PROSPECTUS SUMMARY
The following summary highlights information appearing elsewhere in this
prospectus. It may not contain all of the information that may be important to
you in deciding whether to invest in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section and the
financial statements and related notes appearing at the end of this prospectus,
before making an investment decision.
Targacept, Inc.
We are 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
acetylcholine receptors, or NNRs. NNRs are found on nerve cells throughout the
nervous system and serve as key regulators of nervous system activity. Our
product candidates are designed to selectively target specific NNR subtypes to
promote positive medical effects and limit or potentially eliminate adverse side
effects.
We are developing our most advanced product candidates as treatments for target
indications in three therapeutic areas: cognitive impairment, pain and
depression. Within these areas, we have three product candidates in clinical
development and three preclinical product candidates. We have worldwide
commercialization rights for all of our product candidates. Our most advanced
product candidates are:
Cognitive Impairment
Ispronicline (TC-1734). Ispronicline is a novel small molecule that we are
developing as an oral treatment for conditions marked by cognitive
impairment that afflict the elderly, including Alzheimer's disease and age
associated memory impairment, commonly referred to as AAMI. In 2004, we
completed two Phase II clinical trials of ispronicline, one in AAMI and one
in mild cognitive impairment, commonly referred to as MCI. We are currently
conducting a separate Phase II clinical trial of ispronicline in AAMI. We
have two Phase II clinical trials of ispronicline in Alzheimer's disease
planned. We expect the first of these trials, which we plan to initiate in
mid-2005, to assess ispronicline as a stand-alone treatment for mild
Alzheimer's disease. We expect the second of these trials, which we plan to
initiate in the first quarter of 2006, to assess ispronicline as a
complementary, or add-on, therapy to a currently approved treatment for
mild to moderate Alzheimer's disease.
TC-1827. TC-1827 is a novel small molecule that we are developing as an
oral treatment for cognitive impairment associated with schizophrenia.
TC-1827 is currently a preclinical product candidate. We plan to file an
investigational new drug application, or IND, and initiate a Phase I
clinical trial of TC-1827 in the first half of 2005.
Pain
TC-2696. TC-2696 is a novel small molecule that we are developing as an
oral treatment for acute post-operative pain. Depending on clinical trial
results, available resources and other considerations, we may pursue
development of TC-2696 for other classes of pain as well. In 2004, we
completed a Phase I clinical trial of TC-2696. We plan to initiate a Phase
I multiple rising dose clinical trial to further assess the safety and
tolerability profile of TC-2696 in the second quarter of 2005.
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Depression
Inversine and TC-5214. Inversine, which we believe is the only
FDA-approved product designed to target an NNR, is our only product
approved by the FDA for marketing. Inversine is approved for the management
of moderately severe to severe essential hypertension, a high blood
pressure disorder with an unknown origin. However, we believe that
Inversine is prescribed predominantly for the treatment of neuropsychiatric
disorders, including Tourette's syndrome, autism and bipolar disorder. We
are currently conducting a Phase II clinical trial of Inversine as an
add-on therapy in patients with major depressive disorder. TC-5214 is one
of the molecular components of mecamylamine hydrochloride, the active
ingredient in Inversine. TC-5214 is currently a preclinical product
candidate. If our ongoing Phase II clinical trial of Inversine is
successful, we may accelerate the development of TC-5214 as an add-on
therapy for depression.
TC-2216. TC-2216 is a novel small molecule that we are developing as an
oral treatment for depression and anxiety disorders. TC-2216 is currently a
preclinical product candidate. In 2005, we plan to conduct the additional
preclinical toxicology studies necessary to support an IND for clinical
trials of TC-2216.
We also have preclinical programs for target indications outside these
therapeutic areas in which we believe NNRs can be exploited for medical benefit,
including schizophrenia, smoking cessation and obesity.
We trace our scientific lineage to a research program initiated by R.J. Reynolds
Tobacco Company in 1982 to study the activity and effects of nicotine, a
compound that interacts non-selectively with all nicotinic acetylcholine
receptors. There is a significant amount of published clinical data relating to
nicotine, including studies in which individuals with Alzheimer's disease and
other conditions marked by cognitive impairment showed therapeutic improvement
when treated with a nicotine patch. We have used this clinical data, together
with our deep understanding of the biological characteristics and functions of
NNRs that we have built over more than 20 years, to validate NNRs as potential
targets for drugs to act upon. We have also developed an expertise in designing
compounds of low molecular weight, referred to as small molecules, that can
selectively interact with specific NNR subtypes, with the objective of eliciting
a desired effect and limiting or potentially eliminating side effects such as
those typically seen with nicotine. We have built an extensive patent estate
covering the structure or therapeutic use of small molecules designed to
regulate the central nervous system by selectively affecting specific NNR
subtypes.
We develop product candidates using our proprietary databases and computer-based
molecular design technologies, which we refer to collectively as Pentad.
Together with our proprietary assays and novel screening methods, Pentad enables
us to efficiently identify, prioritize, characterize and optimize novel
compounds. We used Pentad to design or optimize ispronicline, TC-1827, TC-2696
and TC-2216.
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Our Business Strategy
Our goal is to become a leader in the discovery, development and
commercialization of novel drugs that selectively target NNRs in order to treat
diseases and disorders where there is significant medical need and commercial
potential. To achieve this goal, we are pursuing the following strategies:
Develop and commercialize drugs that selectively target specific NNR
subtypes.
Remain at the forefront of the commercialization of NNR research.
Identify and prioritize indications in which drugs that selectively target
specific NNR subtypes can be exploited for medical benefit.
Collaborate selectively to develop and commercialize product candidates.
Build a specialized sales and marketing organization.
Risks Associated with Our Business
Our business is subject to numerous risks, as more fully described in the
section entitled "Risk Factors" immediately following this prospectus summary.
We have a limited operating history and have incurred substantial net losses
since our incorporation in 1997. We expect to continue to incur substantial
losses for the foreseeable future. Inversine is the only product that we have
available for commercial sale, and it generates limited revenues. All of our
other product candidates are undergoing clinical trials or are in early stages
of development, and failure is common and can occur at any stage of development.
In particular, we discontinued development of two of our product candidates,
TC-5231 and TC-2403, because they failed to meet defined clinical endpoints in
Phase II clinical trials that we completed in 2004. We had been developing
TC-5231 as a treatment for attention deficit hyperactivity disorder and TC-2403
as a treatment for ulcerative colitis. None of our product candidates, other
than Inversine, has received regulatory approval for marketing and sale. Our
ability to generate product revenue in the future will depend heavily on the
successful development and commercialization of these product candidates. Even
if we succeed in developing and commercializing one or more of our product
candidates, we may never generate sufficient sales revenue to achieve and then
sustain profitability.
Company History
Our history traces back to 1982 when R.J. Reynolds Tobacco Company initiated a
program to study the activity and effects of nicotine in the body. We were
incorporated in Delaware in 1997 as a wholly owned subsidiary of RJR and became
an independent company in August 2000. Our executive offices are located at 200
East First Street, Suite 300, Winston-Salem, North Carolina 27101, and our
telephone number is (336) 480-2100. Our web site is located at
www.targacept.com. Information contained on our web site is not incorporated by
reference into, and does not form any part of, this prospectus. We have included
our website address in this document as an inactive textual reference only. Our
trademarks include Targacept and Inversine. Other service marks, trademarks and
trade names appearing in this prospectus are the property of their respective
owners. Unless the context requires otherwise, references in this prospectus to
the "company," "we," "us," and "our" refer to Targacept, Inc.
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