Updated from 8:18 a.m. EST

Shares of biotech companies

Genzyme

(GENZ)

and

Bioenvision

(BIVN)

rose Wednesday, following approval by the Food and Drug Administration of their leukemia drug Clolar.

The FDA approved the drug late Tuesday for pediatric acute lymphoblastic leukemia, or ALL. Genzyme said an estimated 3,400 new cases will be diagnosed in the U.S. next year. Genzyme said the drug should be available in January.

Genzyme's stock was up $1.21, or 2.1%, to $58.74. Bioenvision's stock gained 78 cents, or 9.2%, to $9.25 after climbing as high as $9.99.

The FDA approved Clolar for patients from ages 1 to 21 whose leukemia has returned after at least two treatments of other therapies or who haven't responded to two other therapies.

"The children who participated in the Clolar study had failed an average of three prior treatment regimens and had very poor chances of survival," said Dr. Sima Jeha, the lead investigator in the Clolar clinical tests, in a statement provided by Genzyme. Dr. Jeha is director of developmental therapeutics in the division of Leukemia/Lymphoma at St. Jude Children's Research Hospital, in Memphis, Tenn.

Cambridge, Mass.-based Genzyme has the Canadian and U.S. marketing rights to the drug, thanks to its recent acquisition of Ilex Oncology, which had signed the marketing and development deal with New York-based Bioenvision.

Genzyme will pay Bioenvision milestone payments based on the drug's development as well as royalties from North American sales. Bioenvision will pay Genzyme royalties based on sales of Clolar in the rest of the world.

Bioenvision obtained the development and commercialization rights to the drug, known generically as clofarabine, under patents held by Southern Research Institute of Birmingham, Ala.

"With this approval, we will now expand our commercial operations, including the creation of Genzyme's first oncology sales force for Clolar," said Mark Enyedy, senior vice president and general manager of Genzyme's oncology division. "This is the first step in our comprehensive development plan for Clolar, which we are also studying for adult leukemia and solid tumor cancers."

Four weeks ago, an FDA advisory committee recommended approval of Clolar as a treatment for acute lymphoblastic leukemia; but it opposed Genzyme's request that the drug be approved for another type of cancer called pediatric acute myelogenous leukemia. The FDA followed its advisory panel's recommendations.