Targacept sharpens well-used budget ax after another drug flames out

A very bad year for Targacept just got worse. The biotech announced this morning that a mid-stage study of its program for attention deficit/hyperactivity disorder--ADHD--failed to achieve statistical significance. The failure, the latest in a string of clinical setbacks, forced the biotech to jettison the program and prepare for another round of layoffs. Its stock price ($TRGT) slid about 10% on the news.

Over the past 10 months the share price has plunged about 80%.

Once again, the company had to concede that the placebo performed better than the drug. "Across the study measures, patients in the placebo dose group consistently improved more than patients in the TC-5619 dose groups," Targacept stated in a release.

"Under these circumstances, we are taking additional steps to more closely align our resources with our current operational plan and emphasize the efficient use of Targacept's capital," said Targacept Chairman Mark Skaletsky. "We will limit our investment in our nicotinic pipeline to our ongoing or previously announced clinical programs until the search for a new CEO is successfully completed, and we will implement a further reduction in force." The company did not spell out how many jobs would be cut this time.

Once viewed as one of Targacept's most promising drugs, the luster around TC-5619 has dimmed considerably. AstraZeneca ($AZN) decided to walk away from its partnership on the drug as a potential treatment for schizophrenia in early 2011. AstraZeneca also gave up on the depression drug TC-5214 and TC-6987 failed one of two key goals in a study. The drumbeat of bad news forced longtime CEO J. Donald deBethizy to bow out in June, after the company outlined plans to eliminate half of its workforce.

- here's the press release

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