(Reuters) - Targacept Inc said it would cut its workforce to 43, or by about 38 percent, due to the failure of its attention deficit hyperactivity disorder drug, and expects the move to save about $9.6 million per year beginning next year.
Last month, the company said it would stop developing the drug, TC-5619, after a mid-stage trial showed that patients in the placebo group had improved more than those taking the experimental drug.
Targacept expects one-time severance and other charges of about $1.5 million in the fourth quarter due to the layoffs.
The company, which will have 43 employees after the job cuts, has cash and investments of about $195.0 million and expects them to be enough to fund operations through at least 2015.
According to its website, Targacept is running several other partnered and unpartnered trials related to schizophrenia, Alzheimer's disease and overactive bladder.
Targacept shares were up 1 percent to $4.59 on the Nasdaq on Monday.
(Reporting by Esha Dey in Bangalore; Editing by Sreejiraj Eluvangal)