Fall has been a season of rising fortunes for Targacept Inc. In October, the Winston-Salem-based drug developer netted $44.4 million in less than 24 hours by selling 2.2 million shares of stock. A week later came news that its depression compound, TC-5214, did three times better in clinical testing than the drug Abilify. TC-5214 is expected to hit the market in 2013, and analysts say it could generate sales of more than $1 billion — 50 times what Targacept grossed last year. In early November, the company reported third-quarter net income of $1.3 million — its first profitable quarter in nearly three years. Targacept stock traded for about $22, up from a summertime low of $2.
All that set off celebrations in the Twin City. “Obviously, one of the major focuses on the growth of Winston is tied to biotechnology and life sciences,” says Bob Leak, president of Winston-Salem Business Inc., which recruits companies to the city. “Having Targacept here and having it be successful continues to affirm that Piedmont Triad Research Park and our recruiting efforts are headed in the right directions.”
But some wonder whether the company is becoming too successful. They worry that a big drug company could swoop in and snatch it up — Targacept already has partnerships with AstraZeneca PLC and GlaxoSmithKline PLC, both based in London. A buyout could result in layoffs among its 115 employees and a loss of status as it becomes a subsidiary of a foreign behemoth. “We do know that the more successful they get, the bigger the target becomes,” Mayor Allen Joines says.
CEO Don deBethizy has said that he wants the company to remain independent and stay in its birthplace. But he also told analysts in early November that it is searching for a big drug company to help with the next stage of clinical trials for TC-5214. That third-quarter profit was fueled largely by a payment from AstraZeneca for progress on a treatment for adult attention-deficit/hyperactivity disorder. Joines says he believes it when deBethizy expresses a desire for Targacept to stay independent. “But we know sometimes these decisions are financial.”
Leak says the Triad has created enough momentum at Wake Forest University Baptist Medical Center and other places to sustain its life-science cluster regardless of what happens to Targacept. “We don’t sit around and worry about who’s going to be bought.”