CORRECTED - UPDATE 2-Oncolytics stock soars on cancer trial plan

(Corrects first paragraph to clarify that the company and the FDA have already reached an agreement)

* Phase 3 study to assess overall survival rate

* Company says in partnership talks on treatment

* Shares jump nearly 30 percent (Adds company comments, share price; in U.S. dollars unless noted)

By Scott Anderson

TORONTO, Oct 2 (Reuters) - Oncolytics Biotech Inc (ONC.TO) said on Friday it has reached an agreement with the U.S. Food and Drug Administration on the design of a late-stage trial for its cancer treatment, sending its shares to a three-year high.

The small Canadian drugmaker said the Phase 3 trial for Reolysin will study the effectiveness of the treatment in combination with paclitaxel and carboplatin in patients with head and neck cancers, versus chemotherapy alone.

The news sent the shares up as much as 29 percent to a high of C$4.10 on the Toronto Stock Exchange. The stock later eased to C$3.68, for a gain of 16 percent.

Oncolytics also said is in discussions on possible partnerships to work on the treatment, President and Chief Executive Brad Thompson told Reuters.

"There is a variety of ways that money will be coming into these studies and financing is only one possible part of that," he told Reuters in an interview.

"It has always been a plan to partner. We are in active discussions with a number of parties," he said.

Thompson would not give details of the talks nor comment on the structure of the partnership it was seeking.

However, he said the $15 million cost of the Phase 3 study could be funded through cash on hand. Calgary-based Oncolytics recently called some warrants for the remainder of the cash.

The primary goal of the trial is to study overall patient survival, with secondary endpoints including progression-free survival, safety and tolerability of the drug when administered in combination.

This marks the first time a company has reached an agreement on a Phase 3 trial for an intravenously administered oncolytic virus with the U.S. health agency.

Oncolytics said it hopes to initiate enrollment in the first portion of the study early in 2010 with data available late in the year or in early 2011, with more data in late 2011 on a second batch of patients.

($1=$1.09 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)