By Jon D. Markman, Contributing Writer, Money Morning

On Dec. 21, 2009, we introduced Cytori Therapeutics Inc to Money Morning readers as a "special situation" stock worthy of consideration. The stock has surged more than 40% since then.

A big reason for that move was that the company received approval from the US Food and Drug Administration (FDA) to start marketing a product called PureGraft that prepares a patient's fat tissue for reinjection into the body for cosmetic procedures. Technically, this was what the industry calls a 510(k) clearance, which is the equivalent, for medical devices, of clearing Phase III trials for a drug.

So, what exactly is PureGraft and why is it so important? For those questions, I turned to one of my sources on the company, an investor and analyst who asked not to be identified.

Most importantly, he notes, the announcement proves that Cytori can get 510(k) approval for a fat-grafting product. But it also allows Cytori salespeople for the first time to begin talking to plastic surgeons, dermatologists and the like about an approved product. That means they can begin setting the groundwork for selling the company's much larger and more expensive Celution systems once they get FDA approval for that device.

More.

[Source: Money Morning]