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Targacept Reports Third Quarter 2009 Financial Results
Winston-Salem, North Carolina
November 05, 2009
Targacept, Inc.,
a clinical-stage biopharmaceutical company developing a new class of
drugs known as NNR Therapeutics™, today reported its financial results
for the third quarter ended September 30, 2009.
Targacept reported net income of $1.3 million for the third quarter of
2009, compared to a net loss of $7.6 million for the third quarter of
2008. For the nine months ended September 30, 2009, Targacept reported a
net loss of $13.0 million, compared to a net loss of $20.2 million for
the corresponding 2008 period. As of September 30, 2009, cash, cash
equivalents and short-term investments totaled $75.3 million. In October
2009, after the end of the third quarter, Targacept completed a public
offering of 2,200,000 shares of common stock at a price to the public of
$21.00 per share which generated net proceeds to Targacept of $44.4
million.
“The third quarter was unquestionably significant for Targacept, with
the announcements of our successful Phase 2b trial of TC-5214 in MDD and
AstraZeneca’s decision to conduct further development of AZD3480 for
ADHD. These outcomes highlight the breadth of our pipeline of NNR
Therapeutics and reinforce our leadership position in the NNR space,”
said J. Donald deBethizy, Ph.D., Targacept's President and Chief
Executive Officer. “The millions of patients with depression for whom
existing therapies are inadequate need a new treatment approach. The
robust results from our augmentation trial suggest that TC-5214 may
represent a new mechanism with the potential to help fill this void, and
we look forward to the planned initiation of Phase 3 development in the
second quarter of 2010.”
Recent Highlights and Program Updates:
Targacept‘s TC-5214 Program
-
Presented data from the completed Phase 2b clinical trial of TC-5214
as an augmentation (add-on) treatment in subjects with major
depressive disorder, or MDD, on October 15, 2009 at the Nicotinic
Acetylcholine Receptors as Therapeutic Targets Satellite Symposium, a
satellite meeting of the 39th annual meeting of the Society
for Neuroscience;
-
6.0 point advantage for the add-on TC-5214 arm (TC-5214 +
citalopram) over the add-on placebo arm (placebo + citalopram) on
the primary outcome measure, the Hamilton Rating Scale for
Depression-17, or HAM-D;
-
highly statistically significant (p < 0.0001) results achieved on
HAM-D and all of the trial’s secondary outcome measures;
-
TC-5214 exhibited a favorable tolerability profile in the trial;
-
Targacept continues to expect Phase 3 clinical development of TC-5214
to be initiated in the second quarter of 2010, following planned
discussions with the FDA and the European Medicines Agency and the
expected production of clinical trial material;
AstraZeneca Collaboration and Cognitive Disorders
AZD3480 (TC-1734)
-
Multiple presentations made at the 39th annual meeting of
the Society for Neuroscience regarding results of Phase 2 clinical
development of AZD3480 in various indications and plans for further
development of AZD3480 as a treatment for ADHD for both younger
subjects and adults;
TC-5619
-
Initiation of a Phase 2 clinical proof of concept study of TC-5619, a
product candidate highly selective for the alpha7 NNR, in cognitive
dysfunction in schizophrenia planned for the fourth quarter of 2009;
following the completion of the planned Phase 2 study, AstraZeneca
would have the right to license TC-5619;
AZD1446 (TC-6683)
-
AstraZeneca has completed Phase 1 single rising dose and multiple
rising dose clinical trials of AZD1446, a product candidate selective
for the alpha4beta2 NNR subtype and planned for development for
Alzheimer's disease;
NNR Leadership
-
Targacept scientists authored or co-authored peer-reviewed articles
published in:
-
Medical Hypotheses, discussing mechanisms proposed to
underlie Alzheimer’s disease that may have a common link to alpha7
NNR dysfunction;
-
Biochemical Pharmacology, describing the positive effects
of TC-5619 in an animal model of cognition and positive and
negative symptoms of schizophrenia;
-
Neuropharmacology, discussing the interaction of atypical
antipsychotics with alpha4beta2 and alpha7 NNRs;
-
Acta Pharmacologica Sinica, discussing NNRs as novel
targets for inflammation and neuroprotection; and
Company Recognition
-
Named by Deloitte to its Technology Fast 500™ for 2009; the Technology
Fast 500 recognizes 500 of the fastest growing technology, media,
telecommunications, life sciences and clean technology companies in
North America based on percentage of fiscal year revenue growth over
five years.
Financial Results
Targacept reported net income of $1.3 million for the third quarter of
2009, compared to a net loss of $7.6 million for the third quarter of
2008. The results included non-cash, stock-based compensation charges of
$553,000 and $493,000 for the third quarter of 2009 and 2008,
respectively. For the nine months ended September 30, 2009, Targacept
reported a net loss of $13.0 million, compared to a net loss of $20.2
million for the corresponding 2008 period. The results included
non-cash, stock-based compensation charges of $1.7 million and $1.5
million for the nine months ended September 30, 2009 and 2008,
respectively. The change in net income (loss) for each of the 2009
periods compared to the corresponding 2008 period was primarily
attributable to a $10.0 million milestone payment to Targacept by
AstraZeneca based on the achievement of the objective in the completed
Phase 2 trial of AZD3480 in adults with ADHD.
Net operating revenues totaled $12.7 million for the third quarter of
2009, compared to $4.1 million for the third quarter of 2008. The higher
net operating revenues for the 2009 period were primarily attributable
to an increase of $9.8 million in milestones and license fees from
collaborations revenue, partially offset by a decrease of $1.3 million
in collaboration research and development revenue. For the nine months
ended September 30, 2009, net operating revenues totaled $21.6 million,
compared to $13.6 million for the corresponding 2008 period. The higher
net operating revenues for the 2009 period were primarily attributable
to an increase of $11.6 million in milestones and license fees from
collaborations revenue, partially offset by a decrease of $3.5 million
in collaboration research and development revenue. For both 2009
periods, the increase in milestones and license fees from collaborations
revenue was primarily attributable to the $10.0 million milestone
payment to Targacept by AstraZeneca, and the decrease in collaboration
research and development revenue reflected reduced services rendered by
Targacept in its preclinical research collaboration with AstraZeneca as
a result of progress previously made towards meeting the objectives of
the research plan.
Research and development expenses totaled $9.6 million for the third
quarter of 2009, compared to $10.7 million for the third quarter of
2008. The lower research and development expenses for the 2009 period
were principally attributable to a decrease of $2.0 million in costs
incurred for third-party research and development services in connection
with our clinical-stage product candidates, partially offset by
increases of $641,000 in costs incurred for third-party research and
development services in connection with our preclinical programs,
primarily in the therapeutic focus areas of our alliance with
GlaxoSmithKline, and an accrued expense of $350,000 payable under our
agreements with the University of Kentucky Research Foundation based on
the $10.0 million milestone payment to us by AstraZeneca. For the 2009
period, third-party research and development costs in connection with
our clinical-stage product candidates totaled $1.2 million and were
substantially all incurred for TC-5214 and TC-5619.
For the nine months ended September 30, 2009, research and development
expenses totaled $30.2 million, compared to $30.3 million for the
corresponding 2008 period. Costs incurred for third-party research and
development services in connection with our clinical-stage product
candidates decreased by $1.6 million and were partially offset by an
increase of $1.4 million in costs incurred for third-party research and
development services in connection with our preclinical programs,
primarily in the therapeutic focus areas of our alliance with
GlaxoSmithKline. For the 2009 period, third-party costs in connection
with our clinical-stage product candidates totaled $6.6 million and were
primarily incurred for TC-5214 and TC-5619.
General and administrative expenses totaled $1.6 million for the third
quarter of 2009, compared to $1.4 million for the third quarter of 2008.
The higher general and administrative expenses for the 2009 period were
primarily attributable to professional and consulting fees related to
business development activities. For the nine months ended September 30,
2009, general and administrative expenses totaled $4.5 million, compared
to $5.0 million for the corresponding 2008 period. The lower general and
administrative expenses for the 2009 period were principally
attributable to decreases in patent-related costs and travel-related
expenses.
Interest income, net of interest expense, totaled $120,000 for the third
quarter of 2009, compared to $514,000 for the third quarter of 2008. For
the nine months ended September 30, 2009, interest income, net of
interest expense, totaled $623,000, compared to $2.1 million for the
corresponding 2008 period. The decrease for both 2009 periods was
attributable to lower short-term interest rates and a lower average cash
and investment balance.
Update to 2009 Financial Guidance
Following its receipt in October 2009 of $44.4 million in net proceeds
from a public offering of common stock, Targacept now expects to have at
least $105 million in cash, cash equivalents and short-term investments
at December 31, 2009. Targacept also now expects that its current cash
resources will be sufficient to meet its operating requirements at least
through the first half of 2012, based on current operating plans and
assuming that funds required for Phase 3 clinical development of TC-5214
will be secured through a potential future strategic alliance,
collaboration, licensing or other arrangement.
Conference Call
As previously announced, Targacept will be hosting a conference call and
webcast today, November 5, 2009, at 5:00 p.m. Eastern Standard Time. The
conference call may be accessed by dialing 866-356-3377 for domestic
participants and 617-597-5392 for international callers (reference
passcode 20187838). A replay of the conference call may be accessed
beginning approximately two hours after the call and continuing at least
through November 19, 2009 by dialing 888-286-8010 for domestic callers
and 617-801-6888 for international callers (reference passcode 17664421).
A live audio webcast of the conference call will be accessible from the
Investor Relations page of Targacept’s website, www.targacept.com.
To ensure a timely connection to the webcast, it is recommended that
users register at least 15 minutes prior to the scheduled start time. 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.
About Targacept
Targacept is a clinical-stage biopharmaceutical company that discovers
and develops NNR Therapeutics™, a new class of drugs for the treatment
of central nervous system diseases and disorders, in support of its
vision of building health and restoring independence for patients.
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
clinical-stage product candidates in development for major depressive
disorder, attention deficit/hyperactivity disorder, Alzheimer's disease
and cognitive dysfunction in schizophrenia, 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
This press release includes “forward-looking statements” made under the
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements other than statements of
historical fact regarding, without limitation: the progress, scope or
duration of the development of TC-5214, AZD3480, AZD1446, TC-5619 or any
of Targacept’s other product candidates, such as the size, design,
conduct or objective of any clinical trial, the timing for initiation or
completion of or availability of results from any clinical trial or the
indication(s) for which the product candidate may be developed; the
benefits that may be derived from any Targacept product candidate; a
strategic alliance, collaboration, licensing or other arrangement with
respect to TC-5214; any payments that AstraZeneca or GlaxoSmithKline may
make to Targacept; the period of Targacept’s preclinical research
collaboration with AstraZeneca; the period over which Targacept will
conduct grant-funded research; or Targacept’s plans, expectations or
future operations, financial position, revenues, costs or expenses.
Actual results may differ materially from those expressed or implied by
forward-looking statements as a result of various important factors,
including, without limitation, Targacept’s critical accounting policies
and risks and uncertainties relating to: Targacept’s ability to
establish a strategic alliance, collaboration or licensing or other
arrangement with respect to TC-5214 on favorable terms and the time and
complexity involved; Targacept’s dependence on the success of its
collaboration with AstraZeneca and its alliance with GlaxoSmithKline;
the significant control that AstraZeneca has over the development of
AZD3480 and AZD1446, including as to the conduct of any further
development of AZD3480 in ADHD or AZD1446 in Alzheimer’s disease and the
scope and design of any future clinical trial of AZD3480 or AZD1446; the
conduct and results of clinical trials and non-clinical studies and
assessments of TC-5214, AZD3480, AZD1446, TC-5619 and Targacept’s other
product candidates, including the performance of third parties engaged
to execute such trials, studies and assessments, delays resulting from
any changes to the applicable protocols and difficulties or delays in
the completion of subject enrollment or data analysis; Targacept’s
reliance on a third party contract manufacturer for the production of
clinical trial material for future development of TC-5214; and the
timing of discussions with regulatory authorities and the timing and
success of submission, acceptance and approval of regulatory filings.
These and other risks and uncertainties are described in greater detail
under the heading “Risk Factors” in Targacept’s most recent Annual
Report on Form 10-K, in its subsequently filed Quarterly Reports on Form
10-Q and in other filings that it makes 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.
Targacept cautions you not to place undue reliance on any
forward-looking statement.
In addition, any forward-looking statement in this press release
represents Targacept’s views only as of the date of this press release
and should not be relied upon as representing its views as of any
subsequent date. Targacept disclaims any obligation to update any
forward-looking statement, except as required by applicable law.
NNR Therapeutics™ is a trademark of Targacept, Inc. Any other service
marks, trademarks and trade names appearing in this press release are
the properties of their respective owners.
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TARGACEPT, INC
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|
Unaudited Condensed Statements of Operations
|
|
(in thousands, except share and per share amounts)
|
|
|
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Three Months Ended
|
|
|
Nine Months Ended
|
|
|
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September 30,
|
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September 30,
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|
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|
|
2009
|
|
|
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2008
|
|
|
|
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2009
|
|
|
|
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2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating revenues
|
|
$
|
12,663
|
|
|
$
|
4,136
|
|
|
|
$
|
21,634
|
|
|
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$
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13,567
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|
|
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|
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|
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|
|
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Operating expenses:
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|
|
|
|
|
|
|
|
|
|
|
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Research and development
|
|
|
9,625
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|
|
|
10,717
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|
|
|
|
30,169
|
|
|
|
|
30,316
|
|
|
General and administrative
|
|
|
1,628
|
|
|
|
1,397
|
|
|
|
|
4,477
|
|
|
|
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4,982
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|
|
Cost of product sales
|
|
|
206
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|
|
|
184
|
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|
|
|
691
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565
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Total operating expenses
|
|
|
11,459
|
|
|
|
12,298
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|
|
|
|
35,337
|
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|
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35,863
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating income (loss)
|
|
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1,204
|
|
|
|
(8,162
|
)
|
|
|
|
(13,703
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)
|
|
|
|
(22,296
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)
|
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Interest income, net
|
|
|
120
|
|
|
|
514
|
|
|
|
|
623
|
|
|
|
|
2,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss) before income taxes
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1,324
|
|
|
|
(7,648
|
)
|
|
|
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(13,080
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)
|
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|
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(20,232
|
)
|
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Income taxes
|
|
|
10
|
|
|
|
-
|
|
|
|
|
83
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss)
|
|
$
|
1,334
|
|
|
$
|
(7,648
|
)
|
|
|
$
|
(12,997
|
)
|
|
|
$
|
(20,232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic net income (loss) per share
|
|
$
|
0.05
|
|
|
$
|
(0.31
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)
|
|
|
$
|
(0.52
|
)
|
|
|
$
|
(0.82
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
0.05
|
|
|
$
|
(0.31
|
)
|
|
|
$
|
(0.52
|
)
|
|
|
$
|
(0.82
|
)
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|
|
|
|
|
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|
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|
|
|
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Weighted average common shares
|
|
|
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|
|
|
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outstanding - basic
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|
25,126,823
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24,945,523
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|
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25,019,953
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|
|
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24,563,371
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|
|
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|
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Weighted average common shares
|
|
|
|
|
|
|
|
|
|
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outstanding - diluted
|
|
|
26,943,535
|
|
|
|
24,945,523
|
|
|
|
|
25,019,953
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|
|
|
|
24,563,371
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|
|
|
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TARGACEPT, INC
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Unaudited Condensed Balance Sheets
|
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(in thousands)
|
|
|
|
September 30,
|
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December 31,
|
|
|
|
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2009
|
|
|
|
2008
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
75,311
|
|
|
$
|
88,363
|
|
Collaboration receivables and other current assets
|
|
|
3,263
|
|
|
|
3,603
|
|
Property and equipment, net
|
|
|
5,175
|
|
|
|
6,401
|
|
Other assets, net
|
|
|
171
|
|
|
|
184
|
|
Total assets
|
|
$
|
83,920
|
|
|
$
|
98,551
|
|
|
|
|
|
|
|
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Current liabilities
|
|
$
|
13,541
|
|
|
$
|
13,792
|
|
Noncurrent liabilities
|
|
|
23,539
|
|
|
|
27,386
|
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Total stockholders' equity
|
|
|
46,840
|
|
|
|
57,373
|
|
Total liabilities and stockholders' equity
|
|
$
|
83,920
|
|
|
$
|
98,551
|
Source: Targacept, Inc.
Targacept, Inc.
Alan Musso, 336-480-2186
VP and CFO
alan.musso@targacept.com
or
Linnden
Communications
Michelle Linn, 508-362-3087
linnmich@comcast.net
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