* Biogen says potential U.S. launch by 2016-end or Q1 2017
* Drug may get $1 bln-$2 bln in peak annual sales - Piper Jaffray
* Shares of Ionis jump as much as 28.16 pct
* Biogen shares up as much as 7.32 pct (Updates shares, adds analyst comments)
Nov 7 (Reuters) - Biogen Inc and Ionis Pharmaceuticals said a second late-stage study testing their drug for a rare genetic muscular disorder, the leading genetic cause of death in infants, was successful, prompting them to stop the trial early.
Ionis Pharmaceutical's stock jumped up as much as 28.16 percent to $34.77 while Biogen shares rose as much as 7.32 percent to $297.27 in trading on Monday.
An interim analysis found that patients with a less-severe form of spinal muscular atrophy (SMA) who received the drug, Spinraza (nusinersen), experienced significant improvement in motor function compared with those who didn't.
A separate late-stage study in August evaluating the drug in patients with the most-severe form of SMA was stopped early after the drug was found effective.
SMA disrupts the part of the nervous system that controls voluntary muscle movement, eventually taking away an individual's ability to walk, eat or breathe.
Currently, there is no approved treatment for the condition and it affects about 1 in 10,000 babies, and some 1 in 50 Americans is a genetic carrier, according to Illinois-based Cure SMA.
Monday's announcement increases the probability of Spinraza obtaining a broad initial label, analysts said.
Biogen, which agreed to pay Ionis a $75 million license fee to take responsibility for the drug's development, regulatory and commercialization activities in August, is preparing for a potential U.S. launch of Spinraza, possibly by the end of the year or the first quarter of 2017.
Spinraza could provide a new growth opportunity for Biogen, which hasn't seen big organic growth since the launch of multiple sclerosis drug, Tecfidera and has faced several late-stage setbacks over the past year.
Avexis Inc is also developing a gene-therapy for SMA.
"Even with gene therapy competition we still think Spinraza can achieve more than $1 billion-$2 billion in peak annual revenue," Piper Jaffray & Co. analysts said.
Reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Martina D'Couto