Targacept CEO Steps Down After Series of Setbacks

After pipeline disappointments a corporate shake up might be just what Targacept needs as it moves forward with its remaining drugs.

After months of disappointments, a corporate shake up might be just the change Targacept, Inc. (TRGT) needs to turn its weak stock back around.

The drug-development company announced Tuesday that Chief Executive J. Donald deBethizy was stepping down for personal reasons. This shake up follows a year of continuous setbacks in several key clinical trials.

Most recently, Targacept and development partner AstraZeneca (AZN) pulled the plug on their depression drug TC-5214 after it was shown largely ineffective in a Phase III trial. When that news hit in March the stock dropped 28% to $5.36.

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Targacept’s stock started the day down 1.19% after the news of deBethizy’s departure. The stock showed volatility for the rest of the morning, climbing up to the day’s high of $4.27 before falling to $4.18. Around noon on Tuesday the stock was up again by 0.95% to $4.24.

While the company looks for a new CEO, board chairman Mark Skaletsky will lead a newly formed office of the chairman that includes Chief Business Officer Jeffrey P. Brennan, Chief Financial Officer Alan A. Musso and General Counsel Peter A. Zorn. The office of the chairman will guide the company’s strategic direction, resource allocation and pipeline development.

Chart from Targacept

Targacept is still partnered with AstraZeneca on two Alzheimer’s drugs — AZD3480 and AZD1446. The former is in a Phase IIb study evaluating the drug head-to-head with donepezil, which is more often prescribed for Alzheimer’s disease. AZD1446 is expected to next start in a Phase II trial as an adjunct treatment to donepezil in patients with mild to moderate Alzheimer’s.

The drug TC-5619 is being considered for a number of diseases and is the furthest along in trials as a schizophrenia drug. In December 2011 it started in two studies: a Phase IIb treating negative symptoms and cognitive dysfunction in schizophrenia and a Phase II treating adults with inattentive-predominant ADHD. The company is evaluating the potential for the drug in Alzheimer’s as well.

Lastly, TC-6987 is an anti-inflammatory in separate Phase II studies for type 2 diabetes and asthma.

The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock.

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