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Targacept Reports Fourth Quarter And 2011 Financial Results

Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics™, today reported its financial results for the fourth quarter and year ended December 31, 2011.

Targacept reported a net loss of $9.8 million for the fourth quarter of 2011, compared to a net loss of $2.2 million for the fourth quarter of 2010. For the year ended December 31, 2011, Targacept reported a net loss of $8.5 million, compared to net income of $10.9 million for 2010. As of December 31, 2011, cash and investments in marketable securities totaled $249.3 million.

“We are continuing to execute on a business plan designed to advance the development of our robust pipeline of pharmacologically diverse NNR Therapeutics in therapeutic areas where there is a high unmet need and significant commercial opportunity,” said J. Donald deBethizy, Ph.D., Targacept’s President and Chief Executive Officer. “As the RENAISSANCE Program for TC-5214 nears completion, we remain focused on strategic prioritization and the optimal deployment of our cash resources to exploit our innovative science and pipeline.”

Recent Highlights and Program Updates:

TC-5214 (co-development with AstraZeneca)
  • Expect to report top-line results from two fixed dose trials (RENAISSANCE 4 and RENAISSANCE 5) and a long term study designed primarily to evaluate safety (RENAISSANCE 7) in the first half of 2012 in support of a potential second half of 2012 filing of a new drug application with the FDA as an adjunct to antidepressant therapy for major depressive disorder (MDD);
  • Reported top-line results from two flexible dose clinical trials (RENAISSANCE 2 and RENAISSANCE 3) that did not meet the primary endpoint, change in the Montgomery-Asberg Depression Rating Scale (MADRS) total score after eight weeks of adjunct treatment with TC-5214 as compared to placebo;
  • Recruitment continuing for the Phase 2b “switch” monotherapy study (known as the EXPLORER study) for patients with MDD who do not respond adequately to initial antidepressant therapy;

TC-5619
  • Initiated a Phase 2b study as a treatment for negative symptoms and cognitive dysfunction in schizophrenia; study planned to enroll approximately 450 patients with stable schizophrenia at U.S. and Eastern European sites, with a target of 80% tobacco users;
  • Initiated a Phase 2 study in adults with inattentive-predominant attention deficit/hyperactivity disorder (ADHDi) that is now planned to enroll approximately 152 patients at sites in the United States with top-line results expected in the second half of 2012;

TC-6987
  • Completed enrollment in Phase 2 studies in asthma and type 2 diabetes that are planned to guide the selection of indications for which this product candidate is best suited for later-stage development; expect to report top-line data from both studies in the first half of 2012;

AZD3480
  • Recruitment continuing in a Phase 2b potential registration study of AZD3480 head-to-head against donepezil in mild to moderate Alzheimer’s disease at sites predominantly in Eastern Europe and also in the United States; the Alzheimer’s Disease Assessment Scale-cognitive subscale (ADAS-Cog) and the Clinician Interview-Based Impression of Change Plus Caregiver Input (CIBIC-(+)) are co-primary endpoints of the study, with the Alzheimer’s Disease Cooperative Study ― Activities of Daily Living Inventory (ADCS-ADL) replacing CIBIC-(+) as a co-primary endpoint for European regulatory purposes;

AZD1446
  • Announced that Targacept was informed of AstraZeneca’s plans to progress the development of AZD1446 as a treatment for Alzheimer’s disease, with the next study expected to be a Phase 2 study as an adjunct treatment to donepezil; and

Scientific Leadership
  • Remained at the forefront of NNR research, with the following publication authored by Targacept scientists:
    • Bencherif M, Stachowiak MK, Kucinski AJ, Lippiello PM. Alpha7 Nicotinic Cholinergic Neuromodulation May Reconcile Multiple Neurotransmitter Hypotheses of Schizophrenia. Med Hypotheses (in press).

Financial Results

Targacept reported a net loss of $9.8 million for the fourth quarter of 2011, compared to a net loss of $2.2 million for the fourth quarter of 2010. The net loss position for the 2011 period as compared to the 2010 period was primarily due to an increase in research and development expenses and a decrease in amounts recognized into revenue from payments previously received from AstraZeneca and GlaxoSmithKline. For the year ended December 31, 2011, Targacept reported a net loss of $8.5 million, compared to net income of $10.9 million for 2010. The change was primarily due to an increase in research and development expenses, partially offset by an increase in amounts recognized into revenue from payments previously received from AstraZeneca and GlaxoSmithKline. Non-cash stock-based compensation charges of $2.0 million and $1.2 million were recorded for the fourth quarters of 2011 and 2010, respectively, and $8.5 million and $4.9 million for the years ended December 31, 2011 and 2010, respectively.

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