WINSTON-In one of the area’s largest funding rounds this year, R.J. Reynolds Tobacco spin-off Targacept Inc. has completed a $46-million equity financing.

The second round of financing for the Winston-Salem based biotech company was led by Nomura International’s Healthcare Private Equity Group, based in London.

In addition to Nomura, other new investors participating in this round were Reston, VA-based New Enterprise Associates (NEA), CDIB BioScience Ventures of Santa Clara, CA, and New York-based Easton Hunt Capital Partners.

Also participating were investors from Targacept’s $30.4 million first round of financing, which took place in August 2000. They are EuclidSR Partners, Burrill & Company, Advent Venture Partners, Auriga Ventures, CDC-IXIS Innovation, Genavent Fund, Société Générale Asset Management Finance and Academy Venture Fund.

Targacept says it will use the $46 million to advance its current programs into late stage clinical development and to progress its preclinical programs.

“The sizeable support from both new and existing investors in these challenging market conditions is a substantial validation of Targacept’s business model, clinical programs and underlying technology platform,” J. Donald deBethizy, president and chief executive officer of Targacept, said in a statement. “These funds will allow Targacept to continue to pursue key milestones in the clinical development of our lead product candidates.”

Targacept is focusing on the discovery and development of nicotinic acetylcholine receptor-based therapies for neurodegenerative, neuropsychiatric and gastrointestinal diseases. The company has products in research and development for treating Alzheimer’s disease, Parkinson’s disease, Lewy body dementia, ulcerative colitis, depression, pain, anxiety disorders and schizophrenia.

Furthermore, Targacept has a strategic alliance with Aventis Pharma SA to discover, develop and commercialize compounds for the treatment of Alzheimer’s disease and a strategic alliance with Dr. Falk Pharma GmbH to develop a new class of drugs to treat ulcerative colitis.

“Targacept has done a great job of establishing a broad portfolio of clinical stage CNS opportunities,” said Denise Pollard-Knight, Head of Healthcare Private Equity at Nomura. “The company has combined its expertise in nicotinic acetylcholine receptor biology with its proprietary chemistry to identify selective drug candidates with promising safety profiles for this class of drugs. With the financing complete, Targacept now has the components necessary for success.”

In connection the financing, Targacept named John Richard and Jim Barrett to the company’s board of directors. Richard is the former executive vice president of business development for Sequus Pharmaceuticals. Barrett is a general partner of NEA and was founder, chairman and CEO of Sensors for Medicine and Science Inc.

“NEA has been very impressed with Targacept’s business plan and the commercial opportunities for its receptor-based therapeutics,” Barrett said. “We believe the combination of a balanced clinical stage portfolio, a validated discovery engine and an experienced management team position Targacept as one of the leading biotechnology companies in the CNS space.”

Targacept: www.targacept.com