UPDATE 2-Aeterna shares jump on Sanofi drug development deal

* Sanofi to make upfront, milestone payments

* U.S. marketing deal for prostate drug worth $135 mln

* New Drug Application filing in U.S. seen in 2010

* Aeterna shares jump more than 50 percent (Adds analyst's comments. In U.S. dollars)

By Scott Anderson

TORONTO, March 6 (Reuters) - Pharmaceuticals giant Sanofi-Aventis SA (SASY.PA) said on Friday it will help Canadian drugmaker Aeterna Zentaris (AEZ.TO) develop and market its enlarged prostate treatment in the United States, providing Aeterna with enough cash to usher the product through the U.S. approval process.

The deal, under which Sanofi will pay Aeterna $30 million immediately, pushed Aeterna's shares up more than 50 percent on the Toronto Stock Exchange early on Friday as it provided the company with sufficient cash to continue its trials.

By midmorning, the shares were up 44 percent at C$1.31 after touching as high as C$1.41.

Aeterna is also entitled to receive up to $135 million in additional payments when certain regulatory and commercial milestones are reached for cetrorelix, a treatment for enlarged prostate, also known as benign prostatic hyperplasia (BPH). This values the total deal at about $165 million.

BPH is a non-cancerous enlargement of the prostate, affecting more than 20 million men in the United States alone. The estimated market for BPH treatments in the United States is about $3 billion a year, according to figures provided by Aeterna.

The agreement increases Aeterna's financial liquidity in the near term, while enhancing the commercial visibility of the cetrorelix program, said Maher Yaghi, an analyst at Desjardins Securities in Montreal.

"This will help the company fill the cash register for a while and will take off some of the pressure in its cash allocation going forward," he told Reuters.

Yaghi said the narrow U.S.-only deal will make it more difficult for the company to negotiate a European or global deal down the road.

But Juergen Engel, Aeterna's president and chief executive, said that by signing a U.S.-only deal, the company has more "freedom" to pursue similar agreements in other territories on its own timetable.

"We are not under pressure any longer because our financial position is sound enough to go to the filing of the approval," he told Reuters.

Aeterna's product is in late-stage trials for the treatment of enlarged prostate in Canada, United States and Europe, French drugmaker Sanofi-Aventis said.