Peptistar: a joint venture with Shionogi and Sekisui Chemical to take peptide manufacturing in-house (2017)

What it means for a discovery company to take on manufacturing

The heart of this decision was that it carved out manufacturing alone — the heavy step — into a separate company, without breaking the light structure of a discovery-only business. However fast PDPS finds candidates, there is no medicine unless the active ingredient can be produced at stable volume. To keep the nimbleness of holding neither plant nor inventory while closing the narrow point downstream, sharing capital in a joint venture with Shionogi and Sekisui Chemical, who had the technology, made more sense than owning a factory outright. The care in the design shows in the refusal to house discovery and manufacturing under one roof, placing them instead in separate legal entities.

That said, the joint-venture form, while sparing PeptiDream from carrying the difficulty of manufacturing alone, also left a structure in which it could not decide the success of scale-up by itself. The cost of making special peptides remained high even after the plant was running, and the original problem — establishing mass-production technology — was carried forward for years. That the venture required funding on the order of $181.2M (¥20bn) and several shareholders is itself a sign that bringing manufacturing in-house held a difficulty of a different order from discovery. Whether the standing PeptiDream earned in discovery can be carried through to practical medicines depends on how far this joint venture can lower the wall of mass production.