UPDATE 1-FDA oks Merck KGaA's reworked MS pill application

* FDA also gives Priority Review status to cladribine pill

* Ruling on marketing approval expected in Q4

* Decision puts Merck back in race against Novartis pill

* Shares indicated up 2.2 percent

(Adds details, background)

FRANKFURT, July 28 (Reuters) - The U.S. Food and Drug Administration (FDA) accepted a reworked request by Germany's Merck KGaA (MRCG.DE) for regulatory approval of cladribine, a key pipeline drug for the pharmaceuticals and chemicals company.

The move puts Merck back in the race against rival Novartis (NOVN.VX) to market a pill for multiple sclerosis in the United States.

The application was granted a Priority Review status by the FDA, with the goal of a completing the review in six months instead of the standard ten months, Merck said on Wednesday.

Merck expects an FDA decision over a possible marketing approval for cladribine in the last three months of this year, it added. The family-controlled drugmaker resubmitted the U.S. application for its MS pill on June 8, trying to catch up with Novartis, which remains on track to bring the first oral treatment against the debilitating disease to market.

Novartis's rival product Gilenia already has Priority Review status with the FDA. The drug is likely to be approved to treat U.S. patients with relapsing multiple sclerosis (MS) as early as the third quarter.

Only injectable drugs are currently on offer to treat MS, in a market worth about $8.6 billion per year, with the main products offered by Biogen Idec Inc (BIIB.O), Bayer AG BAYG.DE, Novartis and Teva (TEVA.TA).

(Reporting by Ludwig Burger)