Unfazed by the two major setbacks it suffered during the last two years, Dr Reddy's Laboratories seems upbeat about its prospects on the drug discovery front.

The company, which commenced Phase II clinical trials on its lead cancer compound DRF 1042 in March, has now decided to advance development work on its broad spectrum anti-infective compound DRF-11057. The compound is currently under preclinical development.

G V Prasad, chief executive officer of Dr Reddy's, said: "DRF-11057 was tested by external experts against European and US bacterial isolates, and we are very excited about their findings. We will advance the compound for development, and initiate toxicology studies later this year."

The company is looking at licensing opportunities for this compound. The company also has a compound in the bacterial infections segment. The compound DRF-8417 is under preclinical development.

Prasad also announced the addition of a new compound DRF 10945, which is a predominantly PPAR alpha agonist to its metabolic disorders programme.

The company will be conducting preclinical studies on the compound for development as a triglyceride lowering/HDL elevating agent.

This apart, the company already has DRF-4832 compound in the same therapeutic area. This is under late preclinical development in Europe.

Dr Reddy's also initiated two exploratory stage research programs on PPAR-independent mechanisms. Go/no-go decisions on pursuing these programs beyond the exploratory stage will be made towards the end of the current fiscal, Prasad said.

One of these research programmes is based upon a new gene target, and the company has some early compounds, which are currently being tested in animal models.

The other programme is in the early discovery stage. The company is currently screening the two compounds in vitro.

In the anti-cancer segment, the company began Phase II clinical trials in March on its lead compound DRF 1042, a topoisomerase I inhibitor against osteosarcoma, renal cell carcinoma, CNS tumors, and breast cancer. DRF-1644, another compound in the same segment, has completed preclinical studies in Europe.

Currently, Dr Reddy's discovery pipeline has nine compounds, inclusive of DRF-2725 and DRF-4158. Incidentally, development work on DRF-2725 and DRF-4158 was suspended by Novo Nordisk and Novartis, respectively.

However, Novo Nordisk is now going ahead with the development of another insulin sensitizer compound Balaglitazone (DRF-2593). This was outlicensed by Dr Reddy's in March 1997 and has so far completed Phase II clinical trials.

In addition to the nine compounds, Novartis also has rights for a dual-acting insulin sensitizer compound, in lieu of DRF-4158. The compound is yet to be disclosed by the company.