The drug has milder side effects than rival MS drugs and analysts say it could find favor among newly diagnosed patients. Around 35 percent to 40 percent of MS patients prefer to take no medication rather than face unwanted side effects.

"In a clinical trial, the relapse rate for patients using Aubagio was about 30 percent lower than the rate for those taking a placebo," Russell Katz, director of the Division of Neurology Products at the Food and Drug Administration, said in a statement.

Aubagio is set to be on the U.S. market in a few weeks, a spokeswoman for Sanofi unit Genzyme said.

Multiple sclerosis, which has no cure, affects 2.5 million people worldwide. It is a chronic, often disabling disease that attacks the central nervous system and can lead to numbness, paralysis and loss of vision.

MS pills Gilenya by Novartis and Biogen Idec Inc's BG-12 are seen dominating a market that JPMorgan analysts predict growing to $14 billion in 2015 from $9.6 billion last year.

Aubagio is seen grabbing a much smaller chunk of this market, reaching modest sales of $353 million in the United States and five major European countries by 2020, according to business intelligence firm Datamonitor.

European regulators are expected to give their response to Aubagio in the first quarter of 2013.

Compared with older therapies for MS, Aubagio has the advantage of being an oral drug but it has produced less impressive results in clinical tests than other oral treatments and has failed to show it was better than Merck's Rebif, a commonly used injectable drug for MS.

In addition to Aubagio, Sanofi has filed MS injectable drug Lemtrada with regulators.

In a recent setback, the FDA asked Sanofi to refile its marketing application for Lemtrada but the drug could be launched in 2013 if it wins approval.

The most common side effects associated with Aubagio include increased levels of the enyzme alanine transaminase, which can indicate damage to the liver, as well as hair loss, diarrhea, influenza, nausea and numbness of the skin, Sanofi said.

The ongoing Aubagio clinical development program involves more than 5,000 patients in 36 countries. Some patients in extension trials have been treated for up to 10 years, the company said.

(Reporting by Elena Berton in Paris and Tej Sapru, Sunayan Bhattacharjee in Bangalore; Editing by Steve Orlofsky and Edwina Gibbs)

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