Japan stock market week to April 2, 2007

Tokyo staged a retreat in the week to April 2 following mixed movements. The Nikkei 225 dropped 2.8%, although the 17,000 mark was retained at the close, while the Topix index fell 3.4%. The moves were caused by crosscurrents of positive and negative factors. On the bright side, the expected establishment of new investment trust funds in the new business year encouraged investors. In contrast, some players took a wait-and-see stance because of a lack of new trading incentives and the lackluster data from the Bank of Japan's quarterly business sentiment survey undertaken at the end of the January-March quarter. The index of big manufacturers fell to 23 points from 25 in the previous survey.

The pharmaceutical index was off 2.7%, performing in line with the market. Eisai declined 4.8%, even though its subsidiary Eisai Korea had in-licensed Eril (injectable formulation of fasudil HCl), a vasodilator indicated for the prevention of cerebral vasospasm and ensuing cerebral ischemia following surgery for subarachnoid hemorrhage, from Asahi Kasei. Eisai Korea will begin development of the compound in its country in order to submit an application for approval. Eisai Korea is to expand business, in addition to the marketing of Aricept (donepezil) for the treatment of Alzheimer's disease, while Asahi Kasei is willing to utilize Eisai Korea's expertise in the neurology area.

Takeda lost 4.7%, despite a report that, with its US subsidiary, Takeda Pharmaceuticals North America, it had prevailed in a law suit involving the patent infringements on the Japanese firm's anti-diabetes drug Actos (pioglitazone) against Mylan and Alphapharm. A US federal court ruled that Mylan must pay to Takeda and TPNA $11.4 million for attorney fees and other expenses and Alphapharm $5.4 million. The court accepted Takeda's allegation regarding the two generic companies' misconduct. Takeda's share performance was not helped by its acquisition of the development and commercial rights from 3M of R-851 for topical cervical high-risk human papillomavirus infection and cervical dysplasia. R-851 is a part of immune response modifier (IRM) molecules and IRM acts to stimulate the human body's immune system to fight virus-infected cells and tumor cells. The compound is in Phase II clinical trials in the USA. Dainippon Sumitomo dipped 1.3%, without finding support from its R&D meeting to update on its current activities, focusing on clinical trial data for the two potentially significant compounds, lurasidone (SM-13496), for the treatment of schizophrenia, and ranirestat (AS-3201) for diabetic neuropathy. The effectiveness of lurasidone for schizophrenia in both Japanese and overseas Phase II clinical trials has been shown, while the company is considering initiating an independent Phase III clinical trial overseas after licensee Merck & Co returned the rights to the drug in December 2006. Phase III clinical trials conducted overseas of ranirestat did not demonstrate a statistically-significant difference against placebo in the primary endpoint of the change of the sensory nerve transmission speed. Phase III trials overseas are to be succeeded by Eisai, the licensee for marketing outside Japan.