchase order requirements and how do we produce that in a timely manner.

A CDMO, on the other hand, will ask very specific questions related to not only the product, but how can they improve the product, what are the specific requirements, what are your objectives, and what are your challenges. These questions would be related to what is the delivery system, how can we improve product performance, how can we improve yield, and how do we build a long term relationship with the customer?

At Advanced Powder Dynamics, we are an end to end business, so we take the customer through the whole process. That’s why we ask specific questions so that we can address not only the production requirements, but we want to create differentiation for the customer. We want to provide a quality product, and we want to provide the same product with every production run.

Once we have asked the basic questions, then we will develop a process for the customer, and we will discuss the process with the customer. How do we get to a production run that would achieve each one of these objectives? How do we address challenges? Maybe they had specific challenges with the previous toller, and they couldn’t provide the quality product or the specifications for the product or the yield, or they could not optimize that. APD would specifically look at these objectives and challenges, see how we can address that, provide a process towards production, and then provide an in-spec product for you.

Will West: It’s worth noting also that sometimes you have customers who come to us with broad portfolios. We see this all the time. They might approach one campaign, one product line in a certain way where they just need tolling that fits into very tight parameters because it’s an established product. It’s been in the market, maybe it’s very highly regulated, and they need to produce in a certain way. Whereas other aspects of their portfolio are newer, they’re trying to enter markets, maybe they’re trying to enter international markets, and they need versatility, and they need a very flexible partner that acts more like a CDMO. We can help them grow that product line, maybe grow it aggressively, create variants of that product.

That’s where a company like Tesseract’s Advanced Powder Dynamics can really thrive, by serving a client like this in different ways, in different parts of its portfolio. There are differences in these two different types of providers, but a really versatile provider can help a diversified client with a broad portfolio in quite a few different ways within one shop.

Who owns the IP when a CDMO develops your formulation?

Will West: If you bring a drying system in house and you don’t have an external relationship, in a sense, you’re locked in, and a market can move on without you. So you need external relationships to continue to connect to third party technologies.

The way we look at it is, we’re open on intellectual property. We have one of the richest intellectual property portfolios in the market because we have intellectual property around our drying platform. It’s probably the most advanced, in that our dynamic atomization technology gives us drying capabilities that no one else has, particularly at the scale we have it, meaning ultra low scale at the R&D level all the way up through development stages to very large commercial scale. There are the types of drying that we can do, the fact that we can dry the inside of a cyclodextrin, the fact that we can work with very delicate as well as very viscous materials, and the fact that we can work with materials that have high concentrations of solids in the material flowing through the drying platform. There’s a whole list of things that we can do that are outside the normal realm of possibility for spray dryers. On top of that, we have entire portfolios of delivery technologies, absorption technologies, etcetera, at the Tesseract level that we can bring to the equation.

From my point of view, it depends on whether the client we’re engaged with is talking to us about intellectual property for process or intellectual property for formulation, whether they’re talking to us about intellectual property that’s older, meaning it’s already established, or it’s newer, meaning it’s being established in the work we’re doing together, or whether it’s a combination of any or all of these things. We simply establish upfront what this mix is.

If we bring it to the table, it’s ours. If they bring it to the table because they have already worked on it internally and they want our help commercializing it or proving its viability in a process or in our delivery system, then it’s theirs. If we’re able to bring something to the market and it involves our technology, we’d love to give them a license to use our technology that’s only dependent upon us producing material for them. That is standard, but also very easy because no one else can do what we’re doing. So they’re going to be working with us anyhow. We’re very easy to work with in that respect.

We find that there’s almost no conflict on intellectual property. It’s usually very clear where it originates. If it comes out of work that we do together, then it’s shared, or it’s immediately clear where it’s originating and how we work going forward, because we offer the opportunity for them to take it to market.

It’s a rare situation, but it’s one where our interests are aligned, because our goals are to get intellectual property to market. So we have a vested interest in finding agreement with our clients, with our partners. So far, we haven’t really stumbled over the issues of intellectual property.

What red flags should you watch for in a spray drying CDMO?

Hendrik Grobler: An absolute red flag is when the first thing they tell you is that we can dry anything, and we can dry anything at any scale without a problem. I recently watched a video on social media where a toll manufacturer actually explains to a customer how easy it is to scale up from a pilot scale dryer to full production without any process development or process engineering or equipment optimization. It is critically important that you explain to the customer your experience with similar products, with similar volumes. What was the process that you followed for that? What is the process that you’re going to follow for this specific product for this customer, and how are you going to achieve these objectives?

That’s why we ask specific questions. Is particle engineering involved? Is there opportunity to improve the product or to expand the product? How can we do that? How can we support you? Those are the important questions. We know what our capabilities are. We know how to scale product. We know how to scale volumes, but we take the customer through a defined process.

I have seen many times in the past that a customer asked me, why would you follow this detailed process? We have spray dried this product before. We know how to deal with this product. We have to explain to them that there’s always room for improvement. There’s always room for optimization, whether it’s on the product side, the product functionality side, or the drying process side. Ultimately, we want to produce the highest value, the highest quality product at the highest yields for the customer.

Will West: I’ll be completely honest here. We’ve been criticized by our customers before for having an intake form that’s overly detailed. Burdensome is probably a fair description. It takes some time, and frankly, we might even need to shorten it a little bit. But what it does is it forces them to think in a very granular fashion about what they want out of the relationship, what they want out of the project, and what they want out of the product that we’re creating or helping process for them.

It eliminates the gray areas. It answers the questions, and it forces the discussion in a way that creates positive outcomes. We get through the beginning. We get into the middle. We get toward the end. There’s no mistaking what we were trying to accomplish. Issues like “this is not what I expected” or “I thought you said you could do this” don’t happen with us.

Yes, it means there might be an extra three days or a week filling out forms and talking about why do you need this? What’s this question about? How do I answer this? Or just plainly, I don’t know, which we get a lot, and that’s okay. It forces the two sides to talk. It means that we engage in a project with clarity, and we do exactly what is in the best interest of the customer.

The red flag is when the customer goes down a road with [a partner] without certainty of knowing exactly what they’re going to get. Even if that certainty is a clear understanding that the next step is going to have an outcome where the probability of successful particle engineering is only maybe 80%, they know that they’re going to get five to seven kilos of a powder that’s very likely within a range of spec that they can then take on the road to their clients. They’re going to have 250 grams of the powder that they can give to each of, call it, 20 clients. They can then say to those clients, take this to your lab, take this to your customers, and show them that in 60 days you’re going to have this available as a product. They can seed the market, start taking orders, and have a book of business before the product is even available to the market. That’s the kind of clarity that’s valuable in a relationship. If you don’t have that from your partner, that’s a red flag.

Ulli Lindauer: Slow is smooth and smooth is fast.

Edited for length and clarity from a recorded conversation with Hendrik Grobler and Will West and Ulli Lindauer.