WASHINGTON (Reuters) - Drug regulators approved Onyx Pharmaceuticals Inc's Kyprolis for people who have failed to successfully treat a type of blood cancer with other medicines. The U.S. Food and Drug Administration said on Friday the intravenous drug was approved for treating multiple myeloma in people who have tried at least two other medicines, including Takeda Pharmaceutical Co Ltd's Velcade and Celgene Corp's Revlimid or Thalomid. "We are encouraged by the continued progress in the development of drugs for multiple myeloma over the past decade, offering improved treatment of this disease," said Dr. Richard Pazdur, head of the FDA's cancer drugs office. Onyx shares jumped 12 percent to $76.68 in early afternoon trading after being halted pending the FDA announcement. Shares of Ligand Pharmaceuticals Inc, a small biotech firm that contributed to Kyprolis and would receive royalties from its sales, were up 0.7 percent to $17.66. Onyx shares may also have been boosted after a competitor, Bristol-Myers Squibb Co, on Thursday said its experimental cancer drug had failed in a late-stage trial. Analysts expect the multiple myeloma market to reach $5.4 billion by 2016, with Kyprolis, known generically as carfilzomib, garnering about $570 million of that, according to Thomson Reuters forecasts. The FDA approved Kyprolis under accelerated approval, an application process where a single clinical trial is sufficient to show benefit in order to get drugs to patients sooner. The company must then conduct a follow-up study to confirm the drug actually keeps the disease from getting worse, or helps people live longer. A clinical trial of the drug in 266 patients showed it shrunk or eliminated tumors in 23 percent of them, for an average time of just under 8 months. The most common side effects were fatigue, low blood cell count and blood platelet levels, shortness of breath, diarrhea and fever, while serious side effects included heart failure. Reporting by Anna Yukhananov; Editing by Gerald E. McCormick, John Wallace and Tim Dobbyn