UPDATE 2-Sanofi unveils positive diabetes drug test results

* Lixisenatide effective against type 2 diabetes

* Phase III trial shows drug safe to use

* New GLP-1 drug vies with rivals from Novo and Lilly

* Sanofi shares up 0.5 percent

(Adds detail on rivals, diabetes conference, background)

By James Regan

PARIS, Sept 20 (Reuters) - French drugmaker Sanofi-Aventis SASY.PA unveiled positive final-stage study results for type 2 diabetes drug lixisenatide as it challenges Novo Nordisk NOVOb.CO for the top spot in the treatment of the increasingly prevalent disease.

Tests showed injections of lixisenatide significantly improved glycemic control and were particularly effective at controlling glucose after meals, Sanofi said in a statement on Monday, adding the drug had proved safe to use.

Lixisenatide belongs to the GLP-1 class of drugs that stimulate insulin release when glucose levels become too high. If it wins marketing approval it will compete with Novo Nordisk's Victoza and Amylin AMLN.O and Eli Lilly's LLY.N Byetta.

“Once-daily lixisenatide demonstrated significant improvement in glucose control in patients with type 2 diabetes,” Sanofi said in the statement.

Sanofi is seeking to broaden its diabetes offering, which includes blockbuster insulin Lantus and has set up a diabetes division to become more competitive in the fight against a disease whose incidence is rising worldwide as more and more people become overweight.

Some 285 million adults are living with diabetes, a number which is expected to surge to 438 million within 20 years, according to Sanofi.

The head of the diabetes division told Reuters earlier this month the company wanted to take the top spot in the treatment of the disease worldwide by offering monitoring devices and patient services in addition to its drugs. [ID:nLDE6880J6]

Sanofi also said on Monday that tests had showed adding Lantus to oral drug therapy further reduced blood sugar in patients with Type 2 diabetes.

Shares in Sanofi were up around 0.5 percent at 50.36 euros by 1140 GMT. The drugmaker is seeking to acquire U.S. biotech Genzyme GENZ.O, specialised in rare disease treatments, as it hunts growth in the face of patent expiries.

Clinical trial results with both lixisenatide and Lantus were presented at the European Association for the Study of Diabetes annual meeting in Stockholm. Lixisenatide was invented by Danish biotech company Zealand Pharma and licensed to Sanofi in 2003.

Some analysts see lixisenatide as a latecomer to the GLP-1 market, since other companies are working on drugs that need to be injected less frequently. (Editing by David Holmes and Ben Hirschler)