It's a little early to call it, but it looks like Bristol-Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN) have a potential blockbuster on their hands.

Their new diabetes drug, dapagliflozin, seems to work pretty well when combined with metformin, a standard of care for type 2 diabetics. In a six-month trial, at all the doses tested, the drug was able to lower HbA1c levels -- a measure of long-term glucose levels -- better than placebo.

Dapagliflozin is in a new class of diabetes medications that inhibits the kidneys from moving glucose back into the bloodstream, and thereby lowers the glucose levels in diabetics. With a new mechanism of action, there's always concern that side effects might crop up, but so far everything looks OK.

If dapagliflozin has another successful clinical trial and wins approval, it'll enter a pretty crowded market. But I think there's room, especially if it can be used as an add-on therapy with a popular drug such as Merck's (NYSE:MRK) Januvia. The companies could also be bold and combine the new drug with their recently approved diabetes drug, Onglyza, which might help the latecomer compete against Januvia.

If new oral medications are developed that can help slow the progression of the disease, the clear losers will be companies making insulin and other injectable drugs, like Amylin Pharmaceuticals' (NASDAQ:AMLN) and Eli Lilly's (NYSE:LLY) Byetta and Novo Nordisk's (NYSE:NVO) Victoza. These treatments are typically used later in the disease's progression, after oral drugs are no longer capable of keeping glucose levels down.

It'll probably be another year before the companies file for marketing approval, putting a potential approval in 2011. The drug's still worth keeping an eye on, though, whether you're invested in Bristol-Myers, AstraZeneca, or one of the makers of rival diabetes treatments.

Let us know what you think in Motley Fool CAPS. Make an out- or underperform call on these companies, or post a pitch about whether you think dapagliflozin is Bristol-Myers' ticket to its post-Plavix future. It's free, fun, and Foolish.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Novo Nordisk is a Motley Fool Global Gains selection. The Fool has a disclosure policy.