Targacept Reports Second Quarter 2006 Financial Results
Wednesday August 9, 4:01 pm ET
WINSTON-SALEM, N.C., Aug. 9 /PRNewswire-FirstCall/ -- Targacept, Inc. (Nasdaq: TRGT - News), a clinical-stage biopharmaceutical company focused on a new class of drugs that selectively target neuronal nicotinic receptors, or NNRs, to treat central nervous system diseases and disorders, today reported its financial results for the second quarter ended June 30, 2006.
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Targacept reported a net loss of $4.6 million for the second quarter of 2006, compared to a net loss of $8.1 million for the second quarter of 2005. For the six months ended June 30, 2006, Targacept reported a net loss of $9.9 million, compared to a net loss of $15.5 million for the comparable period in 2005. As of June 30, 2006, cash, cash equivalents and short-term investments totaled $63.5 million.
"We are pleased with the progress made in our collaboration with AstraZeneca and anticipate that the safety and product characterization studies of TC-1734 that it is conducting should be completed according to our previously disclosed timeframe," said J. Donald deBethizy, Ph.D., Targacept's President and Chief Executive Officer. "In addition to our collaboration with AstraZeneca, we are encouraged by the advancements we have made this year with our portfolio of NNR-selective product candidates. We expect to initiate clinical development of TC-2216, a novel product candidate that has shown promise in a number of therapeutic areas where there is significant unmet need, later this year."
Recent Highlights:
Collaboration with AstraZeneca
- AstraZeneca continued to progress its safety and product
characterization studies of TC-1734 (AZD3480). In an annual business
review presentation made in June, AstraZeneca's Vice President for
Clinical Neuroscience commented that this product candidate "continues
to show great promise as a treatment for cognitive dysfunction." He
also noted that it remains AstraZeneca's intent to develop TC-1734
(AZD3480) initially for the indications of Alzheimer's disease and
cognitive deficits in schizophrenia.
Internal Product Development Pipeline
- Resumed a Phase I multiple rising dose clinical trial of TC-2696,
Targacept's product candidate for acute post-operative pain.
- Advanced late preclinical product candidates TC-2216, a novel compound
that has shown positive activity in models of depression, anxiety and
obesity, and TC-5619, a novel compound selective for the alpha7 NNR,
toward the planned initiation of Phase I clinical development in 2H06
and 1H07, respectively.
- Completed the dosing phase of Targacept's ongoing Phase II trial of
mecamylamine hydrochloride as an add-on therapy for depression in
August. Targacept believes that the results of the trial, which are
expected to be available in the fourth quarter of 2006, may provide
valuable insights that can be applied to the development of TC-2216.
Corporate Developments
- Initiated innovative research in collaboration with the California
Institute of Technology and the University of Colorado at Boulder on
NNR-based approaches to smoking cessation. This research is being
supported by a grant from the National Institute on Drug Abuse, part of
the National Institutes of Health.
- Amended Targacept's equipment financing facility to provide
$2.0 million in additional borrowing capacity available before the end
of June 2007.
- Honored by the North Carolina Council for Entrepreneurial Development
for "Deal of the Year" for public companies in a ceremony in Durham,
North Carolina.
Financial Results
Targacept reported a net loss of $4.6 million for the second quarter of 2006, compared to a net loss of $8.1 million for the second quarter of 2005. Targacept's net loss for both periods reflected its adoption of Statement of Financial Accounting Standard No. 123®, relating to stock-based compensation expense, effective January 1, 2005. Targacept had non-cash, stock-based compensation expense of $158,000 for the second quarter of 2006 and $107,000 for the second quarter of 2005.
Revenue totaled $589,000 for the second quarter of 2006, compared to $300,000 for the comparable period in 2005. This increase was principally due to the recognition of $313,000 in revenue received under Targacept's collaboration agreement with AstraZeneca in the 2006 period. For the six months ended June 30, 2006, Targacept reported revenue of $1.2 million, compared to $603,000 for the comparable period in 2005.
Research and development expense totaled $4.6 million for the second quarter of 2006, compared to $7.3 million for the comparable period in 2005. Research and development expense for the 2006 period reflected a decrease of $2.3 million in spending relating to TC-1734 (AZD3480) as a result of the assumption by AstraZeneca of development costs under the collaboration agreement and a decrease of $561,000 in spending relating to TC-2696 due to the temporary suspension of the ongoing Phase I clinical trial of that product candidate. These expense reductions were partially offset by increased spending to progress TC-2216 and TC-5619, Targacept's most advanced preclinical product candidates, in preparation for the planned initiation of clinical development, increased salary and benefit expense for research and development personnel and increased third-party service, supply and infrastructure costs in connection with the ongoing preclinical research collaboration with AstraZeneca. Research and development expense was $9.4 million for the six months ended June 30, 2006, compared to $12.4 million for the comparable period in 2005.
General and administrative expense totaled $1.3 million for the second quarter of both 2006 and 2005 and $2.5 million for both the six months ended June 30, 2006 and 2005.
Interest income totaled $722,000 for the second quarter of 2006, compared to $306,000 for the comparable period in 2005. The increase was principally attributable to a substantially higher average cash balance during the 2006 period following completion of Targacept's initial public offering in April 2006. Interest income was $1.0 million for the six months ended June 30, 2006, compared to $598,000 for the comparable period in 2005.
Conference Call
As previously announced, Targacept will be hosting a conference call and webcast today, August 9, 2006, at 5:00 p.m. ET. A live webcast of the conference call will be available on the Investor Relations section of Targacept's website at www.targacept.com. An archived version of the webcast will also be available on the Event Calendar page of the Investor Relations section of Targacept's website for at least two weeks following the call.
The conference call may be accessed by dialing 866-700-7477 for domestic participants and 617-213-8840 for international callers (reference passcode 24521695). A replay of the conference call may be accessed through August 23, 2006 by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers (reference passcode 43487609).
About Targacept
Targacept is a biopharmaceutical company engaged in the design, discovery and development of a new class of drugs to treat multiple diseases and disorders of the central nervous system by selectively targeting neuronal nicotinic receptors, or NNRs. NNRs are found on nerve cells throughout the nervous system and serve as key regulators of nervous system activity. Targacept's product candidates are designed to selectively target specific NNR subtypes to promote therapeutic effects and limit adverse side effects. Targacept has a marketed product, Inversine® (mecamylamine hydrochloride), product candidates in development for Alzheimer's disease and cognitive deficits in schizophrenia, pain and depression, and multiple preclinical programs. Targacept's news releases are available on its website at www.targacept.com. |
