Health Advance Inc (OTCMKTS:HADV) has recently entered into a non-binding letter of intent (LOI) with Patrick O’Charchin to purchase proprietary product formulations for generic drugs.

Acquisition of Proprietary Product Formulations

The transaction is subject to the company’s due diligence as well as the execution of a definitive contract, which will be subject to customary conditions such as the issuance of shares in exchange for the proprietary product formulations.

The said proprietary product formulations are presently active in anti-infection drugs such as erythromycin ophthalmic ointment, central nervous system drugs such as antipsychotics, hormonal drugs such as steroids, topical dermatology drugs such as topical anti-inflammatories, among others.

Generic drugs feature the same ingredients and therapeutic benefits as branded drugs except that they have fallen short of exclusive patent protection. Consequently, generic drugs are cheaper alternatives for branded drugs.

While generic and branded drugs have the same active chemical formulations, they also differ in inert substance formulations such as artificial flavorings, binders, fillers, among others. The inert substance formulations may have an impact on the bioavailability of active chemical formulations, which is why drugmakers first need to conduct clinical trials evaluating the bioequivalence of generic drugs. The results of such clinical trials must be submitted to the US Food and Drug Administration to back the commercial approval of the drugs.

The proprietary product formulations of O’Charchin have already been evaluated to feature efficient bioequivalence, which is why acquiring them will lead to massive cost and resource savings for Health Advance.

Growth Prospects

Completing the deal will play an important role in the company’s broader growth strategy as it can create new opportunities to penetrate the global pharmaceutical industry.

In line with this, Health Advance has guaranteed that its deal with Hantian Labs is likely to close within the next two to three weeks as it nears entering into a definitive acquisition agreement with O’Charchin.

Health Advance is also to file its 10K Annual Report next week.

“The company is late in filing its 10K Annual Report and expects the 10K to be filed within the next two weeks,” revealed Health Advance in a press release last week.

Health Advance has closed at $1.30 on Friday.