"We expect it (the approval) will increase our royalty revenues," said Yves Fradet, chief medical officer of DiagnoCure, which was founded in 1994.
Royalty revenue for the company, which has a market capitalization of about C$31 million, was C$659,120 in 2011.
The urine-based test -- named Progensa PCA3 -- will be used with other patient information to help decide on repeat biopsy in men of 50 years or older.
PCA3 is a gene that is highly over-expressed in prostate cancers -- the second most common type of cancer found in American men, according to the American Cancer Society (ACS), the company said.
DiagnoCure licensed Progensa to U.S.-based Gen-Probe, a diagnostic test maker, in November 2003.
The ACS estimates about 241,000 Americans were newly diagnosed with prostate cancer in 2011, and about 34,000 men died from the disease.
DiagnoCure marketed its first diagnostic test, for bladder cancer, in Europe in 1998. The product got U.S. approval in 2000.
The company said the PCA3 test will now be available for sale in the United States, Canada and the European Union.
Shares of the company were up 35 Canadian cents at C$1.06 on Wednesday morning on the Toronto Stock Exchange. They touched a high of C$1.30 earlier in the day.
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon)
