UPDATE 1-FDA concerns remain over new use for Schering drug

* Agency issues complete response letter for PegIntron

* Schering to work with FDA over melanoma indication

* Schering-Plough shares down 0.81 percent (Adds details on drug, background)

WASHINGTON, Oct 30 (Reuters) - The U.S. Food and Drug Administration has "outstanding concerns" about Schering-Plough Corp's SGP.N bid to market its drug PegIntron to treat certain skin cancer patients who also undergo surgery, the drugmaker said on Friday.

The company is seeking FDA permission to sell the injectable drug for melanoma. But the agency declined against approving the new use, at least right now, instead issuing a complete response letter about remaining issues.

“Schering-Plough will work closely with FDA to respond to outstanding concerns related to the PegIntron melanoma filing,” the company said in a statement.

Schering did not say what the FDA’s concerns were and company spokeswoman Mary-Francis Faraji said the drugmaker had no additional comment.

PegIntron, a type of alpha interferon protein-based drug that is self-injected once-a-week, is already approved for liver disease. The new use would allow it for patients whose melanoma has spread to the lymph nodes and require surgery to remove the cancer and the nodes.

Earlier this month, an FDA panel of outside experts narrowly recommended approval of the drug despite its toxic side effects. Some panelists as well as FDA staff reviewers also questioned whether the drug actually helped people live longer or just increased the time before cancer recurred.

Side effects with PegIntron include heart problems and depression.

Schering’s Intron A, which is already approved for melanoma after surgery, has the same active ingredient as PegIntron but must be given intravenously five times a week for four weeks at a doctor’s office.

Shares of Schering were off 23 cents, or less than one percent, at $28.20 on the New York Stock Exchange.

Reporting by Susan Heavey; Editing Bernard Orr