Eisai Co.’s shares had their biggest gain on record after partner Biogen Idec Inc.’s experimental drug for Alzheimer’s slowed progression of the disease in an early-stage study.

The Japanese drugmaker’s shares climbed as much as 21 percent to 8,748 yen in Tokyo trading today, headed for the largest gain since Bloomberg started tracking the data in 1974.The benchmark Topix Index rose 0.5 percent.

Biogen’s drug BIIB037 reduced beta amyloid, a protein fragment, in the brains of Alzheimer’s patients. It also cut cognitive decline, with higher doses and longer treatment resulting in increased improvement in an early-stage trial of 166 patients announced on March 20.

Eisai has an option to co-develop and co-promote BIIB037 with Biogen. The two companies are likely to equally split profits if the drug is successful in the last-stage trial as part of their Alzheimer’s disease collaboration, Thomas Wei, an equities analyst at Jefferies Group LLC, said in a note to clients.

Eoin Treacy's view

The ability of Japan’s numerous world class companies to deliver in an increasingly competitive global economy has been questioned over the last decades as economic malaise sapped investment in R&D and risk takers were excluded from board rooms. However, if Abenomics has succeeded in anything it is to cause some reassessment of Japan’s ability to reinvent itself. 

Eisai, a former S&P Pan Asia Dividend Aristocrat, has almost doubled since the beginning of the year, not least because of its close ties with Biogen. The share surged again today and while increasingly overbought in the short term, a clear downward dynamic will be required to check momentum beyond a brief pause.