Targacept Announces Designation of Lead Compound in Smoking Cessation Program

WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Targacept, Inc. (NASDAQ:TRGT), a clinical-stage biopharmaceutical company developing a new class of drugs known as NNR Therapeutics (TM), today announced the designation of a lead compound in its smoking cessation program, triggering a $500,000 milestone payment under its alliance agreement with GlaxoSmithKline (GSK).

“We are delighted to have successfully leveraged our expertise in NNRs to bring forward a novel compound for smoking cessation, an area that is not only a major healthcare need but also where application of the NNR mechanism has been validated commercially,” said J. Donald deBethizy, President and CEO of Targacept. “Emerging science has made the promise of NNR-targeted compounds as smoking cessation aids increasingly evident. It is important for a smoking cessation aid to specifically target the areas of the brain that serve as pathways for addiction, while addressing limitations of currently available products by minimizing unwanted side effects.”

Neuronal nicotinic receptors (NNRs) are a class of proteins in the nervous system that modulate the levels of key chemical messengers, such as dopamine. Nicotine’s addictive effects have been linked to over-stimulation of dopamine release in brain regions involved in feelings of reward and pleasure. Various NNR subtypes modulate dopamine release in these pathways and represent optimal targets for therapeutic intervention. Compounds that can normalize the activity of these NNR subtypes have the potential to decrease the rewarding effects of nicotine and, as a result, the desire to smoke.

In July 2007, Targacept and GSK entered into a strategic alliance pursuant to which Targacept would utilize its proprietary Pentad (TM) drug discovery technology to discover novel small molecule product candidates that target specified NNR subtypes in five therapeutic areas -- pain, smoking cessation, addiction, obesity and Parkinson’s disease. GSK is participating in the alliance through its Center of Excellence for External Drug Discovery.

Statistics from the Centers for Disease Control and Prevention indicate that tobacco use remains the leading preventable cause of death in the United States, causing approximately 438,000 premature deaths each year. Datamonitor projects that the global prescription market for smoking cessation therapies will be as much as $4.6 billion by 2016.

About Targacept

Targacept is a clinical-stage biopharmaceutical company that discovers and develops NNR Therapeutics (TM), a new class of drugs for the treatment of central nervous system diseases and disorders. Targacept’s product candidates selectively modulate neuronal nicotinic receptors that serve as key regulators of the nervous system to promote therapeutic effects and limit adverse side effects. Targacept has product candidates in development for Alzheimer’s disease, cognitive dysfunction in schizophrenia, pain and depression, as well as multiple preclinical programs. Targacept also has a cognition-focused collaboration with AstraZeneca and a strategic alliance with GlaxoSmithKline. Targacept's news releases are available on its website at www.targacept.com.

Forward-Looking Statements

Statements in this press release that are not purely historical in nature, including, without limitation, statements regarding the progress, timing or scope of the research and development of our product candidates, or related regulatory filings or clinical trials, the benefits that may be derived from NNR Therapeutics, the market for prescription smoking cessation therapies in the future, our plans, expectations, future operations, financial position, revenues, costs or expenses, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by forward-looking statements as a result of various important factors, including risks and uncertainties relating to: our ability to discover and develop product candidates under our alliance with GlaxoSmithKline; the results of clinical trials and non-clinical studies and assessments of product candidates in the programs subject to our alliance with GlaxoSmithKline, including the lead compound in our smoking cessation program; the conduct of such trials, studies and assessments, including the performance of third parties that we engage to execute them and difficulties or delays in the completion of patient enrollment or data analysis; the timing and success of submission, acceptance and approval of regulatory filings; changes in the prevalence of tobacco use; and the extent to which non-prescription smoking cessation therapies gain market acceptance. These and other risks and uncertainties that may impact actual results are described in greater detail 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. We caution you not to place undue reliance on any forward-looking statement. In addition, any forward-looking statements in this release represent our views only as of the date of this release and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause our views to change. Although we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, except as required by applicable law.