Japan stock market week to July 16, 2007

Tokyo retreated slightly in the week to July 16 (four trading days only because the last was a national holiday in Japan). The Nikkei 225 edged down 0.1% to close at the 18,200 level, following a three-day losing streak. The market bounced back on the last reporting day seeing the strength of New York markets. The Topix index dipped 0.5%. Investors basically stepped aside due to approaching significance events, including the forthcoming quarterly earnings reports and the House of Councillors election due on July 29. A lack of positive news developments and incentives also caused players to avoid aggressive investments. The pharmaceutical index was off 1.0%, underperforming the market.

Daiichi Sankyo slipped 0.9%, without being helped by a report of being granted exclusive rights to develop and commercialize Amgen's denosumab, a fully-human monoclonal antibody for potential treatment and prevention of bone loss conditions, including osteoporosis and bone metastases (see page 21). Denosumab targets a ligand which is an essential mediator of cells that break down bone. Under the contract, Daiichi Sankyo will make an upfront payment of $20.0 million and development costs of approximately $150.0 million. Denosumab is in Phase II clinical trial for osteoporosis and Phase III for bone metastases in Japan.

Ono Pharmaceutical lost 1.4%, despite the news that Swiss drug major Novartis had received US approval of Exelon patch (rivastigmine transdermal system) for the treatment of mild-to-moderate Alzheimer's disease (Marketletter July 16). In Japan, Novartis Pharma and Ono are jointly conducting a Phase III clinical trial. The drug is expected to offer an easier way to manage the therapy for patients and caregivers through a skin patch which provides continuous delivery of the medication for 24 hours. Another advantage appears to be a reduction of gastrointestinal adverse effects observed in the oral formulation. The drug was submitted for review in the European Union in 2006.