Johnson & Johnson (NYSE: JNJ) looks to have registered a solid win at the American Diabetes Association meeting. Beating a $4.7 billion franchise will do that.

The health-care conglomerate's drug, canagliflozin, had a greater effect on blood glucose levels than Merck's (NYSE: MRK) multibillion-dollar drug Januvia. Canagliflozin also beat an older generic called glimepiride.

Canagliflozin also produced significant weight loss compared with the other drugs, which is a welcome benefit since obesity is one of the contributing factors to developing diabetes.

Johnson & Johnson has already submitted a marketing application to the Food and Drug Administration for approval of canagliflozin. Based on the data so far, it looks like the drug has a very good shot of getting approved.

The only concern investors should have is that canagliflozin is a SGLT2 inhibitor, the same class as Bristol-Myers Squibb (NYSE: BMY) and AstraZeneca's (NYSE: AZN) dapagliflozin. The FDA rejected dapagliflozin earlier this year after a few patients taking dapagliflozin in the clinical trials got bladder and breast cancer. There are no signs of a cancer risk for canagliflozin, but since dapagliflozin and canagliflozin are the first two SGLT2 inhibitors developed, it's hard to know  whether the FDA will be worried about whether the cancer risk is specific to dapagliflozin or a class effect.

If canagliflozin gets past the FDA, it should have blockbuster potential. The clinical trial data should help it compete against Januvia and being first in class means it can set the bar for other SGLT2 inhibitors.

The one downside for marketing is that canagliflozin increases the need to urinate because it works by blocking the reabsorption of glucose in the kidneys, which causes the sugar to be excreted in the urine. Januvia, on the other hand, has a very clean side-effect profile, one of the main reasons the drug has sold so well, so capturing the Januvia market might not be all that easy for Johnson & Johnson. Initially I wouldn't be surprised to see canagliflozin used as a second-line branded therapy for patients who can't reach their blood glucose goal on Januvia or Takeda's Actos at least until doctors gain experience prescribing the drug.

Of course, first Johnson & Johnson has to get canagliflozin approved. At least investors can collect a solid dividend while they wait. If you're looking for other dividend options, take a look at a select group of dividend companies Fool analysts believe are good buys in this new report: "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can get your copy for free.