Targacept historical perspective.
Sports aficionados may recall various feats of futility in sports. The Baltimore Orioles began the 1988 season an astounding 0-24, it got so bad they were called the “Uh-O’s”…. by their own fans. The Tampa Bay Buccaneers lost their first 26 games as a franchise, going 0-14 in 1976 followed by 0-12 in 1977 before finally breaking through with their first franchise win. Of course The Bucs were an expansion team so they can be excused. Lest I forget to mention the Chicago Cubs with no World Series wins in one entire century plus 6 years, making the Red Sox "Curse of the Bambino" 86 years of frustration (1918-2004) seem less painful.
A biotechnology company, Targacept, may have joined the legendary pantheon of lovable losers with the distinction, by my count, of a record breaking 13 consecutive clinical trial losing streak that will be extremely difficult to be beat. Typically biotech losing streaks of half or less this sort come to a natural conclusion with a corporate bankruptcy, or folding their tent long before reaching Targacept’s epic and current 13 trial, 6 drug, 6 indication, 4 year losing streak.
Call it “The Curse of R.J. Reynolds.” Yes, Targacept was founded based on research conducted at R.J. Reynolds Tobacco leveraging their in depth knowledge of nicotine, more specifically the nicotinic receptor, but geared toward developing new medicinal drugs as opposed to making sure cigarette smokers remain loyal to the various Reynolds brands. Reynolds spun out Targacept in 2000 with Targacept IPO'ing public in 2006.
Through sheer serendipity or more likely clinical fraud albeit who are we to cast such stones, in July 2009, Targacept did report what at the time seemed like stunningly positive results in treating major depressive disorder with an isomer version of an ancient drug, Targacept called TC-5214. Targacept stock jumped from about $3 per share to well over $20 by the end of that year. These results are critical to the losing streak as they directly enabled Targacept. To fail 13 times in a row, it takes nothing if not perseverance and money, a lot of it.
First, on the heels of the positive phase 2 MDD data, in the summer of 2009, Targacept raised about $52m by selling shares at $22 per share in a secondary offering. Next, in December 2009 Astra-Zeneca paid Targacept a whopping $200m upfront for global rights to TC-5214 to treat major depressive disorder. Targacept further augmented their cash hoard with a large secondary offering of $82m in 2011. Thus in sum, the promising albeit ultimately doomed 5214 data enabled Targacept to raise some $335m to finance their drug pipeline for years to come.
And then there were thirteen…
1. October 2010: AZD1446 misses the primary endpoint in adult ADHD.
2. January 2011: TC-5619 failed in treating cognitive dysfunction in schizophrenia. Targacept reported it was “positive” but the p value missed what investors would consider significance at p=0.054
3. March 2011: TC-5619 negative Phase 2 data for adults with ADHD.
4. November 2011: in a crushing blow, “Renaissance 2” the first of four TC-5214 pivotal trials for major depressive disorder misses its primary endpoint.
5. December 2011: A daily double, TC-5214 misses with its second pivotal trial in major depressive disorder.
6 and 7. March 2012: The TC-5214 quartet of doom is complete, with two more pivotal, major depressive disorder trials failing. $200m upfront plus 80% of the ongoing costs incurred officially down the drain for Astra-Zeneca.
8. March 2012: A phase 2 trial for TC-6987 in diabetes fails. However the losing streak seemingly ends at 8 as a separate trial for TC-6987 in asthma meets its primary endpoint.
9. April 2012: Upon further review TC-6987 in asthma failed. Upon re-review of the earlier reported data, Targacept learns errors in the agreed upon statistical plan were made. The losing streak continues, extending to 9.
10. September 2012: the streak reaches double digits as Targacept goes back for seconds with TC-5619 for adult ADHD, missing its primary endpoint, confirming the March 2011 failure.
11. December 2013: TC-5619 fails yet again, this time in treating schizophrenia, validating the January 2011 outcome was indeed negative.
12. July 2014: TC-1734 fails in a phase 2 trial in Alzheimer’s Disease.
13. July 2014: and finally, TC-5214 flops in a trial to treat overactive bladder, in fact 5214 did not help in overactive bladder but did cause constipation and urinary tract infections.
To recap for those keeping score, by my count, Targacept has reported 13 consecutive trial failures covering 6 distinct indications and 6 distinct drugs. Surely, a record in drug development futility that may never be matched.
Can Targacept reach 14 consecutive trial failures? Next up is TC-6499 for diabetic gastroparesis, a notoriously difficult indication to treat. Now trading for less than cash on hand, for those with iron stomachs and a contrarian bend, maybe #14 will be the charm.
AI
