Japan’s TSE Mothers Plummets as PeptiDream Shares Tumble

Japan’s Tokyo Stock Exchange Mothers Index of smaller companies plunged to its lowest in almost three months as medical shares led declines. PeptiDream Inc. (4587) plummeted after the pharmaceutical company canceled a research and development pact with Pfizer Inc.

The Mothers Index lost 12 percent to 620.46 in Tokyo, its lowest close since April 5 and steepest drop since June 6. The gauge has fallen 41 percent since its recent peak on May 14, when it closed at its highest since March 2007.

PeptiDream tumbled 28 percent. CanBas Co. (4575) plunged 24 percent, the most on the index, after the maker of cancer medications soared as much as 728 percent this year. GNI Group Ltd., which makes drugs based on genome analysis and had surged as much as 514 percent this year, dropped 24 percent today. Gene Techno Science Co. slumped 23 percent for its biggest loss on record.

“The news about PeptiDream is overwhelmingly adding to pressure on the Mothers market,” said Yoshihisa Okamoto, head of equity research at Mizuho Asset Management Co. “It’s making investors lose confidence in start-up companies. Anxiety is breeding anxiety.”

Japanese biotechnology companies surged this year after Prime Minister Shinzo Abe pledged to reform the Pharmaceutical Affairs Law to facilitate biotechnology research, including exploring stem cells that can be reprogrammed for use in tissue engineering and regenerative medicine.

PeptiDream, which soared 268 percent the day after listing on June 11, dropped 28 percent to 7,740 yen. The biopharmaceutical company that specializes in peptide technology said yesterday it exited a 2010 cooperation agreement with Pfizer at the U.S. drugmaker’s request.

“The cancellation of the pact is a shock,” said Kenichi Hirano, a Tokyo-based market analyst at Tachibana Securities. The broader sell-off shows that “individual investors’ appetite is waning. We have clients who had been increasing their stakes bit by bit, but shares aren’t rising so they’re losing enthusiasm.”

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.