The U.S. Food and Drug Administration said on Friday the intravenous drug was approved for treating multiple myeloma in people who have tried at least two other medicines, including Takeda Pharmaceutical Co Ltd's Velcade and Celgene Corp's Revlimid or Thalomid.

Multiple myeloma, a type of cancer that affects the plasma cells in bone marrow, is relatively rare in the United States but often deadly. In 2012, about 21,700 new cases will be diagnosed in the United States, and about 10,710 people will die from the disease, according to the American Cancer Society.

"We are encouraged by the continued progress in the development of drugs for multiple myeloma over the past decade, offering improved treatment of this disease," said Dr. Richard Pazdur, head of the FDA's cancer drugs office.

Onyx shares jumped 14.2 percent to $78.11 in afternoon trading. Shares of Ligand Pharmaceuticals Inc, a small biotech firm that contributed to Kyprolis and would receive royalties from its sales, were down 0.9 percent at $17.38.

Onyx shares may also have been boosted after a competitor, Bristol-Myers Squibb Co, on Thursday said its experimental cancer drug had failed in a late-stage trial.

Analysts expect the multiple myeloma market to reach $5.4 billion by 2016, with Kyprolis, known generically as carfilzomib, garnering about $570 million of that, according to Thomson Reuters forecasts.

Onyx said 10,000 to 15,000 Americans would be eligible for the treatment, which will be available for order from doctors by August 1. The drug will cost $1,658 per vial, or about $9,550 for a typical cycle of six vials. Velcade, which works in a similar way but is approved for patients treated for the first time, costs $1,471 per vial for wholesalers.

"Today's approval is a significant milestone for Onyx and, most importantly, for patients with advanced myeloma who have few treatment options available to them," said Dr. N. Anthony Coles, Onyx chief executive. He said Kyprolis was the first drug to come from Onyx's own labs.

The FDA approved Kyprolis under accelerated approval, an application process where a single clinical trial is sufficient to show benefit in order to get a drug to patients sooner. The company must then conduct a follow-up study to confirm the drug actually keeps the disease from getting worse, or helps people live longer.

A clinical trial of Kyprolis in 266 patients showed it shrunk or eliminated tumors in 23 percent of the patients for an average time of just under eight months.

The most common side effects were fatigue, low blood cell count and blood platelet levels, shortness of breath, diarrhea and fever; serious side effects included heart failure.

(Reporting by Anna Yukhananov; Editing by Tim Dobbyn and John Wallace)

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