Targacept shares crater after another program goes down in flames

Targacept has racked up another major trial failure. After a steady drumbeat of setbacks over the past two years, the Winston-Salem, NC-based biotech says it will tamp down the last spade of dirt on TC-5619 after the therapy--which already failed a study for ADHD--flunked the primary as well as secondary endpoints in a Phase IIb study for schizophrenia.

Targacept's stock ($TRGT) plunged 35% on the news.

"While the results are disappointing, we believe the study was well conducted and provides a robust dataset upon which we have based our decision to not pursue further development of TC-5619 as a treatment for either schizophrenia or Alzheimer's disease," says Targacept CEO Stephen Hill in a statement. "We will focus our efforts on our other ongoing Phase 2b programs, TC-5214 for overactive bladder and TC-1734 for Alzheimer's disease, continue forward with the planned development of TC-6499 for diabetic gastroparesis, and maintain our disciplined approach to executing our business plan which seeks to provide new medicines to improve patients' lives."

So far, Targacept's business plan has resulted in a litany of failures. Raised in the heart of tobacco country, the biotech has developed its expertise in neuronal nicotinic receptors, which the company says exert influence as key regulators of the nervous system. But they have failed to prove their theory that the pathway can lead to major new therapies. And their setback in depression helped trigger a company-wide restructuring at AstraZeneca ($AZN), with a new "virtual" strategy for CNS.

CEO J. Donald deBethizy quit in mid-2012 after four straight Phase III trial setbacks for the depression drug TC-5214--partnered with AstraZeneca--forced the biotech to lay off half of its staff. Later that year TC-5619 was outperformed by a placebo for ADHD. AstraZeneca then handed back rights to Targacept's alpha4beta2 modulator TC-1734 or AZD3480, for Alzheimer's.

- here's the press release