Stephen A. Hill, CEO of Targacept in Winston-Salem, N.C. since late 2012. Photo by Julie Knight.

Targacept’s pioneering target proves too elusive

By Justin Catanoso Triad Next

WINSTON-SALEM, N.C. — From its founding in 2000, the promise of Targacept was nothing short of revolutionary.

Sure it had an irresistible storyline. A pharmaceutical company focused on relieving health care’s most intractable disorders had been birthed from a company, R.J. Reynolds Tobacco, whose primary product is reviled for causing disease and premature death.

The scientists at Targacept were hired first by RJR to devise a safer cigarette. But through their accumulated knowledge of nicotine, they came to see the addictive drug as less harmful and more hopeful — especially if you could extract the drug from all the smoke and toxins in burning tobacco.

So they did. And with a $30 million stake from a French pharmaceutical company, Targacept emerged 15 years ago as a small-pharma startup with a new drug, TC-1734. Its chemists believed that the drug could become the first therapy to effectively treat the global scourge of Alzheimer’s disease.

But that’s not even the revolutionary part. This is.

With TC-1734, and with 20-some drugs that followed, Targacept was taking aim at a vast receptor system in the brain and body still untapped by modern medicine — neuronal nicotinic receptors (NNRs). These NNRs, through the brain chemicals they control, have the unique ability to modulate, or control, brain activity: to calm your nerves; elevate your mood; focus your attention; still quaky limbs; sharpen your memory. Just like smoking cigarettes does for so many users.

As one Targacept scientist told me several years ago, “It’s a major, radical change in medicine.”

And it was all built on the premise that precise, nicotine-like drugs, hitting the very receptor system that smoking so powerfully manipulates, could be a game-changer in fighting society’s greatest unmet medical needs. Depression. Schizophrenia. Attention deficit. Parkinson’s disease. Alzheimer’s.

So it was with a profound sense of poignancy, of coming full circle, that Targacept faced its future last summer. Bleakly and finally, TC-1734, which launched the company, had failed to demonstrate in a clinical trial with 293 Alzheimers sufferers that it was any better at treating the disease than Aricept, the best-known drug already on the market.

CEO Stephen A. Hill took over Targacept in November 2012. He has no ties to its legacy, the tobacco company from which it sprung, or its revolutionary promise. He knew what he had to do. He pulled the plug. Not just on Targacept’s first drug. Not just on the rest of the drugs in its long pipeline of failure. But also on the very thing that made the company stand out from all other pharmaceutical companies, large or small.

He pulled the plug on the company’s founding reason to be — its exclusive focus on NNRs. In doing so, he hopes to save Targacept which is down to 20 employees from its 150-employee peak a few years ago.

In a long interview on Feb. 27 in his downtown office, Hill explained why.

Since its founding, he says, Targacept had spent some $300 million putting more than 20 drugs through clinical trials in a variety of disease categories. None worked. Such a track record is typical in drug discovery, where failure is the norm and bankruptcy often the outcome.

But Targacept has been luckier than most pharma startups. The confidence that investors and big pharma had in Targacept’s original management team, and its revolutionary premise, attracted hundreds of millions of dollars. The company still has $100 million in the bank.

What’s the definition of insanity? Doing the same thing over and over and expecting a different result. Stephen Hill is not insane. The long pursuit of NNR therapies has led only to failure. With the full backing of Hill’s board, Targacept will use its enviable cash reserve to completely change course.

Careful not to violate any SEC public disclosure rules, Hill shared some options that cash-rich Targacept is considering: license new compounds from other companies; buy another company; merge with another company; be purchased primarily for its cash; liquidate and give the money back to the investors.

Lots of choices with one clear constant. No more nicotine-like drugs; no more targeting NNRs.

So did Targacept squander a mountain of money chasing a fantasy? Not at all, Hill says. He explains that what gave so many investors and the public markets so much confidence in Targacept was the same thing that emboldened its founding scientists: a deep understanding of why people keep smoking despite the known health consequences.

For example, a haze of smoky nicotine quickly gets into the brain and makes smokers feel better, less anxious, more alert, more focused, calmer. Many smokers, especially those with attention deficit, schizophrenia or depression, are seen as self-medicating. Remarkably, studies indicate that long-time smokers who don’t succumb to cancer or heart disease are better protected from Parkinson’s than non-smokers.

It all seems so plausible. It always has. But with the benefit of perspective, Hill offers his best guess as to why none of this worked. In retrospect, it seems simple.

Whether through smoking or nicotine-like drugs, “it is absolutely clear that modulating nicotinic receptors has biological effects. We can prove that without a doubt,” Hill says. “The problem is, the degree of modulation we’ve been able to demonstrate…has been sufficiently modest as to not be relevant in terms of new medicine.”

In other words, for people with neurological disorders, nicotine from smoking can offer some fleeting relief from certain symptoms. But it’s not a treatment. And it’s certainly not a cure.

Ultimately, neither were Taracept’s once-promising pipeline of nicotine-like drugs. They may have helped a little. But in Hill’s view, not enough to justify spending millions more to see if they might one day work better.

Justin Catanoso, former executive editor, is director of journalism at Wake Forest University. He has covered Targacept since its founding.