New GSK shingles vaccine may challenge Merck after strong test data

* GSK vaccine cuts risk of shingles by 97.2 pct in over 50s

* Potentially strong competitor for Merck (Other OTC: MKGAF - news) 's Zostavax

* Shares (Berlin: DI6.BE - news) in GSK partner Agenus (NasdaqCM: AGEN - news) jump 10 percent (Adds sales figures for Merck vaccine, forecast for GSK product)

By Ben Hirschler

LONDON, Dec 18 (Reuters) - An experimental shingles vaccine from GlaxoSmithKline (Other OTC: GLAXF - news) has produced impressive results in a late-stage study, giving the group's expanding vaccine unit a potential $1 billion boost.

The data suggests the British company's new shot could be a strong competitor for Merck (Swiss: MER.SW - news) & Co's established vaccine Zostavax, which is currently the only product on the market.

GSK's vaccine, known as HZ/su, reduced the risk of shingles by 97.2 percent in adults aged 50 years and older compared to placebo in the Phase III clinical trial involving more than 16,000 individuals, the drugmaker said on Thursday.

That result looks compelling compared to Zostavax, which has showed 69.8 percent efficacy in patients aged 50 to 59 years, and lower efficacy in older people. However, the design of different clinical trials means direct comparisons are tricky.

The two vaccines work in different ways. Zostavax is a so-called live attenuated virus vaccine while HZ/su combines a protein found on the virus that causes shingles with an adjuvant, or booster, which is intended to enhance the immunological response.

The adjuvant includes a component from U.S. biotech firm Agenus, which is entitled to royalties on any future sales. Shares in Agenus jumped 10 percent in early U.S. trading on news of the good results.

GSK has not said when HZ/su might reach the market and a company spokeswoman said more data would be collected on the experimental shot next year. Additional trials to evaluate the ability of HZ/su to prevent shingles are also underway in people aged 70 and older and in immunocompromised patients.

The full set of safety data from the Phase III trial is currently being analysed and will be disclosed in the coming months, the company added.

Merck's Zostavax, which was approved by the U.S. Food and Drug Administration in 2006, generated sales of $758 million last year and is still growing strongly, since only a minority of elderly people have so far been vaccinated. Its sales are expected to reach $1.1 billion by 2019, according to consensus forecasts compiled by Thomson Reuters Cortellis.

With potential superior efficacy, UBS (NYSEArca: FBGX - news) said in a research note that sales of GSK's vaccine might exceed $1 billion a year.

Shingles is caused by the varicella-zoster virus, the same virus that causes chickenpox. After an attack of chickenpox, the virus lies dormant in certain nerve tissue but in older people in can reappear in the form of shingles. (Editing by Vincent Baby)