The surprisingly poor result for the vaccine, which GlaxoSmithKline has been developing for three decades, leaves several years of work ahead before a protective malaria shot could be ready for countries that desperately need one.

Malaria, a mosquito-borne parasitic disease, kills hundreds of thousands a year, mainly babies in Africa, and scientists say an effective vaccine is key to hopes to eradicate it.

Philanthropist Bill Gates, who helped fund the GSK vaccine's development, said further research was now needed to see whether and how it might be used.

"The efficacy came back lower than we had hoped, but developing a vaccine against a parasite is a very hard thing to do," he said in a statement.

Results from the final-stage trial with 6,537 babies aged six to 12 weeks showed the vaccine provided "modest protection", reducing episodes of the disease by 30 percent compared to immunization with a control vaccine, researchers said on Friday.

That efficacy rate a year after vaccination is less than half the 65 percent in an earlier trial in babies which analyzed protection rates after six months. It is also a lot less than the 50 percent rate seen in five to 17 month-olds.

Vaccinating babies, rather than toddlers, is the preferred option, since the new vaccine could then be added to other routine infant immunizations. A separate program for older children would involve a lot of extra costs.

Eleanor Riley, a professor of immunology at the London School of Hygiene and Tropical Medicine said the results showed that GSK's vaccine, called RTS,S or Mosquirix, is potentially useful, but "not the complete solution".

"The slightly lower than expected efficacy will ... affect the cost-benefit analysis that health providers and funders will have to undertake before deciding whether the vaccine represents the best use of limited financial resources," she said.

NOT GIVING UP

Despite the setback, Britain's top drugmaker said it would push ahead with developing RTS,S and GSK Chief Executive Andrew Witty said it could be an important tool in fighting malaria.

"We've been at this for 30 years, and we're certainly not going to give up now," he told reporters on a conference call.

GSK does not expect to make any profit from the vaccine, which would only be sold in poor countries.

Witty reiterated a promise that if RTS,S is ultimately approved for market, it would be priced at cost of manufacture plus a 5 percent margin, and the margin would be reinvested by GSK in malaria research.

Given the target market, it is governments and international groups that will fund the vaccine's roll-out, and they now need more positive data before deciding whether it is worth buying.

"We will have to have more information to give us a clearer idea as to how useful this vaccine will be," said Seth Berkley, CEO of the GAVI Alliance, which funds bulk-buy vaccination programs for poorer nations.

In particular, Berkley told Reuters he wanted to see longer-term data, including the effect of booster shots, and an analysis of how the vaccine performed in different settings.

Details of the malaria trial, which is Africa's largest ever clinical trial involving almost 15,500 children in seven countries, were presented at a medical meeting in Cape Town and published online by the New England Journal of Medicine.

Witty said he would have liked to have seen efficacy rates of around 50 percent in infants, but stressed that more data would become available before the trial ends in 2014 which may throw more light on why rates of success are so variable.

"It may open up a more customized approach to how this potential vaccine gets used," he said.

Malaria is caused by a parasite carried in the saliva of mosquitoes. It is endemic in more than 100 countries worldwide and infected around 216 million people in 2010, killing around 655,000 of them, according to the World Health Organisation.

Control measures such as insecticide-treated bed nets, indoor spraying and anti-malaria drugs have helped cut cases and deaths significantly in recent years, but scientists say it will take an effective vaccine and many more years work to wipe out malaria.

Scientists around the world are working on other potential malaria vaccines but RTS,S is by far the furthest ahead in development.

(Editing by Mark Potter and Jon Hemming)

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