UPDATE 3-UCB stock rises as U.S. clears arthritis drug

* Rheumatoid arthritis major new market for Cimzia

* UCB drug competes with established anti-TNF blockbusters

* Shares up 15.6 percent; Nektar rises as much as 30 pct (Adds analyst reaction, latest shares)

By Philip Blenkinsop and Antonia van de Velde

BRUSSELS, May 14 (Reuters) - Belgian pharmaceutical group UCB (UCB.BR) received a major boost on Thursday when U.S. regulators approved its rheumatoid arthritis drug Cimzia, and its stock rose 15.6 percent.

Shares of UCB's U.S. partner Nektar Therapeutics (NKTR.O) also rose as much as 30 percent to $6.59 on Nasdaq, touching their highest point in a year.

The news will reduce UCB's reliance on older drugs, some of which have lost patent protection, and is a vindication of its investment in biotechnology. Cimzia is a biological medicine given by injection.

"It is a massive sigh of relief," said ING analyst Mark Clark. "The timing is a surprise to everyone as the company had talked about having to supply extra information (to U.S. authorities). A decision was only expected in the fourth quarter."

Analysts at Morgan Stanley said the approval was an important milestone that reduced the risk of investing in UCB, adding that the dosing regimen was better than expected.

UCB, which has a collaboration on Cimzia with U.S.-based Nektar, will pay the smaller company royalties on sales.

Nektar also would get manufacturing revenue during research, clinical development and commercialization of the drug.

Cimzia, already cleared to treat bowel disorder Crohn's disease in the United States, would be made available this week, UCB said in a statement.

It may be administered either at two or four weeks after initial doses, as a monotherapy or with the older drug methotrexate.

"Not only does Cimzia underpin 20 percent of our 30 euros fair value, it is a major driver of UCB's deleveraging strategy," Morgan Stanley said in a research note on Thursday.

UCB has a high level of debt compared to its rivals following recent acquisitions, with around 2 billion euros of debt requiring refinancing in 2010/11.

Shares in the company closed up 3.02 euros to 22.40.

Cimzia belongs to a class of arthritis drugs that work by blocking an inflammatory protein called tumour necrosis factor (TNF). But it is a late entrant.

It will compete against three established anti-TNF blockbusters -- Amgen's (AMGN.O) Enbrel, Johnson & Johnson's (JNJ.N) Remicade and Abbott Laboratories' (ABT.N) Humira -- and a new product, called Simponi, from J&J.

Cimzia will cost $1,300 a month.

Morgan Stanley said it estimated annual Cimzia sales would reach 650 million euros ($881.1 million) by 2015, based on a 4 percent market share, but added this could prove conservative.

Cowen and Co analysts estimate Nektar receives a 3 to 4 percent royalty on UCB's Cimzia sales, plus manufacturing fees, according to a research note on Thursday.

Some 5 million people suffer from rheumatoid arthritis globally and around 1.3 million in the United States. Women are three times more likely than men to get the disease.

In clinical trials, patients treated with Cimzia alone experienced significant improvements in signs and symptoms, function and pain. Together with methotrexate, patients experienced rapid and significant improvements as early as week one, UCB said.

Separately, another U.S. biotechnology company Medarex Inc MEDX.O said on Thursday that its experimental rheumatoid arthritis treatment met the main goal of a mid-stage trial.

Medarex rose 3.7 percent to $6.40. (Additional reporting by Ben Hirschler and Vidya L Nathan; Editing by Anshuman Daga, Sharon Lindores, Anil D'Silva and Carol Bishopric) ($1=.7377 Euro)