Japan has one of the most advanced biotechnology industries in the world, developing pioneering pharmaceuticals for the world's third-largest drug market and beyond. Its aging population makes for a natural home market, but the United States is often second destination of choice for Japanese drugmakers.
Investors often find this segment hard to play, as drug approvals or failures make or break new treatments.
Watch these four companies with coming "focus events," according to a new Nomura research series called Event Horizon tracking advances in Japanese clinical trials that should land in the short term. All four of the Japanese drugmakers have ADRs, meaning they're easily accessed for U.S. investors.
Daiichi Sankyo (DSNKY) plans to file a New Drug Application in Japan for its drug DS-8201, which has been getting "substantial market attention," according to Nomura. Its first approval should be coming as a third-line treatment for breast cancer. Should the approval come through, it would be a breakthrough for DS-8201 and Daiichi Sankyo would be sure to search for other applications.
Eisai (ESALY) plans to file in the United States for approval to use its thyroid-cancer drug Lenvima in conjunction with the skin-cancer drug Keytruda from Eisai partner Merck & Co. (MRK) as a combination treatment for renal-cell cancer.
Eisai is fighting against time. Merck has also won approval to use Keytruda with the Inlyta drug from Pfizer Inc. (PFE) for the same patient population, while Pfizer is also approved to combine Inlyta with another Merck drug, Bavencio, to combat renal-cell carcinoma.
In other words, watch this space. Should Eisai's application be delayed or fail, it would hurt instead of help the Japanese company.
Ono Pharmaceutical (OPHLY) should shortly release Phase 3 trials for using the drug Opdivo in combination with chemotherapy to treat first-line gastric cancer sufferers. The drug has already generated sales of ¥30.0 billion for the Japanese company as a third-line treatment for gastric cancer. Ono Pharmaceutical works in partnership with Bristol-Myers Squibb Co. (BMY) on Opdivo.
The change in patient population could be huge. There are three times as many first-line gastric cancer patients as there are third-line patients. The drug administration period for first-line treatment is also twice as long as for third-line treatment. First-line approval for the drug therefore should lead to a sizable increase in sales.
Ono Pharmaceutical could be on to a double winner with Opdivo. It is also awaiting the release of its CheckMate-227 study into using the cancer drug to fight lung cancer. There are two parts to the coming research. The studies look at using Opdivo in conjunction with chemotherapy or with chemotherapy and the drug Yervoy, another Bristol-Myers Squibb drug. Ono has exclusive rights to Opdivo in Japan, South Korea and Taiwan and partnered with Bristol-Myers Squibb internationally on it in 2011.
Favorable data should enable Ono to use Opdivo for first-line lung-cancer patients. It would compete with Merck's Keytruda, which despite being developed for melanoma has been applied in lung cancer. If the results of the research are poor, though, Ono would be at an even greater disadvantage to the frontrunner.
And Kyowa Hakko Kirin (KYKOF) soon should be announcing test results for Phase 2 studies of its drug known only as yet as KHK4083, a treatment for ulcerative colitis. It's an autoimmune disorder treatment. No drug to date has yet demonstrated effectiveness in treating both eczema and ulcerative colitis, a type of inflammatory bowel disease.
It looks like KHK4083 could be the first. If the Phase 2 trials are successful, the drug could have applications in all sorts of immune-related diseases involving Th2 "T helper" cells. It potentially could be put to use to combat nasal polyps and even food allergies and asthma. A broad range of uses, indeed.