On January 16, 2008, Targacept, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Deutsche Bank Securities Inc., for itself and as representative of Lazard Capital Markets LLC, Pacific Growth Equities, LLC, and Oppenheimer & Co. Inc. (collectively, the “Underwriters”), relating to the issuance and sale of 3,800,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an offering price to the public of $7.07 per share (the “Offering”). The Offering was conducted pursuant to the Company’s effective shelf registration statement (Registration No. 333-143259). Under the terms of the Underwriting Agreement, the Company has granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 570,000 shares of Common Stock to cover over-allotments, if any. All of the shares of Common Stock are being offered by the Company. The Offering is expected to close on January 23, 2008.

The Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K, and the description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to such exhibit. The Company is also filing the legal opinion of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as to the legality of the Common Stock as Exhibit 5.1 hereto. The prospectus relating to the Offering, which consists of a prospectus supplement dated January 16, 2008, and an accompanying prospectus dated July 20, 2007, has been filed with the Securities and Exchange Commission.

(d) The following exhibits are filed with this Report:

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

January 18, 2008

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EXHIBIT INDEX

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