Japan stock market week to Sept 17, 2007

Tokyo rebounded in the week ended September 17 (four trading days only because September 17 was a national holiday in Japan). The Nikkei 225 gained 2.3%, recovering the 16,100 level at the close, while the Topix index rose 1.3%. The market retreated temporarily mid-week following the news that Prime Minister Shinzo Abe had decided to step down. However, the negative impact of the incident was limited, because he had been expected to resign following the hammering his party took in the recent local elections. Investors generally remained cautious, unable to decide on basic investment strategies until Mr Abe's successor is determined in the following week. On the positive side, the weaker yen prompted some investors to buy back export-oriented issues. The pharmaceutical index was off 1.5% but outperformed the market.

Eisai leapt 9.1% after it initiated a new oncology team in the USA to prepare for the expected launch of eribulin (E7389) for the treatment of breast cancer. The drug, a microtubule growth suppressor and synthetic analog of halichondrin B derived from marine sponges, is in Phase II clinical trial in the USA for breast cancer and Eisai plans to submit a Subpart H application (a US Food and Drug Administration system which gives fast track review to new drugs that show efficacy in a severe or fatal disease) in the current fiscal year. The new team has a scheme for coordinating activities including production, marketing and information provision of the compound and Eisai plans to utilize 150 medical representatives for marketing eribulin.

Tanabe advanced 3.3% with investors recognizing that the planned integration with Mitsubishi Pharma in October is progressing as planned. It announced the results of its offering of early retirement program, which was released on July 25, aiming at having a suitably sized workforce. 61 employees applied to join the program which involves a premium allowance in addition to the normal retirement allowance with assistance in finding new employment. The expenses associated with the program will be 680.0 million yen ($5.9 million) which is to be recorded as an extraordinary loss in the interim financial results to September. The company has already incorporated an extraordinary loss of 2.5 billion yen associated with the merger, including the additional retirement allowance for the current fiscal year's interim results.