Transcript A New Class of Drugs for a New Class of Targets

July 28, 2010
A Model for Corporate Involvement in
Workforce Development – NCBioNetwork
Meeting at Forsyth Tech, Winston-Salem
Cautionary Note re: Forward-Looking Statements
This presentation includes “forward-looking statements” made under the provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include statements that are not purely historical
in nature regarding, without limitation: the progress or scope of development of TC-5214, AZD3480,
AZD1446, TC-5619, TC-6987 or any of our other product candidates or programs, such as the size, design,
population, conduct, duration or objective of any clinical trial, the timing for initiation or completion of any
clinical trial, for availability of results from any clinical trial, for submission or approval of any regulatory filing
or for meeting with regulatory authorities, or the indication(s) for which a product candidate may be
developed; the competitive position of TC-5214, AZD3480, AZD1446, TC-5619, TC-6987 or any of our other
product candidates; the commercial opportunity in any particular indication; any payments that AstraZeneca
or GlaxoSmithKline may make to us; the impact on our alliance of GlaxoSmithKline’s shift in discovery
research focus announced in February 2010; or our plans, expectations, objectives, prospects or future
operations, financial position, revenues, costs or expenses. The words “may,” “will,” “could,” “would,”
“should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,”
“continue,” “ongoing,” “scheduled” and similar expressions are intended to identify forward-looking
statements. 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 our critical accounting
policies and the risks and uncertainties described under the heading “Risk Factors” in our most recent
Annual Report on Form 10-K and in other filings that we make 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. In addition, market and industry statistics contained in this presentation are
based on information available to us that we believe to be reliable but have not independently verified.
All forward-looking statements speak only as of the date this presentation is made and should not be relied
upon as representing our views as of any date after this presentation is made. We specifically disclaim any
obligation to update any forward-looking statement, except as required by applicable law.
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Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept, Inc.
HQ and Laboratories
 Clinical-stage biopharmaceutical
company
 Discovering and developing NNR
Therapeutics™
 New class of drugs for the treatment
of central nervous system diseases
and disorders
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Copyright © 2010 Targacept, Inc. – All rights reserved
NNRs: “Volume Knobs” of the Nervous System that
Normalize the Brain’s Chemical Balance
Targacept’s NNR-Selective
Compounds Optimize
NNR Activity
NNRs Control the Release
of All Major Neurotransmitters
from Nerve Endings
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Copyright © 2010 Targacept, Inc. – All rights reserved
NNR Target Diversity Enables Treatment of Multiple
Diseases With Diverse Pharmacologies
16 Human
Genes Encode..
..for a Number of
Protein Targets
in the Human Body
a1
a2
a3
a4
a5
a6
a7
a9
a10
b1
b2
b3
b4
d
g
e
Modulating
Key Pathways
a7
a4b2
a4b2a5
a4b4
a3b4b2
a6b4b3a5
a3b2
Alzheimer’s
GABA
MCI / AAMI
ADHD / ADD
Acetylcholine
Norepinephrine
Serotonin
BDNF, bFGF, NGF
TH, PNMT, NFkB
Nitric Oxide
TNFa, IL8
a1b1g/e
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Copyright © 2010 Targacept, Inc. – All rights reserved
Glutamate
Dopamine
a3b4
a3b2a5
a3b4a5
Relevant to
Debilitating
Diseases
Schizophrenia
Parkinson’s
Pain
Anxiety
Depression
Obesity
Smoking cessation
Ulcerative colitis
High Failure Rate in Discovery……Mitigating the Risk




It takes about 20-25 years to discover and develop a first -in-class medicine
Average cost per approved drug ~$1 billion
Important to select the right compounds for costly clinical development
Targacept’s Proprietary Drug Discovery Platform: Pentad™ = biological
data + sophisticated, computer-based methodologies
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Copyright © 2010 Targacept, Inc. – All rights reserved
Unparalleled Patent Position in NNR Space
Issued Patents, US and EU
107
Pfizer
74
Astra
Zeneca
Merck
43
Neuro
search
47
Abbott
47
39
SanofiAventis
Roche/
Critical
Memory
Novartis CoMentis Servier
3
3
4
5
5
Bayer
5
J&J
17
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Chart reflects results or patent literature search conducted by Targacept using Delphion Research; includes patents issued in the U.S.
or Europe between January 1990 and April 2009.
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Copyright © 2010 Targacept, Inc. – All rights reserved
Deep Pipeline – Areas of Large Unmet Medical Need
•$80-$100M investment in our pipeline in 2010
•$0.5B investment over next 5 years
•$65M worldwide outsourcing commitment for Phase 3 clinical
development in depression program
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Copyright © 2010 Targacept, Inc. – All rights reserved
Optimistic Pragmatism
Blue Ocean Strategy
Less Competition/Significant Unmet Medical Need
http://www.blueoceanstrategy.com
Compete in Red Oceans
with Big Sharks (alliances
Compete in Blue Oceans
with Submarines
with AstraZeneca and
GlaxoSmithKline)
(Targacept)
Depression
Anxiety
Hypertension
Addiction
AD, ADHD, CDS,
Parkinson’s Disease
Our mission is to provide superior treatment options for
complex diseases and disorders to improve patients’ lives by
developing innovative new medicines that exploit the unique
role of NNRs.
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Copyright © 2010 Targacept, Inc. – All rights reserved
Financial Highlights – Cash is King
Operating Statement
Year Ended
12/31/2009
Year Ended
12/31/2008
Operating Revenues
$25,062
$20,085
R&D Expense
40,179
40,981
G&A Expense
8,167
6,499
License Fees
16,350
0
$(39,404)
$(25,661)
12/31/2009
12/31/2008
$111,066
$88,363
3,756
4,798
28,227
24,964
Net Loss
Cash Position & Capitalization
Cash and Investments
Total Debt
Shares Outstanding
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Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept: A Public Company is Born April 2006
Timing is everything………..
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Copyright © 2010 Targacept, Inc. – All rights reserved
Impact of Capital Market Conditions, Clinical Trial Outcomes,
and Investor Sentiment of Value Generators
Copyright © 2010 Targacept, Inc. – All rights reserved
Economic Footprint in Winston-Salem
2001
 $6+ million invested in 2001 up-fit
 $1 million in expenses associated with relocation from RJR
 Lease of 40,000 square feet (3rd & 4th floors)
2007
 1st floor expansion: 14,000 square feet
 Office and laboratory space
 Up fit costs: $3+ million
 5-year renewal of 3rd and 4th floor space
2010
 Further facility expansion by 18,000 square feet
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Copyright © 2010 Targacept, Inc. – All rights reserved
Economic Footprint in State of North Carolina
$ 1,931,622
North Carolina State Income Tax paid by
Targacept employees in 2009
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Copyright © 2010 Targacept, Inc. – All rights reserved
Importance of Optimism in Economic Recovery
Targacept Adding ~30 New Jobs in 2010
160
140
# Employees
120
100
80
60
40
20
0
Calendar Year
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Copyright © 2010 Targacept, Inc. – All rights reserved
Investing in Talent Development
Targacept’s
Internship
Programs
Copyright © 2010 Targacept, Inc. – All rights reserved
Working in Biotech
“If you like excitement, really hard work, and a
swashbuckling wild ride, and if you like to feel that
everything you do every single day impacts the
vitality and viability of your company, then you are
going to fit in at a biotech firm.”
Gregory L. Verdine
Professor of Chemistry and Chemical Biology
Harvard University
Founder of Seven (7) Biotech Start-Ups
Chemical & Engineering News. April 12, 2010, Volume 88, Number 15, pp. 47-50
Copyright © 2010 Targacept, Inc. – All rights reserved
Birth of Targacept’s Internship Program
 Originally designed to attract women and minorities to
careers in life sciences
 Joint venture between Winston-Salem State University,
Salem College, and Targacept
 Initially undergrads only; later expanded to include high
school and graduate students
 2002 – 1st year of summer interns – 3 minority women
students funded – assignments in scientific research
departments
Copyright © 2010 Targacept, Inc. – All rights reserved
Collaboration Between Forsyth Technical
Community College and Targacept
 2001 – Collaboration between FTCC and Targacept to
jointly develop curriculum elements for Biotechnology
Associate’s Degree program
 2004 – Two FTCC Biotech Program Interns selected for
summer assignment; Regina Whitaker subsequently hired
as a full-time Targacept employee
Copyright © 2010 Targacept, Inc. – All rights reserved
Internship Statistics
 Since 2002, provided 58 summer internship (10 weeks, 40
hours/week) plus two January-Term (4 weeks, 40
hours/week) student assignments
 This includes 10 summer interns currently at Targacept (4
graduate, 5 undergraduate, and 1 high school student)
 We have partnered with total of 8 local
colleges/universities and one high school plus one
international intern from France
 75% scientific, 25% business internships
 Competitive stipend co-funded equally between TRGT and
academic institutions
Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept’s Internship Program with FTCC
Associate’s Degree Program
 10 weeks, 16 hours per week
 Stipend provided by Targacept, as a grant to FTCC
 Fulfills requirement for graduation
 One or two openings per summer (careful matching of
interests)
 Assignments typically in our Medicinal Chemistry,
Neurochemistry, Molecular Design, and Chemical
Process Development laboratories in laboratory
technician-type roles
Copyright © 2010 Targacept, Inc. – All rights reserved
Internship Program Requirements
 Excellent background in the topic area
 Top grades
 Professor’s/educator’s recommendation
 Responsible study habits, an indicator for responsible work
habits
 Excellent communication skills
 Relevant computer expertise
 Ability to quickly adapt to Targacept’s work culture – flexibility,
accountability, execution, personal responsibility,
resourcefulness, problem-ID/solving, team skills
 Commitment to the full 10-week (Summer) or 4-week (Jan
Term) assignment
Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept’s Internship Program
 Benefits to Intern
– Interview experience
– Professional experience in area of
study
– Summer income
– Relationships with fellow interns
– “Real world” work experience—
business hours, accountability
– Presentation skills
– Numerous opportunities for
professional and social interaction
with each other and with employees at
all levels in the company
– Seminar by HR: “How to Interview”
and “Resume Preparation”
– Resume editing upon request
Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept’s Internship Program
 Benefits to University or Community College
– Top quality, relevant work experience provided for student
– Grant received for Targacept’s portion of the stipend
– Presentation invitation for student advisor and career
services officers
– Relationship with Targacept strengthened
– Improved understanding of the needs of companies,
allowing curriculum enhancements/adjustments
– Ability to use this as a model to encourage other companies
to sponsor internship programs
– Ability to raise grant funds from agencies such as NC
Biotech Center, SBTDC and others organizations to support
internships
Copyright © 2010 Targacept, Inc. – All rights reserved
Rob Gould – 2009 Summer Intern – Wake Forest
University, Physiology/Pharmacology Department
 “Overall, my summer internship
allowed me to grow as a
researcher by expanding my
scientific skill set and seeing
first-hand the differences
between academic and
industrial research. However, it
was through such personal
interactions with Targacept
researchers and administrative
individuals that made my
experience so memorable. It is
hard to imagine a similar
experience evolving from a “Big
Pharma” environment.”
Copyright © 2010 Targacept, Inc. – All rights reserved
www.whatcanbiotechdoforyou.com
Local Support
 “These internships help our students grow as they deliver
positive input to Targacept. We are placing in motion the
opportunity for our students to compete for one this coming
summer…keep up the good opportunities.” November 11, 2009
Stanley W. Mandel, Ph.D., CPA, PE
Executive Professor & Director, Angell Center for ENT
Babcock Graduate School of Management
Wake Forest University
 “This is a very good program to help keep our trained young
graduates here in the region. Also, thanks to Targacept for
hosting several of our local interns who have received some
of our grant support for their research internships. These
collaborative efforts are what continue to build our
Biotechnology Cluster for the region.” November 11, 2009
Gwyn F. Riddick, MBA
Regional Director, Piedmont Triad Office
North Carolina Biotechnology Center
Copyright © 2010 Targacept, Inc. – All rights reserved
Targacept People: Key to Company Success
 15 different countries of
national origin
 Nearly half of employees
have Ph.D. and/or M.D.
degree
 Many serve as adjunct
faculty or academic
advisors
 Strengths-based
organization:
opportunities at all levels
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Copyright © 2010 Targacept, Inc. – All rights reserved
Differentiate and Distinguish Your
Company
For the 4th consecutive year, we were just named one of the
Top 30 Best Places to Work in Industry by The Scientist
Magazine
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Copyright © 2010 Targacept, Inc. – All rights reserved
Building Health, Restoring Independence™