Staff Writer

Investors must wait until probably next year to find out exactly what the withdrawal of Abilify's European marketing application means for Targacept Inc.'s chances overseas with lead asset TC-5214 in adjunctive depression therapy.

"They still have a long way to go," noted analyst Jon LeCroy of Hapoalim Securities, since TC-5214 has yet to enter Phase III trials. "We don't expect them to start until March [2010]."

The pullback by Otsuka Pharmaceutical Co. Ltd. removes at least to some degree the handicap for Winston Salem, N.C.-based Targacept's drug in its European race with the atypical antipsychotic Abilify (ariprazole), cleared in the U.S. as an add-on for patients getting selective serotonin reuptake inhibitors.

And the development can only help Targacept's ongoing partnership talks around TC-5214. The company holds a strong position, with $75.3 million in cash at the end of the third quarter, not counting $44.4 million from a secondary offering in October - enough to at least begin Phase III trials without a partner.

Also in October, Targacept thrilled Wall Street with positive news from a Phase IIb trial with TC-5214, a neuronal nicotinic receptor antagonist. Study patients gained a six-point improvement (13.75 points) over those treated with the add-on placebo (7.75 points). Abilify, in a separate trial, garnered only a three-point improvement. (See BioWorld Today, Oct. 19, 2009.)

"Their trial was mostly done in India, and that's been the biggest concern with it," LeCroy told BioWorld Today, but added that cohorts in the U.S. turned up similarly good results. If the success continues and TC-5214 wins approval internationally, LeCroy models peak sales at $3 billion or more. "Right now, your only choice is an antipsychotic or some of the older therapies, and they also have a lot of side effects," he said. Those include weight gain, though Abilify brings "not quite as much" as some other drugs, LeCroy said. "I don't think Targacept's [candidate] will have anything like that," he added.

Tokyo-based Otsuka, in withdrawing the European marketing bid, said gatekeepers need more long-term, randomized controlled data, though the exact parameters remain unclear so far. The drug is partnered with Bristol-Myers Squibb Co., of New York.

Abilify, with an unclear mechanism of action, has gained FDA clearance not only as an add-on in major depressive disorder, but also in manic and mixed episodes of bipolar disorder, schizophrenia and - just this month - autistic irritability.

Targacept plans to meet with the FDA early next year to plot further development plans for TC-5214 as an add-on therapy, and the path probably will be similar to that taken by Abilify.

Mecamylamine, the compound of which TC-5214 is the S+ enantiomer, has undergone limited testing in depression and showed encouraging signs, but nothing like TC-5214's activity. Targacept sells mecamylamine as Inversine. The company's only approved product, Inversine is cleared by the FDA for hypertension, though it's often prescribed for such neuropsychiatric disorders as Tourette's syndrome, autism and bipolar disorder.

Also in the pipeline is AZD3480 for Alzheimer's disease, partnered with London-based AstraZeneca plc. Proof-of-concept results from a Phase IIa trial suggested that modulating alpha4beta2 may work in AD, and later-stage work is expected to begin in the first half of next year.

Meanwhile, Otsuka's withdrawal should prove a slight positive for Targacept. "My guess is that their initial target is the U.S., but any information they can find out about [European demands] will help them," LeCroy said.

Targacept's stock (NASDAQ:TRGT) closed Monday at $23.41, up 95 cents.

Published  December 1, 2009