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LONDON (Reuters) - European regulators have recommended approval of the Western world's first gene therapy drug -- after rejecting it on three previous occasions -- in a significant advance for the novel medical technology.

More than 20 years since the first experiments with the ground-breaking method for fixing faulty genes, scientists and drug companies are still struggling to apply gene therapy in practice.

Friday's decision by the European Medicines Agency (EMA) is a win for the drug's maker, the small Dutch biotech company uniQure, and a potential lifeline for patients with the ultra rare genetic disorder lipoprotein lipase deficiency (LPLD).

It comes too late, however, for investors in the previous listed firm Amsterdam Molecular Therapeutics (AMT).

After the earlier rebuffs for its Glybera medicine, AMT was taken private by newly created uniQure in April because it could no longer fund itself in the public markets.

Patients with LPLD are unable to handle fat particles in their blood plasma and are afraid of eating a normal meal because it can lead to acute inflammation of the pancreas.

The disorder -- estimated to affect no more than one or two people per million -- can cause acute pancreatitis and death.

Winning approval for Glybera proved particularly challenging because the company was only able to test it on 27 patients in clinical trials, due to the rarity of the condition.

That thin evidence base made the European agency reluctant to approve the drug initially.

But the London-based watchdog said it now accepted there was sufficient benefit to justify a green light for the worst-affected patients, on condition that those receiving the one-off therapy continued to be followed.

UNLOCKING POTENTIAL

"This approval unlocks the potential of gene therapy because it is a first at either the EMA or FDA (U.S. Food and Drug Administration) for gene therapy," uniQure's chief executive Jorn Aldag said in an interview.

"People have been skeptical as to whether the regulators would buy into this concept, which they have now done."

The idea of treating disease by replacing a defective gene with a working copy gained credence in 1990 with the success of the world's first gene therapy clinical tests against a rare condition called severe combined immunodeficiency (SCID).

People with SCID -- also known as "bubble boy disease" -- cannot cope with infections and usually die in childhood.

The field then suffered a major setback when an Arizona teenager died in a gene therapy experiment in 1999 and two French boys with SCID developed leukemia in 2002.

In China, Shenzhen SiBiono GeneTech won approval for a gene therapy drug for head and neck cancer in 2003 but no products have been approved until now in Europe or the United States.

More recently, some large pharmaceutical companies have also been exploring gene therapy. GlaxoSmithKline, for example, signed a deal in 2010 with Italian researchers to develop a SCID therapy.

CHALLENGE FOR REGULATORS

Tomas Salmonson, acting chairman of the EMA's Committee for Medicinal Products for Human Use, said evaluating Glybera had not been easy and experts had decided it should be recommended only for those patients with the greatest need for treatment.

"Our established ways of assessing the benefits and risks of Glybera were challenged by the extreme rarity of the condition and also by uncertainties associated with data provided," he said.

Recommendations for drug approvals by the EMA are normally formally endorsed by the European Commission within a couple of months.

UniQure is now also preparing to apply for regulatory approval for Glybera in the United States, Canada and other markets.

Aldag said it was too early to say what the medicine cost but the price would be "comparable" to that for other orphan drugs made by companies like Genzyme, a division of Sanofi, and Shire. These can cost hundreds of thousands of dollars a year.

UniQure's largest shareholders are Forbion Capital Partners and Gilde Healthcare, two leading life sciences venture capital firms in the Netherlands.