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On Friday, shares of Japanese pharmaceutical giant Sumitomo Pharma experienced a significant drop, plummeting 15.60%. This decline seemed to be driven by investors opting to take profits, following the government’s recent endorsement of the company’s innovative iPS cell-based therapies for treating Parkinson’s disease and heart disease.
Sumitomo Pharma has seen its stock soar by more than 300% over the past year, reaching its highest point since 2019 just last week. This surge in value is attributed to heightened optimism surrounding its groundbreaking Parkinson’s treatment. The therapies under development leverage induced pluripotent stem (iPS) cells, which are adult cells that have been reprogrammed to revert to a state akin to stem cells.
These stem cells possess the remarkable ability to self-renew, functioning as a repair system by replacing damaged cells and maintaining tissue health. This capability makes them especially promising for applications in regenerative medicine.
Despite the long-term potential for these treatments to achieve blockbuster status in both Japan and the United States, analyst Hidemaru Yamaguchi from Citigroup Global Markets Japan cautioned that significant profit contributions are unlikely in the near term. He also remarked that the recent surge in Sumitomo’s stock has been “excessive,” indicating that the market may have overheated.
“While the treatment could potentially see widespread use and become a blockbuster in Japan and the US over the long term, we expect almost no profit contribution near term,” said Citigroup Global Markets Japan’s analyst Hidemaru Yamaguchi.
Sumitomo’s stock has been overheated, and recent gains have been “excessive,” he added.
According to Japan’s Ministry of Health, Labor and Welfare, formal approval will be granted within the next one to two months, NHK reported.
The endorsement comes years after Kyoto University professor Shinya Yamanaka, who later won a Nobel Prize for his stem cell research, first succeeded in generating iPS cells from mice in 2006.
Japan has been striving to develop stem-cell therapies, with Kyoto University’s CiRA, which runs a clinical-grade iPS cell bank, providing researchers access to prepared cells that can be used in trials for a range of conditions.
Sumitomo Pharma develops and markets prescription medicines across multiple therapeutic areas, including neuroscience, oncology and regenerative medicine.
