(Adds details on Keytruda, melanoma, rival Bristol-Myers drug)

By Ransdell Pierson

March 24 (Reuters) - Merck & Co Inc said on Tuesday that it would stop a large study of its Keytruda melanoma treatment early because an independent monitoring committee determined the drug succeeded in its goal of prolonging survival in previously untreated patients at advanced stage of the disease.

The medicine, a PD-1 inhibitor that works by taking the brakes off the immune system, is already approved to treat patients who have failed to benefit from standard treatments, including Bristol-Myers Squibb Co's Yervoy.

Patients taking Keytruda showed meaningful improvement in overall survival and in delayed progression of disease, compared with those taking Yervoy, Merck said.

The data, if regulators agree, could allow Merck to widen its marketing of Keytruda to people being treated for the first time for the dangerous skin disease.

Shares of Merck were up 1 percent at $59.30 in early trading.

"Keytruda is the first anti-PD-1 therapy to demonstrate a survival advantage compared to the standard of care for the first-line treatment of advanced melanoma," Merck said in a release. It noted that data from the study will be presented at a medical meeting next month in Philadelphia.

About 76,000 Americans are diagnosed every year with melanoma, which is highly linked to sun exposure, and more than 9,700 die from the disease, according to the National Cancer Institute.

Merck said safety of Keytruda in the halted study was similar to that seen in earlier trials, where the most common side effects were fatigue, coughing, nausea and other mostly mild reactions.

Keytruda in September became the first PD-1 inhibitor approved by U.S. regulators. Three months later, the U.S. Food and Drug Administration approved Bristol-Myers' Opdivo, also for patients with advanced melanoma who no longer respond to other drugs. It also works by blocking the PD-1 protein.

AstraZeneca Plc, Pfizer Inc and other drugmakers are also developing PD-1 inhibitors, or similar drugs known as PD-L1 inhibitors. Wall Street expects the products to generate combined annual sales of more than $30 billion by 2025, with lung cancer seen as the most lucrative potential use.

Merck aims by midyear to seek U.S. approval of Keytruda for non small cell lung cancer, the most common form of the disease.

Bristol-Myers in January said it was halting a trial of Opdivo for lung cancer, also at the advice of independent monitors, when it became clear the drug extended survival compared with standard chemotherapy.

(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe and Lisa Von Ahn)