Following word of a potential $300 million deal with AstraZeneca plc, Targacept Inc. is trying again for an initial public offering, with hopes of raising as much as $59.8 million, though the number of shares and price per share have not been specified.
Although the use of proceeds was not broken down by amount per project, Winston-Salem, N.C.-based Targacept said cash from the IPO would finance completion of the Phase I trial and a Phase II study of TC-2696, the product for acute postoperative pain, as well as studies to support an investigational new drug application for TC-2216, along with Phase I and Phase II trials testing the compound in depression and anxiety disorders.
Proceeds also would fund, among other things, preclinical safety studies to support an IND for trials and - unless licensed by the company to London-based AstraZeneca under the terms of the recent deal - to conduct Phase I trials of a drug called TC-5619.
Targacept, which takes aim at central nervous system disorders by working with a class of receptors known as neuronal nicotinic receptors, or NNRs, entered in late December the deal with AstraZeneca. It involves one product, TC-1734, and the agreement could later include others.
AstraZeneca paid $10 million up front, and Targacept is due to receive $26 million in research funding, plus is entitled to a $20 million milestone payment for the start of Phase II development of TC-1734 and further milestone payments. (See BioWorld Today, Dec. 29, 2005.)
TC-1734, Targacept's lead small molecule, could become a treatment for Alzheimer's disease, cognitive deficits in schizophrenia and potentially other conditions marked by cognitive impairment such as attention deficit hyperactivity disorder, age-associated memory impairment (AAMI), and mild cognitive impairment (MCI).
In 2004, Targacept finished two Phase II trials of TC-1734, one in AAMI and one in MCI, and has one under way in AAMI to further measure the effects of the drug in a cognitively impaired elderly population. The company will finish the trial on its own, with data expected in the first half of this year.
AstraZeneca, for its part, is slated to start two Phase II trials of TC-1734 in the first half of 2007, one in mild to moderate Alzheimer's disease and one in cognitive deficits in schizophrenia, according to the IPO prospectus.
Targacept's only approved product, Inversine (mecamylamine hydrochloride) is labeled for management of moderately severe to severe essential hypertension, but the company believes the drug is prescribed mostly for neuropsychiatric disorders such as Tourette's syndrome, autism and bipolar disorder, and a Phase II trial is ongoing with the compound as an add-on therapy in patients with major depressive disorder.
This month, an interim analysis is planned to determine whether the firm needs to add more patients for clearer results, but if the number of patients is not increased, results should be available in the third quarter.
Citing market conditions in the spring, Targacept withdrew its previous IPO, which would have raised an estimated $79.4 million. As of Sept. 30, Targacept had $30.7 million in cash, cash equivalents and short-term investments.
Deutsche Bank Securities Inc., of New York, will serve as the sole book-running manager in the current IPO, with co-managers Pacific Growth Equities LLC, of San Francisco; CIBC World Markets Corp., of New York; and Lazard Capital Markets LLC, also of New York.