Nexsen (ASX:NXN) entered into a non-binding term sheet with FlashDx Shenzhen to establish a joint venture for the development and commercialization of a Group B Streptococcus diagnostic test, according to a Friday Australian bourse filing.

The proposed venture plans to use FlashDx's existing molecular Group B Streptococcus diagnostic test as a foundation for an enhanced product, incorporating a Nexsen-contributed sample-preparation enhancement.

The joint venture product will sit alongside, rather than replace, Nexsen's StrepSure program, the filing added.

Under the term sheet, FlashDx will exclusively manufacture and supply the test to the joint venture, while Nexsen will lead the regulatory program towards US Food and Drug Administration 510(k) clearance and provide the required funding to obtain US FDA 510(k) clearance and CE-IVDR approval in Europe.

FlashDx will transfer the applicable FlashDx Group B Streptococcus cartridge-specific intellectual property into the joint venture upon those regulatory approvals being obtained.

Nexsen's shares fell 3% in recent trading on Friday.