When wooing retail investors, Chairman Kiichi Kubota likes to compare non-standard peptide drugs to a Jaguar sports coupe (while comparing other drug types to a dump truck and motor scooter). We believe this comparison would be more relevant to PeptiDream if the Jaguar were missing its wheels.
PeptiDream has really cool technology – it can put trillions of different peptides in a single test tube! But we believe the coolness of PeptiDream’s technology amounts to at best a very small business opportunity. In other words, the question investors need to ask the company is “So what?”
To even remotely justify investor expectations, PeptiDream would likely need to succeed in meeting drug development milestones at rates many times industry norms. But to date, PeptiDream has underperformed these industry norms, despite being in operation since 2006. Even as the Company has struggled to commercialize drugs, Chairman Kiichi Kubota tours Japan ginning up retail investor interest in the stock in every prefecture in Japan.
Muddy Waters Capital is short PeptiDream, Inc. because we believe it is more stock story than substance, and the market is deluded as to its potential for commercializing drugs. PeptiDream touts its 19 major partnerships and 101 discovery programs, but half of its partnerships are likely effectively dormant or dead. We see it being highly unlikely that the company’s own development attempts ever yield significant revenue. PeptiDream’s recent shift in focus to developing its own pipeline recalls once-beloved Sosei Group Corporation (“Sosei”), which has lost significant market cap over the past three years. We forecast PeptiDream will have at most one drug commercialized by 2027, versus investor expectations of eight to 15 by then.
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