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Targacept to Lose More Jobs After Failed Trial

Targacept to Lose More Jobs After Failed Trial [Winston-Salem Journal, N.C.]

From Winston-Salem Journal (NC) (September 17, 2012)

Sept. 17--For the second time this year, a failed clinical trial has resulted in the elimination of more jobs at Targacept Inc.

The Winston-Salem biotechnology company released today another negative result from a key research trial, this time with the drug compound aimed at attention deficit/hyperactivity disorder.

The company said the results of the four-week Phase 2 clinical trial of TC-5619 did not meet the primary outcome measure vs. a placebo. The compound was measured against the Conners’ adult ADHD rating scale. Targacept said that patients in the placebo dose group consistently improved more than patients in the TC-5619 dose groups.

Mark Skaletsky, Targacept’s chairman, did not say how many jobs are affected. "We can only make this difficult decision based on our commitment to maximizing the future potential of the company’s assets," Skaletsky said.

Targacept spokeswoman Heather Savelle said that the company doesn’t have "further details to share at this point."

Kimberly Lee, an analyst with research firm ThinkEquity, said the latest setback is "fairly significant. They may need to reduce their spend."

Investors reacted to the failed trial by sending Targacept’s share price down as much as 11 percent in early trading. It was down 38 cents, or 7.9 percent, to $4.47 at 10 a.m. today.

Targacept has been conducting an extensive restructuring after the failure of TC-5214, its most promising drug compound, in four clinical trials for major depressive disorder. The final two clinical trial failures were announced in March.

In April, the company reduced its workforce by 46 percent, or by 65 employees.

Targacept said in June that Don deBethizy resigned as its top executive, leaving the local biotechnology sector without its most public face.

The ADHD trial took place in 13 U.S sites among 153 patients from ages 18 to 65.

Skaletsky said the company will not further pursue ADHA development with TC-5619.

"Under these circumstances, we are taking additional steps to more closely align our resources with our current operational plan and emphasize the efficient use of Targacept’s capital," he said.

"We will limit our investment in our nicotinic pipeline to our ongoing or previously announced clinical programs until the search for a new CEO is successfully completed."

The company has formed a four-person office of the chairman to "guide the company’s strategic direction, resource allocation and pipeline development." They are Skaletsky; Jeffrey Brennan, chief business officer; Alan Musso, chief financial officer and treasurer; and Peter Zorn, general counsel and secretary.

On Sept. 5, Targacept said it was taking its most well-known drug compound, TC-5214, in a new research direction in hope of bolstering research and eventually revenue.

It is developing TC-5214 as a treatment for overactive bladder, with plans to begin a Phase 2b study in the first half of 2013.

The initiative is different for Targacept, since most of its research focus has been on diseases of the mind, such as major depressive disorder, Alzheimer’s, attention-deficit hyperactivity disorder and schizophrenia. Targacept is also doing research on asthma.

TC-5214 came to symbolize Targacept’s ups and downs over the past three years.

After showing great promise for major depressive disorder in Phase 2 clinical trials, TC-5214 failed to show a difference between it and a placebo in four Phase 3 trials.

As a result, Targacept and its licensing partner, AstraZeneca PLC, announced in March that they would discontinue research on TC-5214 for major depressive disorder.

In August, Targacept negotiated a smaller headquarters space in Piedmont Triad Research Park, allowing it to reduce its monthly lease cost by 37 percent.

Targacept has been an anchor tenant in the downtown Winston-Salem park for years.

Wake Forest University Health Sciences and Targacept are negotiating extending the lease beyond the end of 2012.


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Posted: September 2012