Dr Reddy's Laboratories surged in early trades on Friday on good buying support, but it slipped from the day's high. The scrip of the local pharmaceutical major continued to witness volatility.
DRL shares were up 1.3% at Rs 927 on the BSE in early trades. They, however, came off from the day's high of Rs 934. 8,500 shares changed hands on the counter.
DRL stock has been volatile in the last few sessions, moving to a high of Rs 917 and a low of Rs 880. The volatility on the counter has been caused by mixed developments. While the reports regarding the new drug development has been largely negative, on the flip side, the company's Q3 results were encouraging.
The negative development is that Nov Nordisk has decided to drop development of DRL's insulin sensitizer Ragaglitazar, whereas it has decided to move forward on DRL's another insulin sensitizer drug Balaglitazone for which it has also completed phase 2 clinical trials.
Novo Nordisk has decided not to pursue further development of DRL's insulin sensitizer Ragaglitazar (DRF2725; NN622). The decision has been taken after Novo performed a renewed benefit/risk assessment of the compound, including analysis of both the clinical Phase 3 data and the tumour findings in the long-term animal studies. The financial terms and conditions of the original agreement remain unchanged, DRL said. This compound was out-licensed by DRL to Novo Nordisk in August 1998. Ragaglitazar (DRF 2725; NN622) is an insulin sensitizer that acts as a dual PPAR (peroxisome proliferator-activated receptor) alpha and gamma agonist. In July 2002, Novo Nordisk had announced that it was suspending Phase 3 clinical trials of Ragaglitazar (DRF 2725; NN622) after it found tumors in one mouse and several rats in long-term animal studies.
Recently, Novartis decided to discontinue further development of another DRL drug DRF 4158 (a drug licensed by DRL).
On the other hand, Novo has completed analysis of Phase 2 data on DRL's another insulin sensitiser Balaglitazone (DRF 2593; NN 2344). Based on the good clinical efficacy and safety profile obtained in these studies, Novo Nordisk has decided to continue the development of Balaglitazone. This compound was out-licensed by DRL to Novo Nordisk in March 1997.
Balaglitazone (DRF 2593; NN2344) is a potent insulin sensitizer that acts as a partial PPAR (peroxisome proliferator-activitated receptor) gamma agonist.
DRL is a company focussed on drug research and development. But it recently dropped development of three compounds (DRF 4848, DRF 3188 and DRF NPPC) from its research pipeline without citing any reasons. The three compounds were undergoing/ completed pre-clinical development or animal trials. However, the company did not provide any reasons for this move.
Analysts are now awaiting the launch of DRL's modified version of Norvasc. The company was expected to launch amlodipine maleate (modified version of Norvasc), a blockbuster hypertension drug in August 2003, but it has delayed the launch to December 2003. Amlodipine maleate differs chemically from the amlodipine besylate form of Pfizer's anti-angina and hypertension blockbuster, which had sales of $2.5 billion in 2001.
For the third quarter ended 31 December 2002, DRL reported a 5% fall in sales to Rs 374.45 crore (Rs 3.74 billion) and a 42% drop in profit after tax to Rs 93.16 crore. A poll of analysts conducted by capitalmarket.com had projected the company to post a 34.5% to 42% fall in net profit, in the range of Rs 93.60 crore to Rs 106 crore (Rs 1.06 billion). Sales were forecast between Rs 441 crore (Rs 4.41 billion) to Rs 530 crore (Rs 5.3 billion). The fall in Q3 sales was primarily on account of a 32% drop to Rs 78.55 crore in generic sales. This, in turn, was the result of the company's exclusivity in sales of fluoxetine during the quarter. Revenues show decent growth if one-time items are excluded. Excluding the revenues from Fluoxetine exclusivity of Rs 117.70 crore (Rs 1.17 billion) and the one-time R & D license fee income in the quarter ended 31 December 2001, revenues registered a growth of 33% over the corresponding previous quarter.
BSE Code: 500124
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