UPDATE 1-Oncolytics stock rises on cancer study approval

* Mid-stage ovarian cancer study using Reolysin approved

* Shares up as much as 7 percent

TORONTO, Sept 2 (Reuters) - Oncolytics Biotech Inc (ONC.TO) stock climbed as much as 7 percent on Thursday after it said a mid-phase ovarian cancer study involving its proprietary formulation of the human reovirus was approved.

The randomized phase II trial by the Gynecologic Oncology Group and funded by the U.S. National Cancer Institute, will measure the effectiveness and side-effects of using chemotherapy in combination with Oncolytics' Reolysin versus chemotherapy alone on cancer patients.

Calgary-based Oncolytics focuses on the development of viruses for the treatment of cancer.

Reolysin, currently used in a number of cancer trials in various stages, is the company's proprietary formulation of the reovirus, a virus found in human respiratory and bowel systems and also found naturally in sewage and water supplies.

Research has found the reovirus can replicate and kill host tumor cells. Oncolytics says it has also discovered that the process may result in "educating" the immune system to recognize and kill tumor cells.

Oncolytics shares were at five month highs, up 4.8 percent at C$3.51 in Toronto at midday.

($1=$1.05 Canadian) (Reporting by Solarina Ho)