Pfizer’s Exit Halves Japan Biotech Firm Value In Three Days

(Bloomberg) — Sosei Group Corp. has lost over half of its market value in just three days on concern about its outlook after Pfizer Inc. said Monday it will discontinue the partnered development of a diabetes and obesity drug.

Most Read from Bloomberg

Shares of the Tokyo-based biopharma firm plummeted 26% Thursday, the most since 2006, bringing the total plunge in the last three days to 54%. The selloff shaved the firm’s market value to 119 billion yen ($820 million) from 260 billion yen on Monday.

Pfizer said that it will discontinue the clinical development of lotiglipron, which uses Sosei’s proprietary technology, after drug studies showed elevated transaminase liver enzymes. Instead the US company will proceed with another diabetes drug candidate danuglipron.

Analysts at Jefferies and Citigroup Inc. both cut recommendations to sell-equivalent from buy and trimmed price target after removing from forecasts the GLP-1 agonist program to develop lotiglipron. That’s even as Sosei said in a statement that the discontinuation doesn’t have an important impact on its earnings for the fiscal year through December.

Sosei is in negotiations with Pfizer to seek return of the drug and “it will aim to license out the drug candidate again in the future, but it will need to resolve the issues pointed out by Pfizer,” Citigroup analyst Hidemaru Yamaguchi wrote in a note dated Tuesday.

Sosei was founded in 1990 and focuses on drug discovery and early development. It has established partnerships with global pharmaceutical companies via license agreement, according to its website.

(Updates with market close)