12:00 AM
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Feb 11, 2013
 |  BioCentury  |  Finance

Bubbling up in Japan

Japan's biotech stocks surge, question is how long it can continue

Japan's biotech stocks have benefited from a spike in interest from retail investors driven in part by last October's Nobel Prize for a Kyoto University stem cell researcher. Company executives who spoke with BioCentury are wary that there could be an equally precipitous outflow - indeed, there are signs the rally is ebbing - and are mulling raising funds while the prices are still good.

Since the beginning of the year, Japanese biotechs have seen their shares rise 71% based on an equal price-weighted basis (see "Japanese Biotech Performance," A11).

This compares to an 8% gain by the BioCentury 100, an index of the top 100 U.S.-listed biotechs by market cap; a 7% gain by the Nikkei 225; and a 30% gain in the Mothers index of high-growth and emerging stocks on the Tokyo Stock Exchange.

Shares prices for two companies have already doubled since the beginning of the year, including NanoCarrier Co. Ltd., which was valued at over $1 billion for several days in late January.

The cancer company has no marketed products. NK105, its most advanced product, is in Phase III testing for breast cancer. The product, which comprises micellar nanoparticles containing paclitaxel derivatives, is partnered with Nippon Kayaku Co. Ltd.

The surge began in November, after Kyoto University Professor Shinya Yamanaka received a Nobel Prize for his work on reprogramming mature cells to become pluripotent stem cells.

Since October, an equal price-weighted index of 21 Japanese biotechs is up 158% (see "Bubble Up").

"All of a sudden healthcare became a hot thing, particularly those biotech stocks that went public recently but are not really well recognized," said Fuminori Yoshida, president and CEO of cancer company SymBio Pharmaceuticals Ltd.

SymBio was one of four biotechs to go public in Japan in 2011. The others were antibody platform company Chiome Bioscience Inc., infectious, neurology and gastrointestinal play RaQualia Pharma Inc. and tool company 3-D Matrix Ltd.

In some cases, the run-up has helped some stocks to recover. Including the recent gains, SymBio's Friday close of ¥488 is close to the company's ¥560 price per share when it went public. But RaQualia's Friday close of ¥665 is still well below the ¥1,600 price of its IPO.

On the other hand, both Chiome and 3-D Matrix are well above water. Chiome closed at ¥14,720 on Friday, and 3-D Matrix closed at ¥5,540. Chiome's IPO price was ¥2,700, while 3-D Matrix priced its offering at ¥2,100 per share, or ¥1,050, accounting for a...

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