LBT Innovations Limited (ASX: LBT) shares are having a very strong session on Wednesday.
At one stage today, the small cap ASX stock was up as much as 80% to 2.7 cents.
It has since pulled back but remains up 40% to 2.1 cents at the time of writing.
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Why is this small cap ASX stock rocketing?
Investors have been fighting to get hold of the medical technology company's shares following the release of a promising announcement.
According to the release, the company has signed an agreement to sell five Automated Plate Assessment System (APAS) Independence instruments to global giant AstraZeneca (LSE: AZN). It will also provide annual maintenance and support services over seven years.
APAS Independence is described as a best-in-class technology that uses artificial intelligence and machine learning software to automate the imaging, analysis, and interpretation of microbiology culture plates.
It is the only US FDA-cleared artificial intelligence technology for automated culture plate reading and is being commercialised through its subsidiary Clever Culture Systems (CCS).
Contract value
According to the release, the total contract value is estimated to be between US$2.2 million and US$2.7 million, which is the equivalent of A$3.4 million to A$4.1 million.
The final contract value will depend on the level of maintenance and support services selected by AstraZeneca. Though, the majority of the contract value is to be received as the instruments are installed, which is scheduled over the next six months.
But it may not stop there. Management notes that there's potential for additional orders to follow.
It also feels that the rollout is indicative of how other companies might consider adoption of the APAS technology, and highlights that it has created a strong pipeline of opportunities within this customer segment, including some of the largest global pharmaceutical companies.
Management commentary
The small cap ASX stock's CEO and managing director, Brent Barnes, was pleased with the agreement. He said:
The purchasing agreement demonstrates the value the APAS technology provides and unlocks an initial roll-out of five instruments across a number of their large manufacturing operations. This decision was made based on demonstrated performance of the technology within the AstraZeneca manufacturing processes and provides credibility for the technology more broadly.
This milestone provides evidence and confidence that the APAS Independence is a fully validated technology that meets the stringent requirements for environmental monitoring during drug manufacturing, applicable to all customers globally for this application. Pleasingly, evaluations with additional multinational pharmaceutical customers are expected to commence in the current quarter.
