AstraZeneca‘s (NYSE:AZN) decision earlier this year to not license Targacept‘s (NASDAQ:TRGT) compound for attention-deficit/hyperactivity disorder was seen by some as a no confidence vote in the molecule.
But Don deBethizy, CEO of Winston-Salem, North Carolina-based Targacept, is making a case for TC-5619, which showed positive results for schizophrenia but failed in a separate ADHD study earlier this year. A new round of TC-5619 ADHD studies is now expected to start by the first quarter of 2012.
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DeBethizy said drug partner AstraZeneca did due diligence on the compound and the pharma giant even liked it. But for internal reasons, AstraZeneca decided not to license it, deBethizy told analysts during a conference call to discuss second-quarter results.
TC-5619 showed positive results for schizophrenia. DeBethizy said the company believes that the compound continues to hold promise for a second psychiatric indication. Targacept did its own due diligence before deciding to pursue more clinical trials on TC-5619. DeBethizy said the company discussed results of the first trial with the U.S. Food and Drug Administration as well as experts in the field. DeBethizy said that while the compound missed the primary target of the ADHD trial, it still showed cognitive activity.
“The question for us is did we have sufficient activity to warrant further work in the area?” deBethizy said. “Our conclusion is we do.”
DeBethizy must be confident. With no licensing deal for TC-5619, Targacept is now footing the bill for its clinical development. The company recently completed a stock offering that net the company more than $80.8 million. Including the stock offering, Targacept has about $290 million in cash and cash equivalents, enough to meet obligations through 2014. Targacept reported a net loss of $2.3 million in the second quarter, a 39 percent decrease year over year, which reflects increased R&D expenses.
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The TC-5619 study will be conducted primarily in eastern Europe with some U.S. sites as well. Targacept is still recruiting clinical research organizations to conduct that trial. DeBethizy offered no cost estimate for the TC-5619 trial, though he acknowledged that it could be in the range of an earlier estimate of $10 million to $15 million. A successful trial could be money well spent if it shows something in the compound that AstraZeneca didn’t quite see.
