Japan stock market week to Feb 23, 2009

Tokyo accelerated its losses in the week ended February 23. The Nikkei 225 fell 4.8%, to close below the 7,400 mark, following a modest decline  last week amid thin trading volume, while the Topix index ended off  4.5%. Investors were concerned about the Japanese political environment,  with a weakening of the present Cabinet's leadership that is causing a  delay in critical decisions such as the compilation of a fiscal 2009  supplementary budget. Another anxiety was about the country's economy,  which is showing a steeper downturn than other major developed nations.  Although the yen's depreciation was a positive factor for  export-oriented issues, these stocks failed to react to the currency  market movements because of players' worries about an economic slump  grew. The pharmaceutical index was down 3.0%, slightly outperforming the  market but moving within a narrow price range.

Chugai continued its downturn, with a 2.3% dip, even though it concluded  a license agreement with Romark Laboratories of the USA to receive  exclusive rights in Japan to develop and market nitazoxanide for the  treatment of chronic hepatitis C (Marketletter February 23).  Nitazoxanide (trade name Alinia), an oral thiazolide compound with  activity against protozoa, bacteria and viruses, was approved in the USA  in 2002 for diarrhea caused by parasitic disease. An overseas Phase II  clinical trial for hepatitis C genotype 4 patients showed that  nitazoxanide in combination with pegylated interferon alfa-2A and  ribavirin achieved a 30% higher sustained virus response rate than that  of the standard treatment. Chugai, which currently markets Pegasys  (pegylated interferon) and Copegus (ribavirin) in Japan, expects that  the licensing agreement will strengthen its hepatitis C treatment  franchise.

Takeda retreated 2.7%, after it announced the discontinuation of  clinical trials for TAK-242 for severe sepsis. A Phase III study has  been conducted in Japan, the USA and Europe but, after a review of its  development strategy, Takeda concluded that TAK-242's profile does not  meet the criteria to support continuation of further development. The  company said the decision had not been influenced by concerns about  safety or efficacy of the drug. Although the discontinuation of TAK-242  is negative, Takeda intends to enhance its R&D pipeline through the  mixture of in-house development, licensing and alliance activities.