(This version of the story corrects paragraph 8 to remove reference to absorption of insulin)

Novo Nordisk logo is seen in Bagsvaerd outside of Copenhagen, Denmark February 1, 2017. Scanpix Denmark/Liselotte Sabroe via REUTERS

(Reuters) - Novo Nordisk A/S said on Wednesday its diabetes drug met the main goal of reducing glucose levels in patients in a key late-stage trial, setting the stage for it to become the new standard therapy for type 2 diabetes.

The 40-week trial tested two dosages of Novo’s once-weekly drug, semaglutide, in addition to initial standard-of-care therapy metformin, against Eli Lilly and Co’s dulaglutide plus metformin.

Novo Nordisk said its drug was statistically significant in reducing glucose levels and lowering body weight in about 1,200 patients suffering from type 2 diabetes, when compared with dulaglutide.

Type 2 diabetes, closely linked to obesity, accounts for more than 90 percent of all diabetes cases.

The trial results could have been offset by an increase in cases of diabetic retinopathy, which leads to vision loss, Guggenheim analyst Tony Butler noted.

However, Novo Nordisk said on Wednesday the number of patients reporting an adverse event of diabetic retinopathy was low and comparable in both the arms.

“We are excited about the potential of semaglutide to set a new standard for treatment of type 2 diabetes,” the company said.

Semaglutide and dulaglutide belong to the GLP-1 category of drugs, which imitate an intestinal hormone that stimulates the production of insulin.

With both the drugs offering significant benefits, pricing will continue to be the most important factor in the diabetes space, Jefferies analyst Heffrey Holford said in a client note.

Lilly’s dulaglutide, which is sold under the brand name Trulicity, is one of the main growth drivers of the drugmaker’s success.

Dulaglutide generated sales of $480 million in the second quarter, accounting for about half of the company’s new product sales.

“While we project that Lilly will retain its leadership position in the once-weekly segment, Novo has made headway with its oral formulation that could potentially shift the market dynamics in its favor over the longer term,” Barclays analysts said.