Targacept's TC-5619 Phase 2 trial data in schizophrenia presented at ICOSR

Targacept, Inc. (NASDAQ: TRGT) today announced the presentation of data from a Phase 2 clinical proof of concept trial to assess TC-5619 as an augmentation therapy to improve cognition in patients with schizophrenia at the International Congress on Schizophrenia Research (ICOSR) in Colorado Springs, Colorado. Results presented at ICOSR showed statistically significant superiority of TC-5619 over placebo on secondary efficacy outcome measures assessing improvement on cognitive dysfunction in schizophrenia and negative symptoms of schizophrenia. Targacept announced that TC-5619 met protocol-defined success criteria on the study's primary efficacy outcome measure, the Groton Maze Learning Task (GMLT) of the CogState Schizophrenia Battery, and other top-line results in January 2011.

"TC-5619 appeared in this study to have a clinically meaningful effect on measures of cognitive and negative symptoms of schizophrenia, a profile that would represent a therapeutic advance for the field," said Jeffrey A. Lieberman, M.D., the Lawrence C. Kolb Professor and Chairman of Psychiatry at the Columbia University College of Physicians, Surgeons and Director of the New York State Psychiatric Institute and a principal investigator for the TC-5619 trial. "The FDA has recently identified these domains as important clinical targets for drug development because the antipsychotic agents used to treat patients with schizophrenia largely provide benefit for positive symptoms of the disease, such as hallucination or delusions. The quality of life and level of function for most of these patients continues to be dramatically affected by cognitive impairment and by negative symptoms as patients enter what has been called the residual phase of schizophrenia."

Based on the outcome of the trial, TC-5619 is subject to license by AstraZeneca under the terms of a 2010 amendment to the parties' collaboration agreement focused in cognitive disorders. Preliminary indications suggest that AstraZeneca may seek to negotiate different terms and whether it will license TC-5619 is uncertain. Discussions remain ongoing, and an outcome is expected in the coming weeks.

"This Phase 2 trial was designed to evaluate TC-5619 against an extensive list of endpoints to inform future development," said J. Donald deBethizy, Ph.D., President and Chief Executive Officer of Targacept. "The results across various measures affirm for us the promise of TC-5619 to positively impact the lives of patients with schizophrenia. Currently approved treatments are not effective in treating either cognitive or negative symptoms of the disease, leaving a pressing need that is clearly evident to the FDA. We believe TC-5619 has unique potential to meet this need and are actively formulating development plans as we continue discussions with AstraZeneca."

Statistically significant (1-sided p-value ˂ 0.1) results from the trial favoring TC-5619 were reported at ICOSR on:

• Scale for the Assessment of Negative Symptoms (SANS), an investigator assessment of improvement on the negative symptoms of schizophrenia, at week 12 for all patients (p = 0.015) and at all three of the study's measurement dates for the tobacco user dataset (week 4, p = 0.098; week 8, p = 0.054; and week 12, p = 0.033);
• Clinical Global Impression-Global Improvement (CGI-I), an investigator assessment of overall response, at week 4 for all patients (p = 0.049) and at week 4 (p = 0.047) and week 8 (p = 0.075) for the tobacco user dataset;
• Subject Global Impression-Cognition (SGI-Cog), a patient self-assessment of cognitive change, at week 12 for all patients (p = 0.046); and
• two of the six computer-based items on the CogState Schizophrenia Battery (CSB) at week 12 for all patients (attention, p = 0.063; working memory, p = 0.042); three of the six CSB items at week 12 for the tobacco user dataset (attention, p = 0.057; working memory, p = 0.020; verbal memory, p = 0.027); and a composite measure of the CSB at week 12 for the tobacco user dataset (p = 0.098).

Results on the remaining items of the CSB, on a composite measure of the CSB (all patients) and on Clinical Global Impression-Severity (CGI-S) did not demonstrate a drug effect at any of the measurement dates, occasionally favoring placebo over TC-5619 with statistical significance (including on the verbal memory item of the CSB at week 4).

The favorable study results were driven by tobacco users and were often better for patients at study sites in United States as compared to India. Estimates of the prevalence of smoking amongst schizophrenia patients vary, with one study indicating as high as 80%.

TC-5619 exhibited a favorable tolerability profile in the trial, and there was no clinically significant difference between the TC-5619 and placebo dose groups in discontinuations due to adverse events. The most frequent adverse event was nausea (5%), which was mild to moderate in severity and never led to patient dropout. There were two serious adverse events in the trial, one in the placebo dose group and one in the TC-5619 dose group. Both were considered by the applicable investigator as not drug related.