J. Donald deBethizy, chief executive officer of Targacept, is hardly alone in hoping that the company is on track to developing an effective treatment for Alzheimer’s disease.

You see, deBethizy has personal experience with the insidious killer that affects an estimated 4.5 million Americans. His in-laws were affected by the illness, which has no cure.

“It is a horrific disease that just has devastating impact on its victims and the victims’ families,” deBethizy said in a telephone interview on Wednesday. “It’s a very sad thing to see people lose their mental functions.”

DeBethizy, a former executive with R.J. Reynolds and a co-founder of Targacept when the company was spun off from RJR in 1999, didn’t volunteer the information about his in-laws. His response came following a question from a reporter about whether he had personal experience with Alzheimer’s. At age 56, he also knows he is among those facing the threat of the disease as time marches ever onward.

“We baby boomers hope that therapies will be developed that treat the disease better or delay the onset of the disease,” deBethizy said. “The current therapies aren’t very effective, and the side effects can be significant.”

A step toward finding an effective Alzheimer’s treatment took place on Wednesday when drug giant AstraZeneca announced it would continue its partnership with Targacept to develop the compound AZD3480. (Targacept labels it TC-1734.) The news means that Targacept receives a $20 million milestone payment, and plans can start being made for a Phase III clinical trial. Food and Drug Administration approval is hardly assured at this point. But Targacept and AstraZeneca researchers like the results and data they are seeing. They also believe the compound could have wider use in treating cognitive system disorders.

In addition to the payment and the financial boost the news gave to Targacept stock (NASDAQ: TRGT), the firm’s employees took satisfaction in knowing progress was being made in a worthwhile fight.

“Everybody in the company works very hard, and they feel great to develop a product that could be so important,” deBethizy said. “It gives you a lot of satisfaction.”

A “Motivated” Partner

AstraZeneca and Targacept see “very broad” applications for the compound, and AstraZeneca will fund a four-year research effort costing more than $26 million. Targacept chose to partner with AstraZeneca last year because of its reputation as a “global pharmaceutical leader with a strong neuroscience team,” deBethizy explained. And he hasn’t been disappointed. “We’ve got an excellent, motivated partner,” he said.

“There was substantial interest in the compound, and we were delighted with the commitment AstraZeneca was willing to express. We’ve gone through a year with them now, and I couldn’t be happier with AstraZeneca as a partner.

“They are a leader in the neuroscience field, and the program we are embarking on is far more significant that we would have been able to develop on our own. This could be a global blockbuster.”

2006: An Impressive Year

The AstraZeneca news capped an impressive year for Targacept. The company executed a $45 million initial public offering in April after having raised $123 million in venture capital since its founding. In addition to good test results about TC-1734, Targacept also reported good news for another compound that could become a treatment for post-operative pain.

At the core of Targacept’s technology is a proprietary platform called Pentab. The company focuses on so-called neuronal nicotinic receptors (NNRs) that are part of the central nervous system.

“It’s really given us an outstanding engine for producing a lot of novel molecules,” deBethizy said. “It’s really positioned us well for a lot of interesting opportunities.”

In addition to Alzheimer’s, Targacept is searching for means of treating:

  • · Cognitive deficits in schizophrenia
  • · Depression/anxiety
  • · Pain
  • · Schizophrenia
  • · Smoking cessation
  • · Obesity
  • · Inflammation

The growth of Targacept is closely linked to deBethizy, who earned a PhD in toxicology at Utah State University. A former RJR executive, he was vice president of product evaluation, research and development with an emphasis on so-called “reduced risk” products. He was involved in the development of the molecules chosen to target central nervous system diseases. In 1997, RJR named him president of Targacept when the company was formed. Ernst & Young recognized deBethizy as its “Carolinas Entrepreneur of the Year” in 2002.

Targacept continues to look for additional partners. In addition to AstraZeneca, the company has deals with Dr. Frank Pharma and Aventis.

“Our fundamental goal is to hit value inflection points with different programs then enter into partnerships to exploit opportunities,” deBethizy explained. “We’re fortunate in that all our molecules are in areas of unmet needs for the central nervous system. They are large areas.”