(Reuters) - Exelixis Inc's drug to treat a rare form of thyroid cancer met the main goal of a late-stage study, prompting the company to look to an accelerated approval process that could bring the drug to market within a year.

Shares of San Francisco-based Exelixis were up 18 percent at $7.09 in heavy trading on Monday on Nasdaq. They had touched a high of $7.53 earlier in the day.

Exelixis said based on the study it was requesting permission to begin a rolling submission of data toward the marketing application of the drug cabozantinib in advanced medullary thyroid cancer (MTC).

"With the positive data, we expect cabozantinib's filing to be completed in first quarter of 2012, with potential approval in the third quarter," Lazard Capital Markets analysts said in a note.

The drug significantly improved median progression-free survival (PFS) in patients suffering from MTC to 11.2 months versus 4 months for those on placebo in a trial called EXAM.

While that was lower than the numbers returned by AstraZeneca Plc's competing Caprelsa, Jefferies analysts said the drugs appeared comparable given that the EXAM trial appears to have enrolled more severe patients.

About 44,600 new thyroid cancer cases were diagnosed in the United States during 2010, and about 1,690 people died from the disease, according to the National Cancer Institute.

Cabozantinib, which is also being tested for metastatic ovarian cancer and castration-resistant prostate cancer (CRPC), is an oral drug designed to limit blood supply to tumors and block two segments of a pathway used by cancer cells to grow and spread.

In June, Exelixis reported data from a clinical trial showing cabozantinib led to significant tumor shrinkage in several different types of solid tumors, including 24 percent of patients with metastatic ovarian cancer, but also caused the deaths of six patients.

The EXAM trial is being conducted under a special protocol assessment (SPA) agreement, which guarantees that the design and analysis of the trial are adequate to support a marketing application submission to the U.S. Food and Drug Administration.

(Reporting by Esha Dey and Kavyanjali Kaushik in Bangalore; Editing by Roshni Menon and Supriya Kurane)