Shares of



disintegrated Monday after the company said a late-stage clinical trial of an experimental Alzheimer's Disease drug failed to achieve its goals.

The stock fell $3.04, or 62.7%, to $1.81 and a new 52-week low. In less than two hours of trading Monday morning, more than 19.1 million shares exchanged hands, or about 27 times the average daily volume for the last three months.

The experimental drug Phenserine didn't offer any statistically significant improvements vs. placebo in patients with mild to moderate Alzheimer's Disease. Although the company said "there were encouraging trends" with the drug, Axonyx said it would have to "further analyze optimize the trial designs in the currently planned program."

The research compared how well Phenserine patients performed vs. placebo patients on a series of cognition and memory tests. The treatment lasted 26 weeks.

Among the many experimental drugs seeking to treat the memory-robbing Alzheimer's Disease, Phenserine is unusual in that it tries to attack the disease in two ways. It's an AChE inhibitor, which makes it similar to most drugs now on the market such as Reminyl, Aricept and Exelon, from, respectively,

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AChE inhibitors prevent the breakdown of acetylcholine, a brain chemical that plays a key role in memory and other thinking functions. These drugs try to keep the levels of the chemical high despite the fact that cells assigned to making the chemical are being damaged or dying.

But Phenserine also affects plaque formation. Early tests showed that the drug can inhibit production of the beta-amyloid protein, which leads to the development of plaque in the brain. Scientists believe the plaque kills brain cells in Alzheimer's patients. To stop plaque from developing, they are looking for compounds to block the beta-amyloids from sticking to each other and creating plaque.

New York-based Axonyx said Monday's setback doesn't affect a mid-stage clinical trial evaluating Phenserine's ability to lower levels of a precursor protein to beta-amyloid and beta-amyloid itself. Interim results of this test are expected to be announced before the end of March.