The study's data safety monitoring board also determined that the pomalidomide drug, given in combination with a low dose of existing treatment dexamethasone, was superior to a high dose of the existing treatment in improving overall survival.

Following an interim analysis, the safety monitoring board recommended that patients who had not yet progressed in the Phase III trial's high-dose dexamethasone control arm should start on Celgene's combination.

ISI Group analyst Mark Schoenebaum said Celgene had already applied for U.S. and European marketing approvals of pomalidomide based on favorable data from two Phase II, or mid-stage, trials.

The larger Phase III trial was a "confirmatory" study designed for U.S. regulators, to back up data seen in the earlier mid-stage studies, Schoenebaum said in a research note.

"So this trial, according to the company, should 'de-risk' the European Union application," Schoenebaum said. He added that a decision from European regulators on the drug is expected in mid or late 2013. U.S. regulators are expected to decide on marketing approval in February.

Celgene's flagship $3.5 billion-a-year Revlimid drug also treats multiple myeloma and is approved for patients who have failed at least one prior therapy. The company hopes to eventually win approval to market Revlimid at earlier stages of the disease and for longer periods.

Both Revlimid and pomalidomide are derivatives of the chemical thalidomide and work in part by choking off growth of blood vessels that feed tumors.

Multiple myeloma is a cancer of plasma cells - a type of white blood cell responsible for producing antibodies - that affects the bone marrow. The cancer eventually interferes with production of normal blood cells.

The National Cancer Institute estimates that 21,700 men and women in the United States will be diagnosed with myeloma in 2012.

In July, Celgene Chief Executive Officer Robert Hugin said he expected pomalidomide to generate sales of more than $1 billion annually in a multiple myeloma treatment market that analysts have forecast at $5.4 billion by 2016.

Celgene is one of the world's largest biotech companies, with annual sales of more than $5 billion, largely because of Revlimid's success.

The company also sells Abraxane, a breast cancer treatment with annual sales of about $400 million, and Vidaza, which treats a group of blood disorders known as myelodysplastic syndromes and has annual sales of $800 million.

Shares of Celgene were down 0.8 percent at $74.40 in afternoon Nasdaq trading, while the NYSARC Biotech Index fell 2.2 percent amid sharp declines for the broad stock market.

(Reporting by Ransdell Pierson in New York and Vidya P L Nathan in Bangalore; Editing by Anthony Kurian, Phil Berlowitz and Lisa Von Ahn)

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