WINSTON-SALEM, N.C. – A $20 million payment from AstraZeneca lifted pharmaceutical firm Targacept to profitability for its first year as a public company, the firm said Thursday.

Targacept (NASDAQ: TRGT), which went public last year, reported net income of $2.1 million for 2006 vs. a loss of $29 million for 2005.

AstraZeneca made the payment to Targacept in the fourth quarter as part of an agreement to develop a treatment for Alzheimer’s disease.

Over the course of 2006, Targacept recognized more than $26 million in revenue from its partnership with AstraZeneca.