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* MAGE-A3 fails to hit goal in Phase III lung cancer trial
* Setback follows disappointing 2013 results in melanoma
* GSK hopes to find patient sub-set in which vaccine works
* Shares fall 2 percent (Adds analyst comments, latest shares, further details)
By Ben Hirschler
March 20 (Reuters) - An experimental cancer vaccine fromGlaxoSmithKline has failed in a second test - this timeagainst lung cancer - but the British company said it stillhoped to identify a sub-group of patients in which it wouldwork.
Thursday's news that the MAGE-A3 therapeutic vaccine did nothelp patients with non-small cell lung cancer in a late-stagestudy is a further blow to the high-risk, high-reward projectafter a similar setback in melanoma in September.
Unlike traditional preventative vaccines, the MAGE-A3treatment is designed for people with established disease,helping their immune systems to prevent the return of diseaseafter surgery.
The large Phase III study, involving more than 2,000 lungcancer patients, found that the experimental therapy did nothelp patients live longer without their disease recurring.
Nonetheless, GSK plans to continue the clinical trial in thehope of finding a sub-population that will benefit. It is alsodoing the same with patients suffering from melanoma and resultsof analyses looking at these sub-sets of patients withparticular genetic profiles are expected in 2015.
Vincent Brichard, head of immunotherapeutics at GSKVaccines, said the company was disappointed by the outcome butremained committed to the project.
Shares in GSK fell by 2 percent by 0945 GMT, underperforminga 0.7 percent decline in the European drugs sector.
Many investors had been expecting a disappointing read-outfrom the lung cancer study, following the earlier setback inmelanoma, and there are doubts as to whether GSK will be able toprove the vaccine works for a smaller group of geneticallyselected patients.
But despite the problems GSK Chief Executive Andrew Wittypainted a surprisingly upbeat picture of prospects for MAGE-A3at full-year results last month. Witty described the cancervaccine and another drug for heart disease called darapladibthat has also disappointed in tests as among the most promisingin the company's pipeline.
10 PERCENT CHANCE
Citi analyst Andrew Baum said he estimated there was a 10percent probability that MAGE-A3 could result in a significantbenefit in a gene-signature defined population group, whichwould still be a substantial market.
As a result, Citi has a risk-adjusted sales forecast for theproduct of 216 million pounds ($360 million) in 2022.
Other companies, including Bristol-Myers Squibb,Roche and Merck & Co, have had some recentnotable successes in clinical trials of innovative drugs toboost the immune system, but GSK is still pushing the scientificboundaries with its vaccine-based approach.
So-called immunotherapy, in which the body's own immunesystem is enlisted to fight tumour cells, is a hot area ofpharmaceutical research and development at the moment, althoughcancer vaccines have proved difficult to develop over the years.
U.S.-based Agenus has contributed technology to theGSK vaccine and its shares are sensitive to news on the project.The vaccine contains Agenus' QS-21 Stimulon adjuvant, orbooster.
Although news on MAGE-A3 and darapladib has beendisappointing for GSK, the company's overall drug research hasbeen improving recently, with notable new drug approvals in 2013for HIV, cancer and respiratory disease.
GSK, which is the only major drugmaker to report itsinternal rate of return on R&D investment, said last month thatreturns had now reached 13 percent, up from 12 percent two yearsearlier and 11 percent in 2010. It has set a target of reaching14 percent. ($1 = 0.6014 British Pounds) (Additional reporting by Sarah Young; Editing by David Goodmanand Jane Merriman)
