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Medtronic vs. Obesity

Medtronic (MDT - Get Report) agreed to acquire Transneuronix, a privately held medical device company focused on the treatment of obesity, for an initial cost of about $260 million, and left open the possibility of additional payments if certain revenue goals are met.

Transneuronix treats obesity by stimulating the stomach with an implantable pacemaker-like device that delivers electrical pulses. Medtronic, a medical-device maker based in Minneapolis, expects to close the transaction within the week.

The acquisition follows Medtronic's recent plan to form a new business unit called Medtronic Obesity Management. "The acquisition of Transneuronix plays a key part in our strategy to deliver therapeutic solutions for the worldwide challenges of obesity," the company said in a press release. "Because obesity is linked to so many associated health problems, there is a great sense of urgency to find successful long-term treatment options for these patients."

Additionally, Medtronic is starting a feasibility trial to test the safety and efficacy of gastric electrical stimulation for the treatment of obesity in patients with Type 2 diabetes. The first implant took place June 7 at Scripps Memorial Hospital La Jolla in San Diego.

The Appetite Suppression Induced by Stimulation Trial (ASSIST) is designed to determine whether Type 2 diabetes patients with concomitant obesity who receive gastric electrical stimulation have a minimum mean excess weight loss greater than a control group. The trial will evaluate excess weight loss and glycemic control.

Shares of Medtronic were down 31 cents to $52.59.

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