TC-6987 is a selective nicotinic α-7 receptor ligand (open channel stabilizer) that has demonstrated potent anti-inflammatory/antioxidant properties in animal models. Following the oral administration of a 1mg/kg dose of TC-6987 to diabetic mice (db/db mouse) for 7 weeks, numerous metabolic improvements were observed. Specifically, plasma glucose and triglyceride concentrations declined by approximately 30%; Hb1Ac was reduced by nearly 50%; and TNF-α declined more than 60% relative to control db/db mice Therefore, it appears that TC-6987 could prove beneficial in reducing elevated glucose concentrations in diabetic patients as well as in ameliorating organ damage associated with inflammation, oxidative stress and hyperglycemia.

This is a Phase II, multicenter, randomized, double-blind, parallel group, placebo-controlled study to assess the efficacy, safety, tolerability, and pharmacokinetic parameters of TC-6987 in subjects with type 2 diabetes mellitus (T2DM). The study is organized into three phases: (a) Screening phase consisting of a 1-week Screening (Week -5)and a 4-week Washout (Week -4 to Day 1); (b) 4-week, Double-Blind Treatment (Day 1 to Week 4) during which subjects are randomized to either TC-6987 (20 mg on Day 1 and 10 mg from Day 2 to Week 4) or placebo; and (c) 2-week Follow-Up (Week 6). Unscheduled visits will be allowed between visits from Washout through Follow-up to evaluate a subject's glycemic status or other safety issues, as required. Subjects will fast overnight for a minimum of 10 hrs and refrain from drinking alcohol 24 hrs prior to each visit.

Inclusion Criteria:

• Males or postmenopausal/surgically sterile females
• Being treated for T2DM with oral antidiabetic agents (excluding glitazones)
• BMI limit ≤ 38
• Subjects at least 80% compliant on reporting daily SMBG values during washout
• At the end of washout the subject's fasting SMBG is higher than it was at the start of washout and the fasting SMBG ≤ 280.g treated for T2DM with oral antidiabetic agents (excluding glitazones)

Exclusion Criteria:

• Type 1 diabetes mellitus
• Severe complications of T2DM (especially diabetic retinopathy imminently requiring treatment for preserving or restoring vision, diabetic neuropathy with symptomatic orthostatic hypotension, urinary retention, gastric stasis, or pedal ulcers)
• Current treatment with insulin or a glitazone
• Use of moderate to strong cytochrome P450 3A4 (CYP3A4) inhibitors
• FSH level of < 35 IU/L and a LH level < 25 IU/L except for confirmed surgically sterile women with functioning ovaries
• Significant cardiovascular diseases (including arrhythmia) or congestive heart failure, or severe ischemic disease within the last 3 months prior to Screening, or evidence of stroke, myocardial infarction, unstable angina, coronary bypass and/or percutaneous transluminal coronary angioplasty
• History of significant other major or unstable neurological, metabolic, hepatic, renal, hematological, pulmonary, CV, GI, or urological disorder; or diagnosis of major depressive disorder; if stable medical disorder, any medical treatment must be stable for last 2 months prior to Screening
• History of diabetic ketoacidosis
• Patients who have an increased red blood cell (RBC) turn-over or thalassemia or anemia
• Known HIV or history of viral hepatitis type B or C
• Systemic infection with TB
• Current or previous use of oral or injectable corticosteroids 3 months prior to screening.
• Subject has persistent, uncontrolled severe hypertension as indicated by a systolic blood pressure > 180 mmHg or a diastolic blood pressure of > 110 mmHg, with or without treatment
• Subject has had a malignancy in the last 5 years, except for successfully treated basal or squamous cell carcinoma of the skin or of the cervix
• Subject is receiving chemotherapy
• Tobacco user within 4 months prior to Screening
• Smoking cessation therapy within 4 months prior to Screening and/or planned during the study
• Use of prohibited concomitant medications including psychoactive agents
• History within 6 months prior to Screening of alcohol abuse or illicit drug abuse
• Was administered study medication in another clinical trial in the past 3 months prior to Screening