[March 05, 2013]

Targacept and AstraZeneca Amend Collaboration

Targacept, Inc. (NASDAQ: TRGT), a clinical-stage biopharmaceutical company developing novel NNR Therapeutics (TM), today announced that its collaboration with AstraZeneca has been restructured. Under the new terms:

• Targacept now has the right to pursue development and commercialization of any alpha7 NNR modulator in any therapeutic area, including cognitive disorders and schizophrenia, without obligation to AstraZeneca. Previously, AstraZeneca held an option to license any such compound that was developed by Targacept for a cognitive disorder or schizophrenia. Targacept has several alpha7 NNR modulators in its portfolio.
• AstraZeneca now has the right to develop and commercialize the alpha4beta2 NNR modulators that it has licensed from Targacept under the collaboration, including AZD1446, in any therapeutic area. Previously, AstraZeneca's rights with regard to these compounds were limited to cognitive disorders and schizophrenia.
• AstraZeneca will return to Targacept all rights to the alpha4beta2 modulator TC-1734 (also known as AZD3480), which is currently in a Phase 2b clinical trial in mild to moderate Alzheimer's disease.

"We are pleased to regain unencumbered rights to exploit the alpha7 target, as recent advances have provided clinical evidence of its relevance in both schizophrenia and Alzheimer's disease. As appreciation of the potential therapeutic benefits of this mechanism grows, we believe our leadership position and library of novel compounds will serve us well," said Dr. Stephen A. Hill, Targacept's President and Chief Executive Officer. "With respect to TC-1734, we plan to continue our ongoing clinical study, which is designed to reveal conclusively how our compound performs as compared to the market leader in the treatment of mild to moderate Alzheimer's disease after a year of treatment. Sadly, new treatment options for Alzheimer's disease have been elusive, while the need for patients and their caregivers remains immense."

"The modifications to our agreement remove contractual barriers and enable us to pursue AZD1446 and the other compounds that we have licensed from Targacept wherever the science leads us, which we believe increases our chances for clinical success," said Dr. Mike Poole, Head, Neuroscience Innovative Medicines at AstraZeneca.

Scientific evidence supports the alpha7 NNR as a potential target of interest in the treatment of various diseases and disorders. TC-5619, Targacept's most advanced alpha7 NNR modulator, is currently in a Phase 2b clinical trial as a treatment for negative symptoms and cognitive dysfunction in schizophrenia. Top-line results from this study are expected by the end of 2013. Targacept is also evaluating potential Phase 2 development of TC-5619 as a treatment for Alzheimer's disease. Beyond TC-5619, Targacept has several alpha7 NNR modulators in its chemical library. The most advanced of these compounds is the Phase 2-stage TC-6987, and Targacept is evaluating potential future development options for this product candidate.

About Targacept

Targacept is developing a diverse pipeline of innovative NNR Therapeutics(TM) for difficult-to-treat diseases and disorders of the nervous system. NNR Therapeutics selectively modulate the activity of specific neuronal nicotinic receptors, unique proteins that regulate vital biological functions that are impaired in various disease states. Targacept's clinical pipeline includes multiple Phase 2 product candidates, all representing first-in-class opportunities. Targacept leverages its scientific leadership diverse pipeline to attract significant collaborations with global pharmaceutical companies. For more information, please visit www.targacept.com.

TARGACEPT
Building Health, Restoring Independence®

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: the timing for availability of top-line results from Targacept's ongoing Phase 2b clinical trial of TC-5619; Targacept's ongoing clinical trial of TC-1734 in mild to moderate Alzheimer's disease or the continuation of the trial by Targacept; the potential medical benefits of compounds with alpha7 NNR mechanisms; 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 clinical trials and non-clinical studies and assessments of TC-1734, TC-5619 and TC-5214, including the performance of third parties engaged to execute such trials, studies and assessments, delays resulting from any changes to the applicable protocols and difficulties or delays in the completion of subject enrollment or data analysis; whether the executive turnover and two workforce reductions experienced by Targacept in 2012 will have an adverse impact on the development of any Targacept product candidate or Targacept's business generally; Targacept's ability to establish additional strategic alliances, collaborations or licensing or other comparable arrangements on favorable terms; Targacept's ability to protect its intellectual property; and the timing and success of submission, acceptance and approval of regulatory filings. 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.

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