Japan stock market week to April 9, 2007

Tokyo rallied in the week ended April 9. The Nikkei 225 advanced 4.2% to close at the 17,700 level, the highest since the end of February, while the Topix index rose 3.3%. The market was weak in the middle of the review period due to profit-taking of recently-strong performers. However, a strong daily gain was recorded on the last trading day, helped by the firmness of New York markets and the yen's depreciation against the US dollar. Meanwhile, investors remain cautious about the market's near-term direction anticipating that Japanese corporations are likely to announce conservative earnings outlook for the next financial year in the forthcoming announcement of the current fiscal performance.

The pharmaceutical index ended up 3.4%, slightly underperforming the market. Santen leapt 7.0% because its subsidiary in Finland, Santen Oy, submitted the marketing authorization application of DE-085 (tafluprost) for glaucoma and ocular hypertension to 13 countries in Europe. DE-085 has been co-developed by Santen and Asahi Glass also of Japan. Santen is conducting clinical trials, while Asahi Glass is undertaking manufacturing development of the active pharmaceutical ingredient. The Japanese New Drug Application for DE-085 was filed in July 2006.

Astellas went up 4.7%, after it announced in the previous week that it had concluded a non-exclusive license agreement to utilize US firm Regeneron's VelocImmune technology to discover human monoclonal antibody product candidates (Marketletter April 9). Astellas will pay $20.0 million upfront and five additional annual payments of the same amount, and will be able to terminate the agreement after making the first three extra payments. Astellas will record the $80.0 million license fee for the initial four years as R&D expenses for the fiscal year ending Mach 2007.