Alzheimer's Club

"Signing a deal worth up to $300 million for one product - and possibly more if others come into play - Targacept Inc. partnered worldwide rights to its Phase II cognitive disorder drug, TC-1734, with AstraZeneca plc.

The agreement will result in a $10 million up-front payment from AstraZeneca to Winston-Salem, N.C.-based Targacept, as well as $26 million in research funding, a $20 million milestone payment for the start of Phase II development of TC-1734, and further milestone payments related to development, regulatory and commercial achievements of the product, all totaling up to about $300 million.

That figure does not include stepped double-digit royalties for rising sales of TC-1734, nor does it take into account additional milestone payments and royalties for other products that come out of their four-year research collaboration, which will begin once the agreement becomes effective following government clearances.

"It's not our first [partnership], but it's certainly our most significant to date," said J. Donald deBethizy, Targacept's president and CEO. "This is a key business milestone for us because it increases our probability of success" for TC-1734 and other cognitive disorder drugs.

With worldwide development and commercialization rights to TC-1734 (ispronicline) for Alzheimer's disease, cognitive deficits in schizophrenia and other cognitive disorders, AstraZeneca will fund all costs going forward, with one exception. Targacept will complete independently its ongoing Phase II trial of the product as a treatment for age-associated memory impairment (AAMI). The indication falls under AstraZeneca's global license because it covers the field of cognition.

"They support the AAMI indication, but it's not been a labeled indication up to this point," deBethizy told BioWorld Today, "and there's still quite a bit of work to be done with the FDA."

London-based AstraZeneca intends to start additional safety and product characterization studies of TC-1734. Following that, it could decide to move into Phase II development for Alzheimer's disease, cognitive deficits in schizophrenia or a related indication, triggering the milestone payment to Targacept.

AstraZeneca also would be responsible for development and commercialization of compounds that come out of the research collaboration. Targacept intends to use its Pentad drug discovery technology as part of that research. Each discovered drug that enters development would trigger additional milestone payments to Targacept, which also would receive royalties on those that reach the market.

If any of the compounds, including TC-1734, reach commercialization, Targacept has a co-promotion option for the U.S. market, but the company has not yet disclosed whether it plans to build its own sales force.

"We are not elaborating on that component of the deal at this point," deBethizy said. "It's sufficient to say that we are fortunate to have a co-promote option as part of this deal."

The agreement also contains a mechanism by which Targacept can offer to AstraZeneca compounds that act on different neuronal nicotinic receptor (NNR) subtypes than TC-1734.

TC-1734 has shown neuroprotective properties in preclinical studies, deBethizy said. "Its primary focus is symptomatic treatment, but it also offers the potential for disease modification if the preclinical data we have translates into clinical results."

NNRs are found on nerve cells. Targacept's products selectively target specific NNR subtypes to promote therapeutic effects and to limit side effects. Alzheimer's disease is one example of a cognitive disorder that has few treatment options and could benefit from Targacept's research.

"The current therapies are marginally effective," deBethizy said, adding that Alzheimer's disease represents a $3 billion worldwide market.

TC-1734 selectively targets the NNR subtype alpha4 beta2. With superior selectivity, the company has been able to "virtually eliminate activity," deBethizy said, at ganglionic and muscle NNR subtypes known to be involved in side effects of potential competitor drugs. The compound also could address a wide-open market of people with cognitive deficits in schizophrenia.

"Scientists estimate that 75 percent of the 9 million schizophrenics worldwide have cognitive deficits, and there is no approved therapy," deBethizy said.

Targacept has one marketed product, Inversine (mecamylamine hydrochloride), which was acquired from Sunnyvale, Calif.-based Layton Bioscience Inc. and is sold for hypertension. The drug was first developed by Merck & Co. Inc., of Whitehouse Station, N.J.

It also is developing mecamylamine HCl in a Phase IIb trial for depression, and TC-2696 in a Phase I dose-escalating trial for pain. A preclinical compound to treat depression and anxiety, TC-2216, should be ready for an investigational new drug application by the third quarter, while an IND for another preclinical compound for schizophrenia could be filed in the first half of 2007.

Originally formed as a wholly owned subsidiary of R.J. Reynolds Tobacco Co., Targacept became an independent company in August 2000. It filed for an $86.25 million initial public offering in May 2004, but withdrew it in March, citing unfavorable market conditions. (See BioWorld Today, May 18, 2004.)

The company plans to raise money sometime in 2006, possibly trying for an IPO again.

"We are certainly looking at that possibility," deBethizy said, adding that the company would be "looking at both public and private markets.""

Source: Karen Pihl-Carey. Targacept, AstraZeneca Enter TC-1734 Deal For Up To $300M. BioWorld (online 29 Dec 2005) [FullText]