UPDATE 1-ZymoGenetics' arthritis drug hits roadblock

* Says drug fails to meet disease-control activity level

* Says further exploratory analyses underway

Sept 10 (Reuters) - ZymoGenetics Inc ZGEN.O said preliminary results from a mid-stage trial of its experimental rheumatoid arthritis drug did not support a direct move to late-stage trials.

The company said the drug atacicept failed to meet the pre-specified level of disease-control activity.

ZymoGenetics's licensee Merck Serono, a unit of German drugmaker Merck KGaA (MRCG.DE), was developing atacicept as a treatment for systemic lupus erythematosus, multiple sclerosis and rheumatoid arthritis.

ZymoGenetics said further exploratory analyses was on and Merck Serono has not made any decision regarding rheumatoid arthritis as a potential indication for atacicept.

The company said trials for lupus and multiple sclerosis indications are currently ongoing.

Shares of ZymoGenetics closed down 5 cents at $6.47 Thursday on Nasdaq. (Reporting by Anand Basu in Bangalore; Editing by Pradeep Kurup)