Merck KGaA, Pfizer's immunotherapy fails in gastric cancer trial

* JAVELIN Gastric 300 trial misses primary goal

* Bavencio already approved in skin, bladder cancer types

* Results from use against lung cancer still outstanding (Adds share price, analyst's comment)

By Ludwig Burger

FRANKFURT, Nov 28 (Reuters) - Germany's Merck KGaA has suffered a setback in the development of key cancer immunotherapy Bavencio, it having failed in a trial to prolong lives in gastric cancer patients when compared with standard chemotherapy.

Bavencio, or avelumab, which Merck is jointly developing with Pfizer, did not meet the primary goal of prolonging overall survival in patients whose cancer had returned or spread despite two prior treatment rounds, the two companies said in a statement on Tuesday.

Bavencio this year won regulatory approvals against a rare and aggressive type of skin cancer and against bladder cancer. First trial results in lung cancer, its largest commercial opportunity, are not expected before next year.

The drug is a late entrant to a fast-growing class of drugs called PD-L1 or PD-1 inhibitors that help the immune system attack cancer by blocking a mechanism tumours use to evade detection.

Rival drugs Keytruda by Merck & Co, Bristol-Myers Squibb's Opdivo, Roche's Tecentriq and AstraZeneca's Imfinzi are seen as having bigger blockbuster potential by analysts.

Shares in Merck KGaA were little changed while Pfizer stock was up 0.4 percent at 1521 GMT.

Evercore ISI analyst Umer Raffat said initial expectations were low because Bavencio/avelumab was tested against chemotherapy and not against an ineffective placebo, as was the benchmark in earlier comparable studies involving rival drugs in the same class.

The study "was a very high risk trial to begin with ... and the fact that it didn't work doesn't necessarily imply that avelumab is worse off on efficacy vs Opdivo/Keytruda etc.," he said in a note.

"We are confident that our broad clinical development programme in both monotherapy and combinations across a range of cancers will continue to bring new potential treatment options to patients," Chris Boshoff, Pfizer's head of immuno-oncology said in the statement.

Despite the disappointment in the so-called JAVELIN Gastric 300 trial, the two companies will continue to explore Bavencio in the JAVELIN Gastric 100 trial in an earlier treatment setting. (Reporting by Ludwig Burger Editing by Jane Merriman, Greg Mahlich)