Medtronic Goes for Shock Value

The implantation of the device takes about an hour, whereas current weight-loss, or bariatric, surgeries can take several hours. The most common bariatric surgeries in the U.S. are gastric banding, in which an elastic belt is wrapped around the stomach to limit its size, and gastric bypass, where a portion of the stomach is stapled and the lower intestines are rerouted to this smaller section of the stomach.

Gastric banding has a mortality risk of 0.2%, according to Inamed (IMDC Quote), one gastric-band maker. A possible side effect is that the band could slip; this may require surgery to readjust.

Brands of gastric bands include the Lap-Band, made by Inamed, the Swedish Adjustable Gastric Band from Johnson & Johnson's (JNJ Quote) Ethicon Endo-Surgery, and the Midband from the French company Medical Innovation Developpement.

Despite a mortality rate of about 2%, gastric bypass surgery is the most popular bariatric surgery in the U.S. Patients who opt for a gastric bypass can eat more food than those who chose gastric banding, and initial weight loss after surgery is more dramatic, gastroenterologists say.

Bypass surgery includes risks like loss of stomach fluids and the development of gallstones. According to Medtronic's estimates, 130,000 bypass procedures and 30,000 gastric banding procedures were performed last year; combined, the number is increasing about 30% a year.

If it's proven safe and effective, analysts say, Transcend could not only take a chunk of the bariatric surgery market, it could also be indicated in less severe cases of obesity.

However, "I wouldn't hold my breath and wait for it to get to less obese patients, at least in the first couple years," Wittes says. Leerink Swann doesn't have an investment-banking relationship with Medtronic.