FROM ENTREPRENEURS

01 STORY Pepti
Dream
UTEC

Discovering the drug of miracles,
the challenge of PeptiDream

Peptidream, Inc. CEO UTEC Partner

PROLOGUE

In the natural world, there are creatures which are capable of producing substances unique to those species. In many instances in human history, such naturally occurring substances have been used as “miracle medicines” to save human lives. One class of such substances are "special peptides" produced by synthesizing "special amino acids" that do not occur naturally in the human body. PeptiDream was the first in the world to succeed in artificially synthesizing special peptides and linking it to drug discovery. PeptiDream has received a great deal of attention from the scientific and pharmaceutical industries and now, we are continuing our quest for medicines to cure incurable diseases around the world. The company was listed on the TSE Mothers in June 2013. How was PeptiDream able to commercialize a completely new drug discovery platform? We talk with the founder, President and CEO, Mr. Kiichi Kubota, and his companion from the founding period, UTEC partner, Dr. Maiko Katadae.

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SECTION01 : Finding the miracle medicine drug discovery platform

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Finding the miracle medicine drug discovery platform

Kubota:
There are 20 types of amino acids we possess in our body that have the l configuration. All proteins and peptides we synthesize in our bodies are made from these l-amino acids, its like we are playing LEGO.

On the other hand, in nature there are fungi, mosses, animals and plants which can produce special peptides from their own individual amino-acids. Often times the ‘miracle medicines’ that are discovered from rare species from the amazon or Tibet are these special peptides. The inception of our technology was an idea to make these special peptides available in test tubes rather than take a trip to the depths of the amazon forest or the Tibetan mountains.

Let’s review our science text books. Our bodies are made from several trillion cells. Each cell has 20 types of amino acids which it uses to synthesize its proteins and peptides. This synthesis occurs in the ribosome “the protein synthesis factory” from information obtained by copying the building instruction from the cell’s nucleus. If we can control the functioning of this ribosome, we can make proteins and peptides from selected amino acids and construct a practical drug discovery platform.

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Kubota:
The process through which the cell synthesizes its proteins or peptides have been long thought to be the “god’s work” or something that humans could not intervene with. However, if we use the “flexizyme technology” which our company’s co-founder Professor Suga invented, we can use the functioning of the ribosome to combine amino acids selectively. Even if the amino acid is specialized, we can handle the amino acids just like we would a normal one.

The flexizyme technology is a technology which “fools” the ribosome into combining amino acids and making proteins as we would intend it to. In addition, Peptidream has been able to not only synthesize specialized peptides but also to unlock the infinite opportunity of peptide drug discovery.

Kubota:
Even if we are able to synthesize specialized peptides, the technology wouldn’t be so great if we could only create one or two. For drug discovery, we would need to be able to make various peptides at large volumes (a peptide library) and to screen for those peptides that would be appropriate to act as drugs. We were able to develop the ‘FIT system” which enables such library of specialized peptides, to the point where one test tube would contain a trillion peptides. Furthermore, we developed the ‘RAPID Display’ technology which allows for a fast and accurate screening of these billions and trillions of peptides. Combining these two technologies we established a drug discovery platform system ‘PDPS”. We now have alliances with global pharmaceutical companies and are at the forefront of drug discovery.

How will this special peptide platform make better our everyday lives? What will be made possible?

Kubota:
All diseases without cure are the addressable markets for the drugs discovered using our platform. Example of these include diseases which consistently rank high on the causes of deaths in developed countries such as cancer, diabetes mellitus, high blood pressure, other lifestyle diseases and their complications. Our dream is to stand up against these diseases through drug discovery. Fortunately, global pharmaceutical companies are also looking to cure diseases which have no cure. We are lucky that their needs and our intentions are aligned.
Kubota:
The process through which the cell synthesizes its proteins or peptides have been long thought to be the “god’s work” or something that humans could not intervene with. However, if we use the “flexizyme technology” which our company’s co-founder Professor Suga invented, we can use the functioning of the ribosome to combine amino acids selectively. Even if the amino acid is specialized, we can handle the amino acids just like we would a normal one.

The flexizyme technology is a technology which “fools” the ribosome into combining amino acids and making proteins as we would intend it to. In addition, Peptidream has been able to not only synthesize specialized peptides but also to unlock the infinite opportunity of peptide drug discovery.

Kubota:
Even if we are able to synthesize specialized peptides, the technology wouldn’t be so great if we could only create one or two. For drug discovery, we would need to be able to make various peptides at large volumes (a peptide library) and to screen for those peptides that would be appropriate to act as drugs. We were able to develop the ‘FIT system” which enables such library of specialized peptides, to the point where one test tube would contain a trillion peptides. Furthermore, we developed the ‘RAPID Display’ technology which allows for a fast and accurate screening of these billions and trillions of peptides. Combining these two technologies we established a drug discovery platform system ‘PDPS”. We now have alliances with global pharmaceutical companies and are at the forefront of drug discovery.

How will this special peptide platform make better our everyday lives? What will be made possible?

Kubota:
All diseases without cure are the addressable markets for the drugs discovered using our platform. Example of these include diseases which consistently rank high on the causes of deaths in developed countries such as cancer, diabetes mellitus, high blood pressure, other lifestyle diseases and their complications. Our dream is to stand up against these diseases through drug discovery. Fortunately, global pharmaceutical companies are also looking to cure diseases which have no cure. We are lucky that their needs and our intentions are aligned.

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PROBLEM

UTEC’s Dr. Maiko Katadae has seen Peptidream from its birth to the drug discovery technology of dreams that it is today. Peptidream sprouted from the day Dr. Katadae met Professor Suga’s flexizyme technology. Through the advice from the Technology Licensing Office of Tokyo University that this technology may be suited for development by a venture, Dr. Katadae decided to support the incorporation of Peptidream and the commercialization of its technology.

SECTION02 : IP strategy that lay the foundations of Peptidream

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IP strategy that lay the foundations of Peptidream

Katadae:
When I first saw Professor Suga’s invention I was astonished to say the least. At that point, there was no candidate drug being produced by the flexizyme technology yet but I had firm belief that this technology would enable drug discovery that had never been seen before and decided to pursue the incorporation of the company with professor Suga and the Tokyo University TLO. I met Mr.Kubota in the autumn of 2005 and felt his personality and his business philosophy was a great fit to the company and introduced him to Professor Suga as a CEO candidate for the new company.

And so Peptidream was incorporated in 2006 with Mr.Kubota as CEO. Peptidream’s strength of course lied in its flexizyme technology. Mr.Kubota came up with an impressive IP strategy fully utilizing the uniqueness of the flexizyme technology.Peptidream hence became a unique existence that no other company could imitate. Currently, Peptidream possesses library building technology, FIT system, RAPID display screening system but these were all created through Mr.Kubota’s IP strategy.

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Kubota:
At first our IP was only the flexizyme technology. After that, we were granted the patent for the FIT system. However for the screening technology to screen which peptides would be useful as a drug I realized we had to in-license external IP. If a company tries to make up for a technology deficit through the in-licensing of another companies technology, the value of the existing technology IP falls to below half its original value. It was a hard pill to swallow but we decided to focus on the development of our own display technology. It took two years to produce our unique RAPID display technology. Peptidream was now able to be established as a drug discovery platform through the combination of the three patented technologies. We made sure that no one else could do the same drug discovery without the combination of these three uniquely patented technologies. We created a situation that if anyone wanted to perform special peptide discovery, they would have to sign a contract with us. Till this day, there are no other company anywhere in the world which has a platform that can perform from drug discovery to drug screening.

Peptidream currently has contracts with domestic partners Daiichi Sankyo, Teijin Pharma and international pharmaceutical companies as an alliance partners. A venture that came from a “zero start” and growing through partnership with large corporations, is the ideal form of a biotech venture. We think this was only possible due to IP strategy and inhouse technological development.

Kubota:
The reason we were able to pursue joint development schemes and form alliances with domestic and international pharmaceutical companies from the very early days of our companies is because we had our unique technological development of course, but also because we solidified our patent strategy and established a “winning pattern” for ourselves.

We incorporated the company in 2006. Back then, the center of the pharmaceutical industry was antibody drugs. However, many international pharmaceutical companies had been looking for candidates for the next drug development as they foresaw high competition. With this background, pharmaceutical companies who saw our publication on specialized peptide drug discovery started reaching out to us. We only responded to these offers. We did not proactively approach the pharmaceutical companies. When signing contracts with them, we would submit our standard fee table for each joint development, our strategy was to always maintain a bullish attitude.

These strategies eventually turned to fruit and peptidream was able to be a profitable business from its second year onwards. We currently have contracts as alliance partners with 13 global pharmaceutical companies.

Kubota:
At first our IP was only the flexizyme technology. After that, we were granted the patent for the FIT system. However for the screening technology to screen which peptides would be useful as a drug I realized we had to in-license external IP.
If a company tries to make up for a technology deficit through the in-licensing of another companies technology, the value of the existing technology IP falls to below half its original value. It was a hard pill to swallow but we decided to focus on the development of our own display technology.

It took two years to produce our unique RAPID display technology. Peptidream was now able to be established as a drug discovery platform through the combination of the three patented technologies. We made sure that no one else could do the same drug discovery without the combination of these three uniquely patented technologies. We created a situation that if anyone wanted to perform special peptide discovery, they would have to sign a contract with us. Till this day, there are no other company anywhere in the world which has a platform that can perform from drug discovery to drug screening.

Peptidream currently has contracts with domestic partners Daiichi Sankyo, Teijin Pharma and international pharmaceutical companies as an alliance partners. A venture that came from a “zero start” and growing through partnership with large corporations, is the ideal form of a biotech venture. We think this was only possible due to IP strategy and inhouse technological development.

Kubota:
The reason we were able to pursue joint development schemes and form alliances with domestic and international pharmaceutical companies from the very early days of our companies is because we had our unique technological development of course, but also because we solidified our patent strategy and established a “winning pattern” for ourselves.

We incorporated the company in 2006. Back then, the center of the pharmaceutical industry was antibody drugs. However, many international pharmaceutical companies had been looking for candidates for the next drug development as they foresaw high competition.
With this background, pharmaceutical companies who saw our publication on specialized peptide drug discovery started reaching out to us.
We only responded to these offers. We did not proactively approach the pharmaceutical companies. When signing contracts with them, we would submit our standard fee table for each joint development, our strategy was to always maintain a bullish attitude.

These strategies eventually turned to fruit and peptidream was able to be a profitable business from its second year onwards. We currently have contracts as alliance partners with 13 global pharmaceutical companies.

FINAL SECTION : Being a Venture Capitalist, is to accompany a dreamchaser

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FINAL SECTION

FINAL SECTION

Being a Venture Capitalist, is to accompany a dreamchaser

Kubota:
The first impression I had of Dr. Katadae was that she was a technology enthusiast rather than someone at a venture capital firm.


Dr. Maiko Katadae,now a partner at UTEC had been with Peptidream since its very inception. The first task Dr. Katadae and Mr. Kubota did together was not to invest but to make an office at the University of Tokyo, cleaning it and bringing chairs and basic office supplies together. The investment into Peptidream happened in 2008.



Katadae:
When I first saw the felxizyme technology I thought that “this technology will be a success or rather I want to make it a success!”. That’s why we invested in Peptidream but do you remember the business plan we first made together? We were planning about $10M USD sales in the company’s 6th or 7th year.
Kubota:
hmm, the documents are still there but I don’t remember the numbers (laughs).
Katadae:
We were at a stage where we did not even know if the business model would work. “We probably said one project should bring about about this much revenue, and thought how many of those we needed to achieve our goal”. When we looked back, those numbers were so far off.

Peptidream’s business model is one which presumes that pharmaceutical companies would be willing to reveal information about their drug targets.In simpler terms, it is assumes that pharmaceutical companies would reveal information usually kept very secret. We received a lot of comments in the line of “there is no way that is possible”. I remember being very frustrated at this but now I think of it as “ We were able to prove a business model which people thought impossible” which I find very meaningful.
Kubota:
Dr. Katadae has always been with us, from when we were setting up our first office until our IPO. The perspective to see a venture capitalist as not someone who would just offer money but as someone who chases dreams with you is a very important perspective in making a successful business.
Katadae:
At the start, venture capitalists and entrepreneurs sit at opposite sides of the table. However, in the process of investing, I place an emphasis on how close we can sit with the entrepreneurs on the same side of the table. Venture capitalists until they invest are simply looking to buy shares at a cheap rate and then sell at a high price, hence our incentives are the opposite of an entrepreneurs’. The important thig is that trust and closeness are built in the process of having many discussions with the entrepreneurs that when we realize, we have ended up on the same side.
Kubota:
Well, in our case you were literally sitting next to me from the very start.


Peptidream went public on the Tokyo Mothers Exchange in June of 2013. Peptidream’s share was valued at 7900 yen, 2500 yen over the public price. It’s market capitalization has surpassed ~$6 billion USD. Mr. Kubota dreams of having the first drug go commercial with the initials “PD”



Kubota:
I do have a wish to make a drug that has the “PD” initials. However, at the base of this wish is my motivation to work that alleviates the suffering of patients.

Provide novel drugs for patient without cures, that is always our mission.