UPDATE 2-Ondine to buy privately held photodynamic therapy co

* To issue 8.9 mln shares for the acquisition

* Says deal to expand product portfolio (Recasts lead, updates deal value)

Nov 16 (Reuters) - Ondine Biopharma Corp (OBP.TO) agreed to buy closely held Advanced Photodynamic Technologies Inc for about C$575,670 ($551,300) in stock to expand its product portfolio, sending shares of the Canadian biotechnology company up 18 percent.

Ondine will issue about 8.9 million shares to acquire the Minneapolis-based research and development company.

Advanced Photodynamic shareholders would also be entitled to receive contingent share consideration of up to an additional 11.2 million shares based on certain milestones.

They will also receive 5 percent of the net proceeds received by Ondine from future third party transactions for the commercialization or acquisition of certain of Advanced Photodynamic's intellectual property.

"The acquisition of Advanced Photodynamic Technologies represents an ideal strategic fit as it significantly expands our portfolio of photodynamic medical products and intellectual property," Ondine's Chief Executive Carolyn Cross said in a statement.

The deal is expected to close about Nov. 30.

The company also said it would enter into an agreement with PhotoBiologix to issue 466,130 shares and fund certain operating costs of PhotoBiologix as consideration.

PhotoBiologix provides grant writing services, research and development and clinical trial support for early-stage Ondine products.

Shares of Vancouver, British Columbia-based Ondine were up 18 percent at 6.5 Canadian cents Monday afternoon on the Toronto Stock Exchange.

($1=1.044 Canadian Dollar) (Reporting by Koustav Samanta in Bangalore; Editing by Anne Pallivathuckal and Deepak Kannan)