Japan stock market week to July 2, 2007

Tokyo rebounded moderately in the week ended July 2. The Nikkei 225 edged up 0.3%, to close at the 18,100 level, while the Topix index rose 0.9%. The market saw a weak opening but strengthened toward the weekend, due to buying by international institutional investors who undertook "window dressing" for their half-year book-closing. Investors were not discouraged by a report that Japanese industrial production in May fell an unexpected 0.4% from the previous month, against a consensus projection of a 0.7% rise, due to a slowing of exports and a delay in inventory adjustments of the information and technology sector. The pharmaceutical index was up 0.7%, outperforming the market.

Toyama climbed 5.4%, reflecting the fact that it had out-licensed T-5224, an anti-rheumatoid arthritis agent with a new mechanism, to Roche, awarding exclusive research, development and marketing rights for global market, excluding Japan (Marketletter July 2). The drug entered a Phase I clinical trial in Japan in June 2006 and another Phase I study is due to commence in the USA in the current year. Toyama will receive a maximum $370.0 million revenue, including upfront and milestone payments. The drug is expected to inhibit the binding of the transcription factor AP-1 to DNA and restrain the production of inflammatory proteins and enzymes related to bone destruction.

Eisai advanced 1.7%, after it received approval in Japan for an additional indication on Tambocor (flecainide acetate) for the treatment of paroxysmal atrial fibrillation/flutter, a symptom associated with tachyarrhythmia causing severe palpitation. Tambocor restrains paraxysmal atrial fibrillation/flutter by blocking sodium channels and the effects can be sustained with twice-daily administration. Eisai's share performance was also supported by its recent marketing of a once-weekly formulation of Actonel (risedronate sodium hydrate) for the treatment of osteoporosis. Ajinomoto is the originator of risedronate, while Eisai distributes the drug it supplies. Eisai expects that the addition of the new formulation means that turnover of Actonel will expand 20% year-on-year to 9.0 billion yen ($73.8 million) in the current fiscal year.