Targacept announces a new round of job cuts

WINSTON-SALEM, N.C. -- Targacept Inc. said Monday it will eliminate 26 jobs, or 38 percent of its staff positions, as it tries to cut more costs after its second significant drug failure of the year.

The company also said it will close its laboratory operations by the end of 2012. Targacept will have 43 employees left after the cuts take effect and said it expects to save $9.6 million a year starting in 2013 as a result of the terminations and lab closing. The company will take $1.5 million in severance and other charges in the fourth quarter.

Targacept had 142 employees at the end of February. In March, Targacept and its partner AstraZeneca PLC said they were ending development of an experimental depression drug after the product failed in two studies. Targacept later said it would eliminate 65 jobs. In September the company reported the failure of an experimental attention deficit hyperactivity drug and said more job cuts would follow.

The company also said it would not make any further investments in its neuronal nicotine receptor drug candidates until it hired a permanent CEO. Longtime President and CEO J. Donald deBethizy resigned in June.

Targacept said it expects to save $22.5 million a year from all of its cost-cutting measures and said it has enough cash to fund operations through at least 2015.

Targacept is studying drugs that target neuronal nicotine receptors, a group of proteins in the nervous system that modulate the levels of key chemical messengers, such as dopamine, that are linked to nicotine's addictive effects.

Shares of Targacept lost a penny to $4.54 in morning trading. The shares are down 76 percent since Nov. 7, when Targacept and AstraZeneca announced the first disappointing study results for the depression drug.