What's going on with the Xtek (ASX:XTE) share price today?

The Xtek Ltd (ASX: XTE) share price is seesawing in afternoon trade after coming out of a trading halt. Here's what the company announced.

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The Xtek Ltd (ASX: XTE) share price is seesawing in late-afternoon trade after coming out of a trading halt. The company announced a distribution agreement and lifted the restrictions that were placed earlier yesterday.

When news broke, the Xtek share price soared to an intraday high of 62 cents. However, since then, some profit taking has taken place. At the time of writing, the defence contractor's shares are flat at 54 cents apiece.

What did Xtek announce?

According to its late-afternoon release, Xtek advised that it has signed an exclusive distribution agreement with KeyOptions Pty Ltd.

Under the deal, KeyOptions will supply Xtek with its Virolens product for sale and support in Australia, New Zealand and the Pacific independent states.

The contract will be valid for an initial period of 2 years, with year-to-year automatic renewals thereafter. Thus, for Xtek to continue its exclusivity rights, a minimum sales target must be reached within the first year.

Xtek stated that the Virolens product has been accepted by the United Kingdom Medical and Healthcare product Regulatory Agency (MHRA) for registration as an in vitro diagnostic (IVD) medical device. Furthermore, it said that an application has been lodged by KeyOptions to the Australian Therapeutic Goods Administration (TGA).

Xtek noted that revenues are dependent on obtaining approval by the TGA, and customers confirming their expressions of interests into firm orders. It also stated that the commercial opportunity is wide-ranging, however, there is no certainty on guaranteed sales.

What is Virolens?

The Virolens system is a portable floor-standing screening device that combines holographic microscopy with artificial intelligence (AI) to detect COVID-19. The product works by using a mouth swab which is placed inside a cartridge and inserted into the system.

From there, Virolens looks at the nano-scale structures of the sample using a holographic microscope. The data is analysed by AI and quickly identifies if the COVID-19 virus is present. The whole process takes up to 30 seconds with a 99.7% accurate reading based on results of an internal in-vitro validation study.

The Xtek share price has gained almost 40% in the past 12 months and is up 7% year-to-date.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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