Updated from 10:55 a.m. EDT

Shares of

Pharmion

(PHRM)

jumped about 50% in heavy trading Thursday following the Food and Drug Administration's approval of the company's drug for a rare bone-marrow disease.

The drug, Vidaza, is the first FDA-approved treatment for myelodysplastic syndrome, or MDS, a collection of disorders in which the bone marrow doesn't function well enough to produce enough blood cells. The FDA approved the drug late Wednesday, after markets had been closed.

Vidaza is what's called an orphan drug, the name designated by federal law for products that treat fewer than 200,000 people. The law allows seven years of marketing exclusivity for the first company to get approval for such a drug.

MDS can progress to acute myeloid leukemia, a form of cancer in which the body produces too many white blood cells. The FDA said MDS can develop after a patient is treated with drugs or radiation, or it may occur without any known cause. Most patients are 60 years of age and older.

The Boulder, Colo.-based company saw it's stock gain $13.66, or 51.6%, to $40.66. Also on Thursday, J.P. Morgan upgraded the stock to overweight from neutral. (The company's analyst doesn't own shares, but his firm has an investment banking relationship with Pharmion.) Trading volume was more than 40-times the daily average, with almost 11.2 million shares changing hands.

Citing research by the American Cancer Society and the Aplastic Anemia and MDS International Foundation, there are an estimated 10,000 to 30,000 new cases of MDS in the United States each year. The FDA estimates the number of new cases at 7,000 to 12,000 per year. Survival rates range from six months to many years for the different versions of MDS, Pharmion said. MDS can cause death from bleeding and infection in many patients.

"The approval of Vidaza represents a significant milestone for Pharmion and, more importantly, represents an important new option for patients being treated for myelodysplastic syndromes," Patrick J. Mahaffy, president and chief executive officer of Pharmion, said in a statement late Wednesday.

For the quarter ended March 31, Pharmion lost $9.8 million, or 40 cents a share, on revenue of $15.7 million. That compares to a first-quarter 2003 loss of $13.9 million, or 78 cents a share, on sales of $1.7 million. The 2003 figures exclude the conversion of outstanding redeemable-convertible preferred stock into common stock.