* "No evidence" to support drug's further development - CEO
* Co to conduct new trial of its other drug, nelotanserin
* Shares down 50 pct (Updates shares, adds background on disease space, company's comments on second experimental drug)
Jan 8 (Reuters) - Axovant Sciences Ltd's shares plunged nearly 50 percent on Monday after the company scrapped its lead experimental dementia treatment following back-to-back trial failures.
The company flunked a mid-stage study testing the treatment on patients with dementia with Lewy bodies, three months after stopping the development of the drug, intepirdine, for treating Alzheimer's.
Treatments for neurological disorders, like Alzheimer's and Parkinson's, could rake in blockbuster sales for drug developers but these drugs are expensive to develop and high failure rates have discouraged companies from pursuing their development.
Pfizer Inc said on Sunday it was abandoning research to find new drugs aimed at treating Alzheimer's and Parkinson's disease.
In a mid-stage trial, neither of the two doses of intepirdine were effective in improving motor function compared with a placebo, Axovant said.
"Based on the totality of intepirdine data to date, there is no evidence to support its further development," Chief Executive David Hung said in a statement.
The study tested 35 mg and 70 mg doses of intepirdine in patients with dementia with Lewy bodies (LBD) - the second-most common form of progressive dementia - over 24 weeks.
With the closure of the program, the spotlight shifts to the company's other experimental treatment - nelotanserin.
The drug showed "positive trends in efficacy" in an early trial in some patients with LBD and Parkinson's disease dementia who were experiencing visual hallucinations, Axovant said.
The company said it intends to advance the drug's development and conduct a late-stage study following a discussion with the U.S. regulator.
Analysts, however, were not convinced about the drug's prospects.
"Based on our conversations, investors do not assign much value to this asset and neither do we," Leerink analyst Joseph Schwartz said.
Axovant's shares fell as much as 49.7 percent to $2.70, hitting a record low. They had fallen about 78 percent since intepirdine's failure in the Alzheimer's trial. (Reporting by Tamara Mathias in Bengaluru; Editing by Savio D'Souza and Saumyadeb Chakrabarty)