Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics™, today reported its financial results for the fourth quarter and year ended December 31, 2013.
Targacept reported a net loss of $13.4 million for the fourth quarter of 2013, compared to a net loss of $15.9 million for the fourth quarter of 2012. For the year ended December 31, 2013, Targacept reported a net loss of $46.7 million, compared to a net loss of $7.0 million for 2012. As of December 31, 2013, cash and investments in marketable securities totaled $143.8 million.
“As we enter 2014, we continue to emphasize operational excellence in the conduct of our two ongoing Phase 2b clinical trials, TC-5214 as a treatment for overactive bladder and TC-1734 as a treatment for mild to moderate Alzheimer’s disease. We expect to report top-line results for both studies in mid-2014,” said Dr. Stephen A. Hill, Targacept’s President and Chief Executive Officer. “We are also preparing for the initiation of an exploratory trial of TC-6499 as a treatment for diabetic gastroparesis. We are fortunate to be well capitalized and remain committed to developing innovative therapeutics for unmet medical needs in a capital efficient manner.”
Financial Results
Targacept reported a net loss of $13.4
million for the fourth quarter of 2013, compared to a net loss of $15.9
million for the fourth quarter of 2012. The lower net loss for the 2013
period was principally due to a decrease of $1.6 million in research and
development expenses and the non-recurrence of $1.4 million in charges
related to a workforce reduction completed during the fourth quarter of
2012. For the year ended December 31, 2013, Targacept reported a net
loss of $46.7 million, compared to a net loss of $7.0 million for 2012.
The higher net loss for 2013 was primarily due to a decrease of $53.9
million in deferred revenue recognition, partially offset by a decrease
in research and development expenses of $10.2 million and restructuring
charges for the 2012 period of $3.7 million. Non-cash, stock-based
compensation charges of $1.1 million and $1.4 million were recorded for
the fourth quarters of 2013 and 2012, respectively, and non-cash,
stock-based compensation charges of $5.2 million and $7.8 million were
recorded for the years ended December 31, 2013 and December 31, 2012,
respectively.
Net Operating Revenues
Net operating revenues totaled
$93,000 for the fourth quarter of 2013, compared to $590,000 for the
fourth quarter of 2012. For the year ended December 31, 2013, net
operating revenues totaled $3.6 million, compared to $57.9 million for
2012. For the fourth quarter of 2013, the decrease is attributable to
deferred revenue recognized during the 2012 period associated with
Targacept’s ongoing collaboration with AstraZeneca. The payments
received under that collaboration became fully recognized in the first
quarter of 2013. The decrease for the year ended December 31, 2013 was
due primarily to deferred revenue recognized during the 2012 period
associated with Targacept’s now concluded collaboration with AstraZeneca
in major depressive disorder; the company recognized $54.5 million of
the up-front payment received from that collaboration in 2012.
Research and Development Expenses
Research and development
expenses totaled $10.8 million for the fourth quarter of 2013, compared
to $12.3 million for the fourth quarter of 2012, and $38.8 million for
the year ended December 31, 2013, compared to $49.1 million for 2012.
The decrease for the year ended December 31, 2013 was attributable
primarily to the completion in 2012 of a Phase 3 development program in
major depressive disorder. The decrease for the fourth quarter of 2013
was attributable principally to a decision in 2012 to focus resources on
clinical programs and to two 2012 workforce reductions. Research and
development expenses for third-party services associated with
Targacept’s two ongoing clinical studies of TC-5214 and TC-1734, and
with Targacept’s clinical study of TC-5619, which completed during the
fourth quarter of 2013, totaled $8.4 million and $27.6 million in the
aggregate for the fourth quarter and year ended December 31, 2013,
respectively.
General and Administrative Expenses
General and
administrative expenses totaled $2.6 million for the fourth quarter of
2013, compared to $3.1 million for the fourth quarter of 2012. The
decrease was attributable primarily to a smaller general and
administrative workforce for the fourth quarter of 2013 as compared to
the fourth quarter of 2012. General and administrative expenses totaled
$12.0 million for the year ended December 31, 2013, compared to $13.2
million for 2012. The lower general and administrative expenses were due
primarily to a reduction in severance related charges in connection with
the departure of executive officers, which totaled $879,000 in 2013 as
compared to $1.9 million in 2012.
Restructuring Charges
Restructuring charges for the fourth
quarter and year ended December 31, 2012 were $1.4 million and $3.7
million, respectively, and reflected severance and other charges related
to the workforce reductions completed in the second and fourth quarters
of 2012.
Financial Guidance
Based on current operating plans,
Targacept expects its operating expenses for the year ending December
31, 2014 to be in the range of $40 million to $45 million, and its cash,
cash equivalents and investments balance at December 31, 2014 to be at
least $100 million. Targacept does not expect significant operating
revenues for the year ending December 31, 2014, based on current
operating plans. In addition, Targacept continues to expect that its
current cash resources will be sufficient to meet its operating
requirements at least through the end of 2015. This financial guidance
includes both cash and non-cash revenue and expense items.
Conference Call
As previously announced, Targacept will be
hosting a conference call and webcast today, February 13, 2014, at 8:30
a.m. Eastern Time. The conference call may be accessed by dialing
866.515.2911 for domestic participants and 617.399.5125 for
international participants (reference passcode 72076219). A replay of
the conference call may be accessed beginning approximately two hours
following the call on February 13, 2014 through February 27, 2014 by
dialing 888.286.8010 for domestic callers and 617.801.6888 for
international callers (reference passcode 60502052). A live audio
webcast of the conference call will be accessible from 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 on the Investor
Calendar section of the Investor Relations page of Targacept’s website
for at least two weeks following the call.
About Targacept
Targacept is developing an advanced clinical
pipeline of NNR Therapeutics™ to treat patients suffering from serious
nervous system and gastrointestinal/genitourinary diseases and
disorders. Many diseases arise from abnormalities in signaling within
and between the brain and other organ systems such as the bladder and
the GI tract. Targacept’s NNR Therapeutics have the potential to
normalize these signaling pathways to provide significant medical
benefit. Targacept is dedicated to building health and restoring
independence for patients. For more information, please visit www.targacept.com.
TARGACEPT
Building Health, Restoring Independence®
Forward-Looking Statements
This press release includes
“forward-looking statements” made under the provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
include statements, other than statements of historical fact, regarding
without limitation: the timing for reporting of top-line results from
Targacept’s Phase 2b clinical trials of TC-5214 or TC-1734; the timing
for initiation of Targacept’s planned clinical trial of TC-6499; or
Targacept’s plans, expectations or future operations, financial
position, revenues, costs or expenses. Actual results, performance or
experience may differ materially from those expressed or implied by any
forward-looking statement as a result of various important factors,
including without limitation Targacept’s critical accounting policies
and risks and uncertainties relating to: the conduct and results of
clinical trials and non-clinical studies and assessments of TC-5214,
TC-1734 and any other Targacept product candidate, including the
performance of third parties engaged to execute such trials, studies and
assessments, delays resulting from any changes to the applicable
protocols and difficulties or delays in the completion of subject
enrollment or data analysis; the control or significant influence that
AstraZeneca has over the development of AZD1446, including as to the
timing, scope and design of any future clinical trials and as to the
conduct at all of further development of AZD1446; Targacept’s ability to
establish additional strategic alliances, collaborations or licensing or
other comparable arrangements on favorable terms; Targacept’s ability to
protect its intellectual property; and the timing and success of
submission, acceptance and approval of regulatory filings. Risks and
uncertainties that Targacept faces are described in greater detail under
the heading “Risk Factors” in Targacept’s most recent Annual Report on
Form 10-K and in other filings that it makes with the Securities and
Exchange Commission. As a result of the risks and uncertainties, the
results or events indicated by the forward-looking statements may not
occur. Targacept cautions you not to place undue reliance on any
forward-looking statement.
In addition, any forward-looking statement in this press release represents Targacept’s views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. Targacept disclaims any obligation to update any forward-looking statement, except as required by applicable law.
NNR Therapeutics™ and Building Health, Restoring Independence® are trademarks or service marks of Targacept, Inc. Any other service marks, trademarks and trade names appearing in this press release are the properties of their respective owners.
TARGACEPT, INC | ||||||||||||||||||||||||||||
Unaudited Condensed Statements of Operations | ||||||||||||||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
Net operating revenues | $ | 93 | $ | 590 | $ | 3,629 | $ | 57,860 | ||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Research and development | 10,754 | 12,340 | 38,840 | 49,087 | ||||||||||||||||||||||||
General and administrative | 2,647 | 3,104 | 12,005 | 13,193 | ||||||||||||||||||||||||
Restructuring charges | - | 1,406 | - | 3,718 | ||||||||||||||||||||||||
Total operating expenses | 13,401 | 16,850 | 50,845 | 65,998 | ||||||||||||||||||||||||
Operating loss | (13,308 | ) | (16,260 | ) | (47,216 | ) | (8,138 | ) | ||||||||||||||||||||
Other (expense) income, net | (51 | ) | 289 | 518 | 1,039 | |||||||||||||||||||||||
Loss before income taxes | (13,359 | ) | (15,971 | ) | (46,698 | ) | (7,099 | ) | ||||||||||||||||||||
Income tax (expense) benefit | (7 | ) | 101 | (7 | ) | 101 | ||||||||||||||||||||||
Net loss | $ | (13,366 | ) | $ | (15,870 | ) | $ | (46,705 | ) | $ | (6,998 | ) | ||||||||||||||||
Basic and diluted net loss per share | $ | (0.40 | ) | $ | (0.47 | ) | $ | (1.39 | ) | $ | (0.21 | ) | ||||||||||||||||
Weighted average common shares outstanding - basic and diluted | 33,673,047 | 33,609,867 | 33,640,323 | 33,476,316 | ||||||||||||||||||||||||
TARGACEPT, INC | ||||||||||||||||||||||||||||
Unaudited Condensed Balance Sheets | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
Cash, cash equivalents and investments | $ | 143,777 | $ | 184,927 | ||||||||||||||||||||||||
Receivables and other current assets | 1,277 | 2,782 | ||||||||||||||||||||||||||
Property and equipment, net | 682 | 1,639 | ||||||||||||||||||||||||||
Other assets, net | 137 | 231 | ||||||||||||||||||||||||||
Total assets | $ | 145,873 | $ | 189,579 | ||||||||||||||||||||||||
Current portion of deferred revenue | $ | - | $ | 2,357 | ||||||||||||||||||||||||
Other current liabilities | 10,979 | 8,992 | ||||||||||||||||||||||||||
Deferred revenue, net of current portion | - | 1,179 | ||||||||||||||||||||||||||
Long-term debt, net of current portion | 283 | 1,136 | ||||||||||||||||||||||||||
Total stockholders’ equity | 134,611 | 175,915 | ||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 145,873 | $ | 189,579 | ||||||||||||||||||||||||
Contacts:
Alan Musso, 336-480-2186
SVP, Finance and
Administration and CFO
alan.musso@targacept.com