Japan stock market week to Feb 26, 2007

Tokyo posted another advance in the week to February 26. The Nikkei 225 rose 1.5% to close at 18,215.35, the highest since May 2, 2000, while the Topix index gained 2.1%. The Bank of Japan raised the benchmark interest rate to 0.50% from 0.25% on February 21, raising concerns that the higher rate could lead to an appreciation of the yen, but the currency stayed calm and worries receded. Investors further perceived that the rate hike would not negatively affect the economy. International investors activated the buying of Japanese equities, while some Japanese institutional investors took profit of domestic economy-oriented stocks including real estates and retailing toward the closing of the week.

The pharmaceutical index edged down 1.2%, underperforming the market. Kyowa Hakko was off 0.4%, even though it held a meeting to provide a briefing of its antibody drug R&D. The company's wholly-owned US subsidiary, BioWa, has developed Potelligent Technology which involves the reduction of the amount of fucose in the carbohydrate structure of an antibody. Potelligent-derived therapeutic antibodies are expected to have greater antitumor activity than conventional antibodies. To date, BioWa has has concluded out-licensing agreements with some major biotechnology companies, including Genentech and Biogen Idec. One of major compounds being developed by BioWa is BIW-8405, a monoclonal antibody targeting the interleukin-5 receptor for the potential treatment of non-atopic asthma, which is in a Phase I clinical trial in the USA. The compound was out-licensed to MedImmune in December 2006.

Astellas lost 2.6%, despite a report that Theravance, the originator of the antibiotic telavancin which Astellas in-licensed, had successfully submitted the product's New Drug Application to the US Food and Drug Administration. The drug is for the treatment of the complicated skin and skin structure infections caused by Gram-positive bacterial organisms including methicillin-resistant Staphylococcus aureus. The NDA submission is based on data from two Phase III clinical studies in which telavancin achieved its primary endpoint of non-inferiority to vancomycin and compared favorably to standard therapy in clinical cure and microbiological eradication, as well as overall therapeutic response rates. Astellas has another drug on file in the USA, vernakalant HCl, an antiarrhythmic agent for the acute conversion of atrial fibrillation co-developed with Cardiome of the USA. Astellas expects to launch these compounds there in the current year.