Bavarian-Nordic Immunotherapeutics of Kvistgaard said the treatment leaves healthy cells unaffected.
Trials have begun in the United States and are planned in the United Kingdom and 18 other countries, The Daily Telegraph reported.
Ministers in Britain have approved a human trial for the therapy, called Prostvac, that could lead to the first prostate cancer vaccine and possibly new treatment for other types of tumors, the newspaper said.
The treatment is designed for men with advanced prostate cancer that can't be cured by castration and for whom other treatment options are extremely limited.
The therapy combines the virus used in smallpox vaccine and a strain of fowlpox virus, which causes disease in poultry, in addition to four human genes that help the viruses develop chemical signals found in cancerous cells but not healthy ones.
The therapy delivers the prostate-specific antigen as a virus, causing the immune system to eliminate any cells carrying it.
Reiner Laus, president of Bavarian-Nordic Immunotherapeutics, said the vaccine would have much milder side effects than treatments such as chemotherapy. Laus said he hopes the treatment will be licensed by 2015.
"Right now this is the only cancer vaccine in this late stage of development with this large-scale potential for patients to benefit from it," he said.