Japan stock market week to Dec 3, 2007

Tokyo extended its advance in the week to December 3, as the Nikkei 225 rose 3.3% to close at the 15,600 level and the Topix index went up 4.4%. Tokyo was aided by the recovery of New York markets due to the reported massive infusion of cash by an Abu Dhabi government agency into Citiroup. Japanese investors thought that the worst of the the subprime turmoil in global markets was over. The pharmaceutical index was down 0.4%, underperforming the market reflecting the Ministry of Health, Labour and Welfare announcement that the extent of the drug reimbursement price reduction in April 2008 will be approximately 4.5%, based on a price survey in September (see page 7). In addition to ordinary reductions, certain drugs with large annual sales due to the expansion of demand may be subjected to significantly steep cuts based on recalculation of their prices.

Chugai gained 7.1% after it submitted a Marketing Authorization Application to the European Medicines Agency (EMEA) seeking approval for Actemra (tocilizumab), a humanized anti-human interleukin-6 drug for moderate-to-severe rheumatoid arthritis. The submission followed the previous week's filing of an application with the US Food and Drug Administration based on the findings of multinational Phase III trials involving over 4,000 patients. Actemra has been on the Japanese market since June 2005 as an orphan drug for Castleman's disease. The additional indications were filed in April 2006 for rheumatoid arthritis and juvenile-onset idopathic arthritis.

Astellas edged down 0.4% after signing an agreement to acquire US biotechnology firm Agensys for $387.0 million upfront (Marketletter December 3). Additionally, milestones of maximum $150.0 million will be paid in accordance with progress of clinical trials. Agensys, which specializes in therapeutic antibodies for cancer, has identified 30 proprietary targets in 14 cancer types. It uses its optimized hybridoma method to generate fully-human monoclonal antibodies and has Good Manufacturing Practices-certified facilities to produce investigational antibodies for preclinical and early-stage studies. AGS-PSCA, a prostate stem-cell antigen for the potential treatment of prostate, pancreatic and bladder cancer, is in a Phase I trial. Astellas' move is in line with its medium-term strategic plan of building up its antibody R&D capabilities. It previously acquired a non-exclusive license to Regeneron's VelocImmune technology and access to a phage display library from MorphoSys.