As a former R.J.Reynolds employee I am quite familiar with the amount of money R.J.R. used to put into tobacco research. The R&D labs building was worthy of being on an IBM campus. The tobacco cash flow was so immense there was nothing R&D was in need of.
Then in 2000 R.J.R. decided to spin off the chemical research lab and along with it the mountains of research that had already been done on NNR's (Neuronal Nicotinic Receptors), or the part of the brain that makes one crave a cigarette. There was a promising future in brain drugs.
Now it's been shown through mid-level trials that Targacept's chemical TC-5214 does better than Forest Laboratories Inc's (NYSE:FRX) drug Celexa in treatment of depression. Celexa is one of 34 drugs Forest Labs sells at this time. Forest Laboratories market cap is $7.5 Billion as of today, Targacept is a mere $200 Miliion.
In 2002 Forest Labs gained 17% of the antidepressant market with sales of Celexa reaching $1 Billion dollars.
Targacept is also working on promising uses of their chemical for ADD, Alzheimers, and high blood pressure to name a few. All very wide spread afflictions.
My Target price for TRGT is $35.
Forest Labs stock since inception qualdrupaled. Is Targacept the next drug company to quadruple? I say definitely yes.