March 25 (Reuters) - Cassava Sciences ( SAVA ) said on

Tuesday its Alzheimer's drug simufilam, which has been at the

center of regulatory scrutiny, failed in a second late-stage

study, sending shares of the company down 20% in early trading.

The drug came under close watch after a medical professor

linked to its development was charged with fraud last year.

Neuroscientist Hoau-Yan Wang allegedly submitted false data to

get millions of dollars in public funds for research into the

drug.

Late last year, the company had disclosed plans to stop all

trials of the drug after it failed in the first late-stage study

called ReThink-ALZ. The company said on Tuesday that it will

phase out development programs of the drug by the end of the

second quarter.

Cassava has said that Wang was not involved in the

late-stage trials of simufilam. Previously listed as a co-lead

scientist for simufilam on Cassava's website, Wang's name has

since been removed.

CEO Rick Barry said the company was disappointed that

the results showed no treatment benefit and that the results

were "unambiguous."

The results disclosed on Tuesday are from a trial called

Refocus-ALZ, in which the drug failed to significantly reduce

cognitive decline in patients with mild-to-moderate Alzheimer's

disease.

Simufilam was the only drug that Cassava was developing,

along with a blood-based diagnostic test, called SavaDx, which

is in mid-stage studies for Alzheimer's.

The company reported about $128.6 million in cash and

equivalents as of December 31, 2024.

Cassava and two of its former executives were also

charged by the U.S. Securities and Exchange Commission for

making misleading claims in 2020 about the results from previous

studies of the drug. It paid a $40 million penalty to settle the

allegations.