Early data from a small trial of Merck & Co Inc's experimental immunotherapy cancer drug, known as MK-3475, showed that about a quarter of lung cancer patients responded to the treatment.

Data from the trial is slated for presentation in Sydney, Australia, later this month at the World Conference on Lung Cancer, Merck said in a statement on Tuesday.

The antibody drug, once known as lambrolizumab, is part of a new class of compounds designed to block the activity of a receptor on immune cells called programmed death 1 or PD-1. The aim of the drugs is to spur the body's own immune system to attack cancer cells.

"The data for now suggest relatively similar response rates in NSCLC (non-small cell lung cancer) for Merck's '3475, Bristol's nivolumab and Roche's MPDL3280A as single agents," JP Morgan analyst Chris Schott said in a research note. "With lung cancer representing the largest potential market for PD-1 therapy, we will closely watch how data in the space unfolds."

Merck said results from 38 patients whose cancer had stopped responding to earlier rounds of treatment showed that 24 percent had an immune-system response to the drug. The trial also showed that 21 percent of patients experienced tumor shrinkage.

The most common side effects seen in the trial were fatigue, rash, itching and diarrhea.

Earlier on Tuesday, Merck said it would cut annual operating costs by $2.5 billion and eliminate 8,500 jobs. Its shares rose 2.4 percent to close at $48.74 on the New York Stock Exchange.

Schott said Bristol-Myers Squibb Co is still leading the race to develop PD-1 drugs, with more data on nivolumab also expected at the Sydney conference.