UPDATE 1-Microbix to build Chinese flu vaccine plant

* Microbix to build vaccine plant with Chinese company

* Capacity for 300 mln doses of pandemic flu vaccine

* Shares up 16 percent at 65 Canadian cents

(Adds details and company comments. In U.S. dollars)

TORONTO, Oct 27 (Reuters) - Microbix Biosystems MBX.TO, a small Canadian biotechnology company, said on Tuesday it would partner with a state-owned Chinese drugmaker to build Asia's largest flu vaccine plant.

The Toronto-based company said it formed a joint venture with Hunan Biopharmaceutical Co to build and operate the $200 million facility located near Changsha City.

The plant, the third-largest vaccine plant in the world, will have the capacity to produce more than 100 million doses of seasonal influenza vaccine a year, and up to 300 million doses of a vaccine to prevent pandemic influenza, including the H1N1 flu virus, when it is fully operational by 2013. Construction is scheduled to begin in early 2010.

“We are addressing an unmet medical need in China,” William Gastle, Microbix chairman and chief executive, told Reuters. “China is one of those countries that does not have enough capacity to supply its domestic population with influenza vaccines.”

The agreement comes as countries brace for another wave of the deadly swine flu and scramble for supplies of the vaccine as they step up their vaccination programs.

Gastle said the company is currently working with lenders to finalize the financial arrangements, but refused to comment on how the venture would be funded.

Microbix shares were up more than 16 percent at year-high of 65 Canadian cents on the Toronto Stock Exchange by late morning.

Canada has ordered 50.4 million doses of H1N1 flu vaccine for a national population of more than 33 million.

Experts predict that a third of the global population -- 2 billion people -- will eventually be infected with H1N1. Every year seasonal influenza infects between 5 percent and 20 percent of the population. ($1=$1.07 Canadian) (Reporting by Scott Anderson; Editing by Frank McGurty)