UPDATE 2-AstraZeneca bolsters COVID-19 vaccine supply with new deal

* AZ reserves production capacity at Oxford Biomedica plant

* Deal could be expanded beyond new term of 18 months

* AZ's drug, Imfinzi, also wins EU okay for aggressive lung
cancer

* AZ shares rise 1.5%, Oxford Biomedica up 2%
(Adds comment on agreement, AZ drug trial data, shares)

By Pushkala Aripaka and Aakash B

Sept 1 (Reuters) - AstraZeneca has expanded its
agreement with cell therapy firm Oxford Biomedica to
mass-produce its COVID-19 potential vaccine, as it looks to
scale-up supply ahead of a possible U.S. fast-track approval.

While the British drugmaker works on the widely watched
coronavirus vaccine hopeful, AZD1222, its main portfolio of
treatments for cancer, diabetes and heart diseases scored a win
after its drug, Imfinzi, was approved for use in Europe to treat
an aggressive form of lung cancer.

The company's shares gained as much as 1.5% to trade at 84.6
pounds by 0807 GMT, outperforming the benchmark FTSE-100
index, after Oxford Biomedica announced the expanded agreement
and on news of the U.S. approval for Imfinzi.

Cambridge-based AstraZeneca's vaccine is among the leading
candidates in the global race for a successful vaccine and it
has entered late-stage trials in the United States, the company
said on Monday, as it targets 3 billion doses of the vaccine,
globally.

Oxford Biomedica said in a statement that AstraZeneca would
give it 15 million pounds ($20 million) upfront to reserve
manufacturing capacity at Oxford Biomedica's plant and that it
could get an additional 35 million pounds under a new 18-month
deal.

The company was spun off in 1995 from the University of
Oxford, which developed the vaccine before licensing it to
AstraZeneca in April.

It was among AstraZeneca's initial partners when they teamed
up to produce the vaccine and focus on UK and European supply.
Tuesday's deal could be expanded further by another 18 months
into 2022 and 2023, Oxford Biomedica said, sending its share
price up 2.1% to 862 pence.

"Our previously announced partnership with the UK's Vaccine
Manufacturing Innovation Centre (VMIC) has supported our ability
to make additional facilities available for this supply
agreement," said Oxford Biomedica's Chief Executive John Dawson.

The company, however, did not specify how many doses of
AstraZeneca's vaccine it expects to produce under the expanded
deal, which is for "large-scale commercial manufacture,"
according to its statement.

($1 = 0.7458 pounds)

(Reporting by Pushkala Aripaka and Aakash Jagadeesh Babu in
Bengaluru; editing by Patrick Graham and Susan Fenton)