Updated with Wednesday's stock price

DARMSTADT, Germany ( TheStreet) -- Stimuvax, an experimental cancer immunotherapy from Merck KGaA and Oncothyreon ( ONTY), failed to improve survival in a late-stage study of non-small cell lung cancer patients, the companies announced Wednesday.

Detailed results from the Stimuvax phase III lung cancer study were not disclosed, except "notable treatment effects" were seen in certain subgroups of lung cancer patients treated with the drug, Merck said.

The negative study result is a significant setback for Merck, which was counting on Stimuvax to resurrect a drug development program that's seen better days. Stimuvax was also the most important drug in Oncothyreon's research pipeline, which will now be headlined by PX-866, a PI-13 kinase inhibitor in mid-stage studies.

Oncothyreon shares closed Tuesday at $4.49, ahead of the negative Stimuvax news. The stock was down 57.7% in trading Wednesday to $1.91.

Stimuvax was designed to train a patient's immune system to recognize a protein known as MUC1, which is over-expressed in a number of different cancers, including non-small cell lung cancer. This is a similar approach to that taken by Dendreon ( DNDN) with the prostate cancer immunotherapy Provenge.

The phase III study enrolled 1,500 patients with non-small cell lung cancer, randomized to treatment with Stimuvax (also known as L-BLP25) or a placebo. The study's primary endpoint, an improvement in overall survival, was not met.

An interim analysis of the study was previously performed last March, demonstrating no significant survival benefit for Stimuvax-treated patients. The study was allowed to continue, however, even though odds of a successful outcome were diminished drastically.

The rationale for the phase III Stimuvax lung cancer trial was always sketchy, coming from a retrospective subset analysis of a phase II trial.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.