* Says to sign flu vaccine deal with Middle East company
* Says in talks with China's Hunan Province
* Shares up 21.4 pct to 68 Canadian cents (Adds details)
TORONTO, Aug 31 (Reuters) - Small Canadian biotech company Medicago Inc MDG.V said on Monday it expects to sign a licensing agreement with a Middle East company soon, a deal that it said will pave the way for the development of its swine flu vaccine in the region.
Medicago would not name the company nor the country in which it is based.
The agreement would most likely be a nonexclusive licensing deal and technology transfer under which the Mideast company would build a manufacturing facility and use Medicago's technology in exchange for milestone and royalty payments.
Andy Sheldon, Medicago's president and chief executive, told Reuters it would be similar to an agreement his company reached with France's Genopole last month. The two companies formed a partnership to build a commercial facility to manufacture pandemic and seasonal influenza vaccines in France.
Sheldon said Medicago, which is based in Quebec and makes protein-based vaccines through the genetic engineering of plants such as tobacco, would also start talks soon with China's Hunan province on developing a vaccine.
"What we are trying to do is to go to geographical areas," he told Reuters. "We are working in what we consider to be the important strategic geographical areas."
The company's shares were up 21.4 percent at 68 Canadian cents on Canada's TSX Venture Exchange at midday on Monday.
The company, which reported a quarterly loss of 3 Canadian cents last week, does not expect to be profitable until the end of 2012 or the start of 2013, when it expects to see the commercial launch of its vaccine.
"We will be in a loss position until we start to actually sell a product commercially," Sheldon said. "We will be in a loss position as long as we are in development...that is clear."
$1=$1.10 Canadian Reporting by Scott Anderson; editing by Peter Galloway