Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical
company developing a new class of drugs known as NNR Therapeutics(TM),
today reported its financial results for the second quarter ended June
30, 2008.
Targacept reported a net loss of $6.8 million for the second
quarter of 2008, compared to a net loss of $8.3 million for the second
quarter of 2007. For the six months ended June 30, 2008, Targacept
reported a net loss of $12.6 million, compared to a net loss of $13.1
million for the corresponding period in 2007. As of June 30, 2008,
cash, cash equivalents and short-term investments totaled $101.9
million.
“We look forward to AstraZeneca’s expected completion of the Phase
2b clinical trials of AZD3480 in mild to moderate Alzheimer’s disease
and cognitive dysfunction in schizophrenia later this year,” said J.
Donald deBethizy, Ph.D., Targacept’s President and Chief Executive
Officer. “At the same time, Targacept continues to execute on the
development of three other promising clinical-stage NNR Therapeutics
in areas of great unmet medical need. Our recent progress is
highlighted by the initiation of a Phase 2b clinical trial of TC-5214
as an augmentation therapy for major depressive disorder.”
Ongoing Phase 2b Clinical Trials of AZD3480 (TC-1734)
In addition to reporting its financial results, Targacept
announced that it currently expects to report top-line results from
the Phase 2b clinical trial of AZD3480 (TC-1734) being conducted by
AstraZeneca in mild to moderate Alzheimer’s disease (the “Sirocco”
trial) in September 2008. Targacept also confirmed that the Phase 2b
clinical trial of AZD3480 (TC-1734) in cognitive dysfunction in
schizophrenia (the “HALO” trial) is fully enrolled and remains on
track to be completed by AstraZeneca by the end of 2008.
Recent Highlights
AstraZeneca Collaboration and Cognitive Disorders
— Initiated an exploratory Phase 2 clinical trial of AZD3480
(TC-1734) in adults with attention deficit/hyperactivity
disorder in collaboration with AstraZeneca;
— Completed a Phase 1 single rising dose clinical trial in which
TC-5619 was generally well tolerated at a dose at least 100
times greater than doses expected to have positive effects on
cognition in humans based on Targacept’s preclinical work;
TC-5619, a highly-selective alpha7 NNR-targeted product
candidate, is planned for development for cognitive
dysfunction in schizophrenia and potentially one or more other
conditions characterized by cognitive impairment, and
Targacept plans to initiate a Phase 1 multiple rising dose
clinical trial in the third quarter of 2008;
Depression
— Completed the dosing phase of a Phase 1 single rising dose
clinical trial of TC-5214;
— Initiated a Phase 2b clinical trial of TC-5214, the S
enantiomer of mecamylamine hydrochloride and a broad spectrum
NNR antagonist, as an augmentation therapy in subjects with
major depressive disorder who do not respond or who only
partially respond to first-line treatment with the marketed
antidepressant citalopram hydrobromide;
GlaxoSmithKline Alliance and Pain
— Completed a Phase 1 single rising dose clinical trial of
TC-6499, an alpha4beta2 NNR-targeted product candidate planned
for development for neuropathic pain, and plan to initiate
additional Phase 1 clinical development in the third quarter
of 2008;
Corporate Developments
— Added to the Russell 3000(R) Index, which measures the
performance of the 3,000 largest U.S. companies based on total
market capitalization; and
— Recognized as one of the Top 30 Companies in The Scientist
magazine’s “Best Places to Work in Industry” 6th annual
survey, ranking 16th overall. The survey was completed by
almost 2,000 scientists representing 207 life sciences
companies worldwide.
Financial Results
Targacept reported a net loss of $6.8 million for the second
quarter of 2008, compared to a net loss of $8. acyclovir. 3 million for the second
quarter of 2007. For the six months ended June 30, 2008, Targacept
reported a net loss of $12.6 million, compared to a net loss of $13.1
million for the corresponding period in 2007. The decreased net loss
for each of the 2008 periods was principally attributable to increased
operating revenues derived primarily from Targacept’s collaboration
with AstraZeneca and alliance with GlaxoSmithKline, partially offset
by increased research and development expenses. The results included
non-cash, stock-based compensation expense of $524,000 and $1.6
million for the second quarter of 2008 and 2007, respectively, and
$1.0 million and $1.9 million for the six months ended June 30, 2008
and 2007, respectively.
Net operating revenues totaled $5.2 million for the second quarter
of 2008, compared to $2.8 million for the second quarter of 2007. The
higher net operating revenues were principally attributable to an
increase of $1.8 million in milestones and license fees, which
reflects the achievement of milestone events related to progress in
the smoking cessation program under Targacept’s agreement with
GlaxoSmithKline and to the development of a product candidate in the
preclinical research collaboration under Targacept’s agreement with
AstraZeneca resulting in an aggregate of $700,000 in payments to
Targacept, as well as recognition of $1.1 million of deferred license
fee revenue from payments received from GlaxoSmithKline and
AstraZeneca in the second half of 2007. The GlaxoSmithKline alliance
was formed in July 2007. The higher net operating revenues for the
three-month period in 2008 were also attributable to an increase of
$561,000 in collaboration research and development revenue derived
under the AstraZeneca agreement. For the six months ended June 30,
2008, net operating revenues totaled $9.4 million, compared to $4.9
million for the corresponding period in 2007. The higher net operating
revenues were principally attributable to an increase of $2.8 million
in milestones and license fees, which reflects the achievement of
milestone events as described above and recognition of $2.1 million of
deferred license fee revenue from payments received from
GlaxoSmithKline and AstraZeneca in the second half of 2007. The higher
net operating revenues for the six-month period in 2008 were also
attributable to an increase of $1.7 million in collaboration research
and development revenue derived under the AstraZeneca agreement.
Research and development expenses totaled $10.5 million for the
second quarter of 2008, compared to $9.1 million for the second
quarter of 2007. The higher research and development expenses were
principally attributable to an increase of $1.3 million in salary and
benefit expenses, occupancy costs and supply and infrastructure costs
resulting from an increased number of research and development
personnel, as well as an increase of $905,000 in costs for third-party
preclinical research and development services incurred primarily in
connection with the research collaboration with AstraZeneca and
programs in the therapeutic focus areas of the alliance with
GlaxoSmithKline. These increases were partially offset by an aggregate
decrease of $520,000 in costs for third-party research and development
services incurred in connection with Targacept’s clinical-stage
product candidates, primarily due to the timing of initiation and
completion of clinical trials, and reduced spending of $291,000 on a
product candidate no longer in clinical development.
For the six months ended June 30, 2008, research and development
expenses totaled $19.6 million, compared to $15.3 million for the
corresponding period in 2007. The higher research and development
expenses were principally attributable to an increase of $2.8 million
in salary and benefit expenses, occupancy costs and supply and
infrastructure costs resulting from an increased number of research
and development personnel, an aggregate increase of $1.2 million for
third-party research and development services incurred in connection
with Targacept’s clinical-stage product candidates, and an increase of
$926,000 in costs for third-party preclinical research and development
services incurred primarily in connection with the research
collaboration with AstraZeneca and programs in the therapeutic focus
areas of the alliance with GlaxoSmithKline. The increased costs for
third-party research and development services for the six-month period
in 2008 were partially offset by reduced spending of $546,000 on a
product candidate no longer in clinical development.
General and administrative expenses totaled $1.9 million for the
second quarter 2008, compared to $2.6 million for the second quarter
of 2007. For the six months ended June 30, 2008, general and
administrative expenses totaled $3.6 million, compared to $4.0 million
for the corresponding period in 2007. The decrease for both 2008
periods was primarily attributable to a decrease in stock-based
compensation expense resulting from compensatory stock option grants,
a non-cash item, partially offset by greater occupancy costs, salary
and benefit expenses and recruitment costs.
Interest income, net of interest expense, totaled $630,000 for the
second quarter of 2008, compared to $808,000 for the second quarter of
2007. For the six months ended June 30, 2008, interest income, net of
interest expense, totaled $1.5 million, compared to $1.7 million for
the corresponding period in 2007. The decrease for both 2008 periods
was principally attributable to lower short-term interest rates, which
more than offset a higher average cash balance, and increased
indebtedness under loan facilities used to finance laboratory
equipment, furniture and other capital equipment purchases.
Conference Call
As previously announced, Targacept will be hosting a conference
call and webcast today, August 5, 2008, at 5:00 p.m. Eastern Daylight
Time. A live webcast of the conference call will be available on the
Investor Relations page of Targacept’s website, www.targacept.com. An
archived version of the webcast will also be available on the Investor
Calendar section of the Investor Relations page of Targacept’s website
for at least two weeks following the call.
The conference call may be accessed by dialing 800-322-2803 for
domestic participants and 617-614-4925 for international callers
(reference passcode 23370280). A replay of the conference call may be
accessed at least through August 20, 2008 by dialing 888-286-8010 for
domestic callers and 617-801-6888 for international callers (reference
passcode 59054894).
About Targacept
Targacept is a clinical-stage biopharmaceutical company that
discovers and develops NNR Therapeutics(TM), a new class of drugs for
the treatment of central nervous system diseases and disorders.
Targacept’s product candidates selectively modulate neuronal nicotinic
receptors that serve as key regulators of the nervous system to
promote therapeutic effects and limit adverse side effects. Targacept
has product candidates in development for Alzheimer’s disease,
cognitive dysfunction in schizophrenia, pain and depression, as well
as multiple preclinical programs. Targacept also has a
cognition-focused collaboration with AstraZeneca and a strategic
alliance with GlaxoSmithKline. Targacept’s news releases are available
on its website at www.targacept.com.
Forward-Looking Statements
Statements in this press release that are not purely historical in
nature, including, without limitation, statements regarding the
progress, timing or scope of the research and development of our
product candidates or related regulatory filings or clinical trials,
such as the timing for reporting of results from AstraZeneca’s Phase
2b clinical trial of AZD3480 (TC-1734) in mild to moderate Alzheimer’s
disease and for completion of AstraZeneca’s Phase 2b clinical trial of
AZD3480 (TC-1734) in cognitive dysfunction in schizophrenia, the dose
at which TC-5619 is expected to have positive effects on cognition, or
our plans, expectations, future operations, financial position,
revenues, costs or expenses, constitute “forward-looking statements”
made under the provisions of the Private Securities Litigation Reform
Act of 1995. Actual results may differ materially from those expressed
or implied by forward-looking statements as a result of various
important factors, including our critical accounting policies and
risks and uncertainties relating to: our dependence on the success of
our collaboration with AstraZeneca and our alliance with
GlaxoSmithKline; the amount and timing of resources that AstraZeneca
devotes to completion of its Phase 2b clinical trials of AZD3480
(TC-1734); the significant control that AstraZeneca has over the
development of AZD3480 (TC-1734); the risk that successful results in
clinical trials of AZD3480 (TC-1734) in a particular condition
characterized by one degree of cognitive impairment may not be
predictive of successful results in clinical trials of AZD3480
(TC-1734) in a condition characterized by more severe cognitive
impairment or in cognitive impairment resulting from a different
condition; the risk that positive findings in preclinical studies of
TC-5619 may not be predictive of similar results in clinical trials in
humans; the results of clinical trials and non-clinical studies and
assessments with respect to our current and future product candidates
in development; the conduct of such trials, studies and assessments,
including the performance of third parties engaged to execute them and
difficulties or delays in the completion of subject enrollment or data
analysis; and the timing and success of submission, acceptance and
approval of regulatory filings, such as regulatory filings with
respect to TC-5619. These and other risks and uncertainties are
described in greater detail under the heading “Risk Factors” in our
most recent Annual Report on Form 10-K and in other filings that we
make with the Securities and Exchange Commission. As a result of the
risks and uncertainties, the results or events indicated by the
forward-looking statements may not occur. We caution you not to place
undue reliance on any forward-looking statement.
In addition, any forward-looking statements in this release
represent our views only as of the date of this release and should not
be relied upon as representing our views as of any subsequent date. We
anticipate that subsequent events and developments may cause our views
to change. Although we may elect to update these forward-looking
statements publicly at some point in the future, we specifically
disclaim any obligation to do so, except as required by applicable
law.
NNR Therapeutics(TM) is a trademark of Targacept, Inc. Other
service marks, trademarks and trade names appearing in this press
release are the property of their respective owners.
TARGACEPT, INC
———————————————————————-
Unaudited Condensed Statements of Operations
(in thousands, except share and per share amounts)
———————————————————————-
Three Months Ended Six Months Ended
————————- ————————-
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
———— ———— ———— ————
Net operating
revenues $ 5,156 $ 2,842 $ 9,432 $ 4,893
Operating expenses
Research and
development 10,517 9,079 19,599 15,270
General and
administrative 1,894 2,629 3,585 3,967
Cost of product
sales 178 205 381 370
———— ———— ———— ————
Total operating
expenses 12,589 11,913 23,565 19,607
———— ———— ———— ————
Operating loss (7,433) (9,071) (14,133) (14,714)
Interest income,
net 630 808 1,549 1,658
———— ———— ———— ————
Net loss (6,803) (8,263) (12,584) (13,056)
============ ============ ============ ============
Basic and diluted
net loss per
share $ (0.27) $ (0.43) $ (0.52) $ (0.68)
============ ============ ============ ============
Weighted average
common shares
outstanding -
basic and
diluted 24,905,965 19,147,011 24,370,195 19,141,932
============ ============ ============ ============
TARGACEPT, INC
———————————————————————-
Unaudited Condensed Balance Sheets
(in thousands)
———————————————————————-
June 30, December
31,
2008 2007
——– ——–
Cash, cash equivalents and short-term investments $101,920 $87,040
Collaboration receivables and other current assets 4,910 5,373
Property and equipment, net 7,056 6,115
Other assets, net 419 437
——– ——–
Total assets $114,305 $98,965
======== ========
Current liabilities $ 14,087 $15,196
Noncurrent liabilities 30,934 32,185
Total stockholders’ equity 69,284 51,584
——– ——–
Total liabilities and stockholders’ equity $114,305 $98,965
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