Eli Lilly & Co. may have an edge in the $20 billion diabetes market with its novel drug that matches Sanofi’s top-seller Lantus at controlling blood sugar while helping patients lose weight.

Patients with Type 2 diabetes taking Lilly’s experimental insulin lost an average of 1.28 pounds after 12 weeks compared with a weight gain of 0.68 pounds with Lantus, according to data released at the American Diabetes Association meeting.

The new therapy, known by the scientific name LY2605541, is being developed with Boehringer Ingelheim GmbH as part of a deal the two companies struck in 2011 to work on diabetes drugs. If similar results are found in a larger study, it may be the first insulin to help patients lose weight, providing an edge over Lantus and an experimental treatment from Novo Nordisk A/S, said Mark Schoenebaum, an analyst with ISI Group.

“Even modest, but real, weight loss could be a major commercial advantage over other basal insulins, in our opinion,” Schoenebaum said in a note to clients.

It’s not clear how the experimental insulin is causing weight loss. Most insulin causes slight weight gain, a particular problem for patients with Type 2 diabetes, who are usually overweight, said David Kendall, a medical fellow at Indianapolis-based Lilly.

“Insulin therapy in particular are important to improve glucose control and to do so as safely as possible,” Kendall said in a telephone interview. “We want to understand the weight-loss mechanism.”

Further Testing

The studies released Monday at the diabetes meeting are the second of three stages of testing generally required to gain U.S. approval. The insulin now is being tested in five Phase 3 studies. Data from those studies may be submitted to regulators as early as 2014, said Enrique Conterno, the president of Lilly’s diabetes unit.

Lilly plans more studies to determine what’s causing the weight loss, Kendall said.

More than 8 percent of Americans, or 25.8 million people, have diabetes, according to the U.S. Centers for Disease Control and Prevention. Among those diagnosed, 26 percent are taking insulin to treat their condition, according to the CDC.

Lantus generated $5.45 billion in sales last year, accounting for about 12 percent of Paris-based Sanofi’s revenue.

Study Results

Lilly said its insulin worked better after eight weeks at lowering blood sugar than Lantus in Type 1 diabetes, also known as juvenile diabetes, in which the body doesn’t produce insulin. The treatment worked similarly to Lantus over 12 weeks in patients with Type 2 diabetes, a condition where the body doesn’t produce enough insulin or ignores the insulin.

Just 5 percent of people with diabetes have the Type 1 form of the disease.

Patients taking the Lilly insulin had an increase in liver enzymes, a potential sign of liver damage, compared with those taking Lantus in the study. Type 1 diabetes patients on the Lilly treatment had an increase in cholesterol levels.

Lilly also said experimental drug empagliflozin alone or with the older drug metformin reduced fasting blood sugar levels and weight in patients with Type 2 diabetes who took the drug for 90 weeks. The medicine also helped patients lose weight. The class of drugs is known to be weight-neutral or cause slight weight loss.

Empagliflozin is in Phase 3 testing, with data that may be submitted as soon as 2013 if the studies are successful, said Tamara Hull, a Lilly spokeswoman. Results from those trials will be available “in the next couple of months,” said John Smith, senior vice president for clinical development medical affairs at Ingelheim, Germany-based Boehringer.