I want to say this is 85% legit. A lot of Software companies back in the day had terrible management of their IPs. I've heard many a story of source codes for older games forever being lost. I would wager to hope that somewhere out there a Saturn Dev kit is laying around with the source code for that game just waiting to be found.
A guy on TNL named Haohmaru who I think posts here also recounted some stories about being contacted by Sega because he was a guy who literally had a collection of rare & obscure arcade boards from ages ago that Sega had lost the original code to. The thing about PDS is I would wager that Sega would love to have the old source code since I'm sure they themselves realize just how much a copy of the game itself goes for these days.
I just read up a bit on it myself and unless they're lying to maintain the rarity of the game, then they legit don't have the source code and they'd have to rebuild it from the ground up. Especially since Saturn emulation is, according to them, very difficult (and I have no reason to doubt that.)
They said that it would be a risky investment, which it absolutely would be.
Panzer Dragoon is such a niche franchise that it would not recoup the investment costs unless it was the next big thing. Sega has never produced 'the next big thing'. Nothing they made has, to my knowledge, ever been the popular of its kind in any genre of game. They make some damn good games, though.
Valkyria Chronicles was dope AF and
VC 4 was just as good but even those games are niche.
I'd take a remaster of
Skies of Arcadia too. Preferably the one on the Gamecube with the exxtra content.