In The Letters of JRR Tolkien, a note under
Letter
297, "Drafts for a letter to Mr. Rang" says that the word Warg
used in the
Hobbit and the Lord of the Rings refers to
"an evil breed of (demonic) wolves".
It is given primitive Germanic form as representing the noun common to
the
Northmen.
Reference: The Letters of JRR Tolkien: #297