* Cleared for schizophrenia, bipolar disorder
* Saphris expected to be available in Q4
* Schering, Merck each down less than 1 pct (Adds details on new drug and rivals, share prices, byline)
By Lewis Krauskopf and Ransdell Pierson
NEW YORK, Aug 14 (Reuters) - Schering-Plough Corp SGP.N said on Friday that U.S. regulators had approved its Saphris antipsychotic drug, adding a potential blockbuster product as the company is soon to be bought by Merck & Co (MRK.N).
The Food and Drug Administration cleared Saphris for acute treatment of schizophrenia in adults and for episodes associated with the severe bipolar I disorder. The drug, also known as asenapine, is expected to be available in the fourth quarter, Schering said.
"This is the first time a drug has been approved for both indications at once," said Schering-Plough spokesman Robert Consalvo.
It will compete with standard treatments that in past years won separate approvals for both schizophrenia and bipolar disorder, including Johnson & Johnson's (JNJ.N) Risperdal, Bristol-Myers Squibb Co's (BMY.N) Abilify and Eli Lilly and Co's (LLY.N) Zyprexa.
But unlike widely used older treatments, which are approved for both short-term treatment and long-term control of schizophrenia, the Schering-Plough medicine is approved only for acute short-term treatment.
Schering has projected sales of Saphris could exceed $1 billion a year. It acquired the drug in its purchase in 2007 of Organon BioSciences.
Organon had been developing the drug with Pfizer Inc (PFE.N) but acquired full rights to the drug in 2006 when Pfizer abandoned it because of commercial considerations.
Saphris is a type of atypical antipsychotic, a class of drugs that target various brain receptors. Such drugs have raised some concerns over their side effects, which can include problems with weight gain, metabolism and blood fat levels.
But company studies showed fewer patients given Saphris gained weight or saw higher cholesterol levels compared with rival drugs, Schering has said.
The approval comes after an FDA advisory panel in July backed Saphris as a safe and effective therapy for the two mood illnesses.
Merck said in March that it would buy Schering for $41 billion. The deal won shareholder approval last week, and the companies said it remained on track to close in the fourth quarter.
Shares of Merck and Schering-Plough fell moderately on Friday, in line with a 0.4 percent decline for the New York Stock Exchange Arca Pharmaceutical Index of large U.S. and European drugmakers. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Steve Orlofsky)