UPDATE 1-Bristol-Myers cancer drug receives new approval

* Cancer drug can be used as first treatment of disease

* Drug already approved for later stages of leukemia

WASHINGTON, Oct 28 (Reuters) - Bristol-Myers Squibb BMY.N won U.S. approval for the use of its cancer drug Sprycel as the first treatment for a rare blood cancer.

Sprycel received “first-line” approval for a type of leukemia known as Philadelphia chromosome positive chronic phase chronic myeloid leukemia, the U.S. Food and Drug Administration said in a statement.

The decision was based on research showing Sprycel was more effective than Novartis AG's NOVN.VXNVS.N Gleevec, which has long been the leading drug in treating chronic myeloid leukemia (CML).

First-line approval means Sprycel can be prescribed when the cancer is first diagnosed. The drug was first approved in 2006 to treat adults who were intolerant or resistant to other therapies for CML.

Two other drugs have been approved to treat various forms of CML. Novartis’ Tasigna, first approved in 2007, also recently received first-line approval.

“These drugs have dramatically changed the lives of patients with CML,” said Dr. Richard Pazdur, director of FDA’s Office of Oncology Drug Products.

“Results from additional CML studies continue to demonstrate the importance of studying cancer drugs in the earlier stages of a disease.”

Sprycel sales rose 35 percent to $144 million during Bristol-Myers’ fiscal third quarter, the company said when it reported quarterly results on Tuesday.

The drug is believed to inhibit protein activity responsible for the growth of cancer cells, which allows bone marrow to reproduce normal red and white blood cells, FDA said. (Reporting by Emily Stephenson; editing by John Wallace)