LONDON - One month on from a cancer scare that investors feared might sink sales of Sanofi-Aventis's diabetes treatment Lantus, the French drugmaker appears to have escaped the worst.

Prescription data showed demand for the long-acting insulin was holding up, despite the release of studies on June 26 suggesting a possible link between Lantus and cancer, while U.S. and European regulators have both backed the product.

As a result, industry analysts have been reviewing initial gloomy sales forecasts.

Morgan Stanley, which upgraded the stock to overweight from equal weight on Tuesday, now believes the downside risk to Lantus revenues will be closer to 5 to 10 percent, rather than the more than 50 percent that had been modelled initially.

Its analysts now forecast Lantus sales will rise to 3.8 billion euros ($5.43 billion) in 2015. Merrill Lynch is more bullish, predicting 5 billion by 2014, or double last year's level of 2.45 billion.

Other analysts still caution that Lantus could be hit by more negative news in September when the European Association of the Study of Diabetes, whose journal Diabetologia published the critical studies, discusses the drug at its annual meeting.

Still, so far at least, Lantus has escaped the misfortune of GlaxoSmithKline's diabetes Avandia, sales of which plunged in 2007 when it was linked to heart attack risk.

According to Citigroup, four-week average U.S. total prescriptions for Lantus were down only slightly in the period ended July 17 at 292,700, against 297,300 up to June 26.

Avandia prescriptions, by contrast, had fallen 30 percent by the same stage and Glaxo's medicine went on to lose 60 percent of its sales.

The lack of widespread media coverage has been one key difference in the two cases, since the European experts who have questioned the safety of Lantus do not have the high profile of U.S. cardiologist Steve Nissen, who led the attack on Avandia.

Sanofi has also moved quickly to highlight methodological flaws in the research concerning Lantus.

The company's chief executive, Chris Viehbacher, is expected to reiterate his confidence in Lantus prospects when he presents half-year financial results on Wednesday.

Shares in Sanofi were up 2.6 percent 1250 GMT, outperforming a 1.1 percent advance in the DJ Stoxx European drugs sector .SXDP, also benefiting from news of a higher-than-expected price for new heart drug Multaq. ($1=.7004 Euro) (Editing by Karen Foster)