WINSTON-SALEM,Drug development firm Targacept has landed a contract with international giant AstraZeneca for development of one of its compounds.

The deal could be worth as much as $300 million to Targacept.

The target of the deal is Targacept’s compound known as Ispronicline, or TC-1734, which could prove to be effective in the treatment of Alzheimer’s disease and other cognitive disorders. Targacept focuses on drug compounds targeting central nervous systems diseases and disorders.

The deal also calls for a four-year research collaboration through which Targacept will seek to discover other compounds and receive some $26 million in funding.

Targacept was launched in 1997 as a subsidiary of R.J. Reynolds Tobacco Company. It became an independent company in 2000 and since then has raised more than $120 million in venture funding. It has 74 employees.

Targacept will receive an initial payment of $10 million as part of the deal.

Another payment of $20 million would be made if AstraZeneca, a global pharmaceutical firm with more than $20 billion in sales, decides to conduct further clinical development of TC-1734.

Further payments based on achieving regulatory and commercial sale milestones would push the payment total to $300 million.

TC-1734 acts on neuronal nicotinic receptors, or NNRs, that are key regulators of the central nervous system, according to Targacept. Targacept already has a Phase II clinical trial for TC-1734 underway, targeting age associated memory impairment.

The deal could produce more payments to Targacept if other drug candidates are identified as part of the research agreement.

“We are delighted to have AstraZeneca as our discovery and development collaborator for our TC-1734 program and drug discovery efforts in cognitive disorders,” said J. Donald deBethizy, president and chief executive officer of Targacept, in a statement. “AstraZeneca has a demonstrated expertise in developing and commercializing treatments for central nervous system diseases, and we look forward to working closely with our AstraZeneca colleagues to advance TC-1734 and this important research.”