NEW YORK, March 26 (Reuters) - The biotechnology company

Cassava Sciences ( SAVA ) failed on Wednesday to end a malicious

prosecution lawsuit by doctors and short-sellers who expressed

doubts about its experimental, soon-to-be-discontinued

Alzheimer's drug simufilam.

U.S. District Judge Jennifer Rochon in Manhattan said Adrian

Heilbut, Jesse Brodkin, Enea Milioris, David Bredt and Geoffrey

Pitt could try to prove that Cassava knew or should have known

that it could not win its defamation lawsuit against them, which

it dismissed in August.

Cassava accused the plaintiffs of trying to hurt its share

price by claiming on social media and the cassavafraud.com

website that a City University of New York medical professor who

consulted for the company fabricated research for simufilam.

The professor, Hoau-Yan Wang, pleaded not guilty in July to

federal fraud charges he submitted false data to the National

Institutes of Health to obtain public grants. A Maryland judge

refused to dismiss the indictment in January.

Short-sellers borrow stock and sell it, hoping that the

price will fall so they can repurchase it and replenish lenders.

Rochon found sufficient allegations that Cassava filed the

defamation lawsuit with actual malice to "harass and intimidate

plaintiffs and to suppress criticism from the scientific

community."

The judge also found plausible allegations that the Austin,

Texas-based company knew the challenged scientific claims were

uncorroborated, and was aware of alleged research misconduct.

Other defendants include former Cassava Chief Executive Remi

Barbier and neuroscience chief Lindsay Burns, whose resignations

were announced in July. The plaintiffs are seeking monetary

damages.

Isaac Zaur, a lawyer for Heilbut, Brodkin and Milioris, said

the decision lets them seek accountability for the defendants'

efforts to "suppress public and scientific dialogue."

A lawyer for Cassava had no immediate comment. Lawyers for

the other parties did not immediately respond to requests for

comment.

Cassava shares soared more than 20-fold to above $146

between January and July 2021 on hope for an Alzheimer's

breakthrough. The shares now trade below $2 per share.

Cassava said on Tuesday that it will end its Alzheimer's

program with simufilam by June 30, following disappointing

clinical trial results.

The case is Heilbut et al v Cassava Sciences Inc ( SAVA ) et al, U.S.

District Court, Southern District of New York, No. 24-05948.