Targacept Initiates Exploratory Study of TC-6499 in Diabetic Gastroparesis

Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics™, today announced the initiation of a Phase 1/2 exploratory study of TC-6499 as a treatment for gastroparesis, a chronic disorder that slows or stops the passage of food from the stomach to the small intestine. TC-6499 is a novel small molecule that modulates the activity of the alpha3beta4 and other neuronal nicotinic receptors (NNRs). The alpha3beta4 NNR is located throughout the gastrointestinal tract and, when modulated, is believed to increase cholinergic tone, which in turn leads to increased motility.

“Current treatments for gastroparesis are inadequate and range from dietary changes to drugs with side effects that limit long-term use. These approaches provide either incomplete relief, have a negative impact on quality of life, or both,” said Kenneth L. Koch M.D., Professor of Internal Medicine and Chief of Gastroenterology at Wake Forest University Baptist Medical Center. “Patients and treating physicians would welcome a safe and effective oral drug with effects targeted at nicotinic receptors located in the gut. Such a treatment would vastly improve the lives of patients suffering from this chronic, debilitating disorder.”

Evidence from Phase 1 clinical trials suggest that TC-6499 may increase gastric motility. In addition, in a Phase 2a clinical trial involving 24 subjects, TC-6499 outperformed placebo on an objective secondary efficacy outcome measure, the number of spontaneous bowel movements per week, but not on the primary efficacy outcome measure of global symptom relief.

“This clinical study will, at relatively modest cost, allow us to determine whether the early clinical data on TC-6499 is predictive of a meaningful improvement in gastric motility for subjects with diabetic gastroparesis and thus warrant further development of TC-6499 in this therapeutic area,” said Dr. Stephen A. Hill, Targacept’s President and Chief Executive Officer. “We continue to appreciate the potential value of NNR Therapeutics and view this as an important step in building a sustainable company focused on improving patients’ lives.”

About the Study

The Phase 1/2 exploratory study is a double blind, placebo controlled, randomized, four-way crossover study planned to be conducted at sites in the United States. At least 18 subjects with diabetic gastroparesis will be required to complete the study and will receive one of four treatments (2mg, 5mg and 10mg of TC-6499 and placebo) in a randomized, crossover manner on each of four treatment visits, with each dosing period separated by approximately seven days. The primary endpoint of the study is change in gastric emptying half-time (BT_t1/2), as measured by a carbon (13C) labeled gastric emptying breath test, for each active treatment relative to placebo. The study will also assess the safety, tolerability and pharmacokinetics of TC-6499.

About Gastroparesis

Gastroparesis, also referred to as delayed gastric emptying, is a debilitating, chronic disorder that slows or stops the passage of food from the stomach to the small intestine. The most common symptoms of gastroparesis are nausea, a feeling of fullness after eating only a small amount of food, vomiting, gastroesphoageal reflux, abdominal pain and bloating. Gastroparesis affects an estimated 5% to 12% of patients with diabetes and can significantly reduce quality of life for patients due to the need for continuous medical care and poor prognosis. Complications from the disorder may lead to emergency room visits and hospitalizations, which can have a significant economic impact on individuals and society.

About Targacept

Targacept is developing an advanced clinical pipeline of NNR Therapeutics™ to treat patients suffering from serious nervous system and gastrointestinal/genitourinary diseases and disorders. Many diseases arise from abnormalities in signaling within and between the brain and other organ systems such as the bladder and the GI tract. Targacept’s NNR Therapeutics have the potential to normalize these signaling pathways to provide significant medical benefit. Targacept is dedicated to building health and restoring independence for patients. For more information, please visit www.targacept.com.

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Forward-Looking Statements

This press release includes “forward-looking statements” made under the provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements, other than statements of historical fact, regarding without limitation: whether or when Targacept will initiate further clinical trials of TC-6499 in gastroparesis; the development stage, dosage or endpoints of any future clinical trial of TC-6499 in gastroparesis; the medical benefits or tolerability of TC-6499 as a treatment for gastroparesis; the competitive position of TC-6499 or the commercial opportunity in gastroparesis; or Targacept’s plans, expectations or future operations, financial position, revenues, costs or expenses. Actual results, performance or experience may differ materially from those expressed or implied by any forward-looking statement as a result of various important factors, including without limitation risks and uncertainties relating to: the conduct and results of any future clinical trials and non-clinical studies and assessments of TC-6499 as a treatment for gastroparesis; whether favorable findings from completed clinical trials of TC-6499 in another indication or from non-clinical studies with TC-6499 or other agents will be replicated or translate into favorable findings in any future clinical trials of TC-6499 in gastroparesis; Targacept’s ability to protect its intellectual property with respect to TC-6499; and the timing and success of submission, acceptance and approval of regulatory filings with respect to TC-6499. Risks and uncertainties that Targacept faces are described in greater detail under the heading “Risk Factors” in Targacept’s most recent Annual Report on Form 10-K and in other filings that it makes with the Securities and Exchange Commission. As a result of the risks and uncertainties, the results or events indicated by the forward-looking statements may not occur. Targacept cautions you not to place undue reliance on any forward-looking statement.

In addition, any forward-looking statement in this press release represents Targacept’s views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. Targacept disclaims any obligation to update any forward-looking statement, except as required by applicable law.

NNR Therapeutics™ and Building Health, Restoring Independence® are trademarks or service marks of Targacept, Inc. Any other service marks, trademarks and trade names appearing in this press release are the properties of their respective owners.