Targacept reports net loss of $12.4 million for Q2 2013

Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics™, today reported its financial results for the second quarter and six months ended June 30, 2013.

“We believe that success in any one of these wholly owned programs has the potential to be transformative for Targacept and we remain focused on bringing NNR Therapeutics to patients in areas of large unmet medical need.”

Targacept reported a net loss of $12.4 million for the second quarter of 2013, compared to net income of $14.5 million for the second quarter of 2012. For the six months ended June 30, 2013, Targacept reported a net loss of $20.4 million compared to net income of $16.8 million for the corresponding 2012 period. As of June 30, 2013, cash and investments in marketable securities totaled $164.0 million.

"With recruitment completed this quarter in two ongoing Phase 2b clinical trials and tracking ahead of our initial planning assumptions in a third, we anticipate having three clinical readouts between December 2013 and the middle of 2014. Specifically, we expect to report top-line results from our study of TC-5619 as a treatment for negative symptoms and cognitive dysfunction in schizophrenia in either December 2013 or January 2014, top-line results from our study of TC-5214 as a treatment for overactive bladder in the first half of 2014 and top-line results from our study of TC-1734 in mild to moderate Alzheimer's disease in mid-2014," said Dr. Stephen A. Hill, Targacept's President and Chief Executive Officer. "We believe that success in any one of these wholly owned programs has the potential to be transformative for Targacept and we remain focused on bringing NNR Therapeutics to patients in areas of large unmet medical need."

Financial Results

Targacept reported a net loss of $12.4 million for the second quarter of 2013, compared to net income of $14.5 million for the second quarter of 2012, a change of $26.9 million. The change was primarily due to a decrease of $33.5 million in deferred revenue recognition, partially offset by a decrease of $3.1 million in research and development expenses and restructuring charges for the 2012 period of $2.3 million. For the six months ended June 30, 2013, Targacept reported a net loss of $20.4 million compared to net income of $16.8 million for the corresponding 2012 period, a change of $37.2 million. The change was primarily due to a decrease of $52.6 million in deferred revenue recognition, partially offset by a decrease in research and development expenses of $12.5 million and restructuring charges for the 2012 period of $2.3 million. Non-cash, stock-based compensation charges of $1.3 million and $3.1 million were recorded for the second quarter of 2013 and 2012, respectively, and $2.9 million and $5.0 million for the six months ended June 30, 2013 and 2012, respectively.

Net Operating Revenues

Targacept reported no net operating revenues for the second quarter of 2013, compared to $33.6 million for the second quarter of 2012. For the six months ended June 30, 2012, net operating revenues totaled $3.5 million, compared to $56.5 million for the corresponding 2012 period. The decreases for both 2013 periods were due primarily to deferred revenue recognized during the 2012 periods associated with Targacept's now concluded collaboration with AstraZeneca in major depressive disorder that did not recur during the 2013 periods. The Company recognized $32.7 million and $54.5 million of the amount previously received from the now concluded collaboration for the three and six months ended June 30, 2012, respectively.

Research and Development Expenses

Research and development expenses totaled $9.5 million for the second quarter of 2013, compared to $12.5 million for the second quarter of 2012. For the six months ended June 30, 2013, research and development expenses totaled $17.8 million, compared to $30.3 million for the corresponding 2012 period. The decreases for both 2013 periods were principally attributable to a decision in 2012 to focus resources on clinical programs, two 2012 workforce reductions and the completion in 2012 of a Phase 3 development program in major depressive disorder. Research and development expenses for third-party services associated with TC-5619, TC-5214 (overactive bladder program) and TC-1734 totaled $6.7 million and $11.8 million in the aggregate for the three months and six months ended June 30, 2013, respectively.

General and Administrative Expenses

General and administrative expenses totaled $3.0 million for the second quarter of 2013, compared to $4.6 million for the second quarter of 2012. For the six months ended June 30, 2013, general and administrative expenses totaled $6.5 million, compared to $7.7 million for the corresponding 2012 period. The decreases for both 2013 periods were primarily attributable to $1.8 million in severance and stock-based compensation charges, including $1.3 million of non-cash charges, recorded during the first half of 2012. For the six months ended June 30, 2013, the decrease was partially offset by $776,000 in severance and stock-based compensation charges, including $467,000 in non-cash charges, recorded in connection with the departure of a former executive officer from Targacept in March 2013. Exclusive of the severance and stock-based compensation charges, general and administrative expenses decreased by $37,000 and $342,000 for the three months and six months ended June 30, 2013, respectively.

SOURCE Targacept, Inc.