Novo continues rally on Lilly's disappointing drug data

** Shares of Novo Nordisk NOVOb.CO rise 4% in morning trade to nearly top of STOXX .STOXX with analysts saying it extends gains after disappointing Eli Lilly's LLY.N Orforglipron data

** Novo shares surged about 7% on Thursday after Lilly's data showed its oral weight-loss drug candidate helped patients lose 12.4% of their body weight compared to 14.9% weight loss offered by Novo's injectable treatment Wegovy

** Nordnet analyst Per Hansen notes that besides showing less weight loss than anticipated, Lilly's pill had a less convincing side-effect profile, challenging prior market assumptions of its superiority

** The market reaction suggests some investors may have been caught on the wrong side of their bets, Hansen says

** "It seemed like an 'easy win' to be 'long' LLY and short Novo Nordisk ahead of LLY's earnings report," he adds

** Broker ABG believes that some investors are beginning to question whether they need to reverse the Lilly/Novo (and other obesity stocks) trade

** "The share price development over the past year has been so significant that even the 21% relative movement of Novo compared to Lilly pales in comparison to the overall one-year performance," ABG's analyst Morten Larsen says

** Novo shares suffered significant losses last week and earlier this week, a total of -35%, triggered by profit warning, CEO change announcement, and negative reactions to the company's Q2 report

** Shares of Novo's smaller rival Zealand Pharma ZELA.CO rise 2%, after being up 4% on Thursday