Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics™, today reported its financial results for the first quarter ended March 31, 2014.
Targacept reported a net loss before income taxes of $11.6 million for the first quarter of 2014, compared to a net loss before income taxes of $8.1 million for the first quarter of 2013. As of March 31, 2014, cash and investments in marketable securities totaled $132.1 million.
"Targacept remains focused on building a sustainable company through high-quality execution of our ongoing clinical trials and growing and diversifying our pipeline. Our Phase 2b studies of TC-5214 in overactive bladder and TC-1734 in mild to moderate Alzheimer's disease both remain on track for top-line results around the middle of this year," said Dr. Stephen A. Hill, Targacept's President and Chief Executive Officer. "In addition, our exploratory study of TC-6499 in diabetic gastroparesis has progressed as expected towards the planned mid-year start of patient enrollment. With three separate clinical programs in areas of large unmet medical need, a talented workforce and a strong balance sheet, we remain excited about the opportunities that lie ahead."
Targacept reported a total net loss of $15.0 million for the first quarter of 2014, compared to a net loss of $8.1 million for the first quarter of 2013. The net loss for the 2014 period included a non-cash income tax adjustment of $3.4 million recorded as a result of an IRS review of our 2010 federal income tax return completed in the first quarter of 2014. We believe our net loss before income taxes of $11.6 million for the first quarter of 2014 is more representative of our operating results for that period. The increased net loss before income taxes for the 2014 period was principally due to a decrease of $3.5 million in revenue recognized for payments received from collaborations. Non-cash, stock-based compensation charges of $825,000 and $1.6 million were recorded for the first quarters of 2014 and 2013, respectively.
Net Operating Revenues
Net operating revenues totaled $87,000 for the first quarter of 2014, compared to $3.5 million for the first quarter of 2013. The decrease is primarily attributable to deferred revenue recognized during the 2013 period associated with Targacept's ongoing collaboration with AstraZeneca. The remaining balance of payments received under that collaboration became fully recognized in the first quarter of 2013.
Research and Development Expenses
Research and development expenses totaled $9.1 million for the first quarter of 2014, compared to $8.3 million for the first quarter of 2013. This increase was principally due to costs related to the ongoing Phase 2b study of TC-5214 in overactive bladder, which was initiated in the second quarter of 2013, and costs related to our planned exploratory study of TC-6499 in diabetic gastroparesis, which we plan to initiate in mid-2014. These increases were partially offset by decreased costs related to our Phase 2b study of TC-5619 in schizophrenia, which we completed in the fourth quarter of 2013.
General and Administrative Expenses
General and administrative expenses totaled $2.8 million for the first quarter of 2014, compared to $3.5 million for the first quarter of 2013. The lower general and administrative expenses were due primarily to a non-recurrence of severance related charges, which totaled $776,000, in connection with the departure of an executive officer in 2013.
As previously announced, Targacept will be hosting a conference call and webcast today, May 7, 2014, at 8:30 a.m. Eastern Daylight Time. The conference call may be accessed by dialing 877.474.9503 for domestic participants and 857.244.7556 for international participants (reference passcode 72389638). A live audio webcast of the conference call will be accessible via the Investor Relations page of Targacept's website, www.targacept.com. To ensure a timely connection to the webcast, it is recommended that users register at least 15 minutes prior to the scheduled start time. An archived version of the webcast will also be available in the Investor Calendar section of the Investor Relations page of Targacept's website for at least two weeks following the call.