In mouse trials, doctors found the drug prompted weight loss, in addition to managing blood sugar levels.
"That [weight loss] is not what this drug was designed to do, but it's a very attractive additional benefit," said study co-author Richard DiMarchi, a research chemist at Indiana University in whose lab the drug was created.
The medication, administered by injection, is based on a single molecule that combines the properties of two hormones that send chemical signals to the pancreas, said DiMarchi.
"They signal to the pancreas that you are taking a meal," DiMarchi said. "The pancreas then responds by secreting insulin and to synthesise additional amounts of insulin for subsequent use."
People with type 2 diabetes have lower levels of these pancreas-signalling hormones, which are known as incretins, explained Dr John Anderson, president of medicine and science at the American Diabetes Association.
"The incretin defect in type 2 diabetes is well known and it's only within the last few years we have had agents to treat it," Anderson said.
Human and primate trials revealed that the new drug controls blood sugar with fewer side effects than other diabetes medications. Those side effects can include nausea, vomiting and stomach pain.
"In this study, the degree of gastrointestinal discomfort is much more modest than is experienced in conventional drugs," DiMarchi said.
"We get beneficial glycemic control with this combination drug and it seems to be with less adverse drug effect."
The medication combines the action of the hormones GLP-1 and GIP. Current diabetes medications of this sort target GLP-1 receptors in the body; studies involving GIP have produced mixed results.
GLP is known to suppress appetite and DiMarchi said the weight loss observed in mice might be occurring because the second hormone, GIP, is somehow "turbo-charging" that appetite suppression.
In the mouse trials, a drug based on GLP-1 alone decreased body weight by an average 15%. But the new drug combining GLP-1 and GIP decreased body weight by nearly 21%, as well as controlling blood glucose and decreasing appetite.
A six-week human trial involving 53 patients with type 2 diabetes found that the medication effectively controlled their blood sugar levels. However, the researchers did not note any change in weight during the relatively short study period.
The higher potency of the combined molecule suggests it could be administered at lower doses than other incretin-based medications, reducing side effects and making the drug easier to take.
"Currently approved drugs are quite effective," DiMarchi said, "but they are insufficient in normalising glucose and they certainly don't cause much loss of body weight."
The next step will be to hold human trials in which the new medication is administered alongside a current drug to compare effectiveness, he said.
Roche, which makes the drug, funded the study. It will be up to five years before the drug might receive approval from the US Food and Drug Administration, DiMarchi said.
The FDA issued a safety alert in March regarding incretin diabetes drugs, citing unpublished findings that suggest an increased risk of pancreatitis and pancreatic cancer by using the drugs.
The American Diabetes Association has called for an independent review of these medications to evaluate these claims.
The initial findings regarding the combination medication are "promising, I think," said Dr Spyros Mezitis, an endocrinologist at Lenox Hill Hospital in New York City.
"The question now becomes the weight loss in human subjects...how much weight loss, because that's going to be preferable if there will be weight loss," Mezitis said.
"The good thing is this agent is not only treating diabetes but also obesity. People would be losing weight and also maintain glucose control."
Noting that the human trial involved only a handful of people for a short period of time, Anderson said he looked forward seeing further research on the combination therapy.
"While it's an interesting concept and something that could be very promising, we're a long way from knowing whether targeting both hormone receptors will be incrementally better or a lot better," he said.
"There's obviously a lot they're going to have to do with this molecule from this point forward."
The study findings were published in the journal Science Translational Medicine.
Visit the American Diabetes Association for more on the blood sugar disease.