Health Advance Inc (OTCMKTS:HADV) Has Compounded Its Upside Potential With A Generic Drugs Entry

Health Advance Inc (OTCMKTS:HADV) has been on a sustained run up since announcing an acquisition that will see it enter the booming health products retail market, and the gains look set to continue as the terms of the deal finalize and the company (and its shareholders) start to reap the benefit. Additionally, a fresh deal just hit press, and we expect this will serve as a near term floor to support any profit taking on the initial arrangement, and beyond that, drive further upside heading into the close of 2016.We'll get to the deals and what they means shortly, but first, take a look at the chart below.As it shows, the company traded for as little at $0.04 a share back at the end of September. A signed letter of intent to acquire 100% interest in Hantian Labs Limited, a private UK corporation, in return for 15 million shares of Health Advance, kick started the move and the company ran up through October to hit $1.81 at the close of the month. The second deal, a deal which will see Health Advance pick up the rights to a number of generic drug formulations and enter the generic space (assuming regulatory approval – we'll get to this shortly) with a focus on CNS, anti-infections and dermatology, among others, was announced just a few days ago.The first deal has been covered quite a lot, and its implications already digested by markets and built in to the price, so we won't go in to too much detail about it here. Suffice to say, it represents the first major step in the company pivoting into the senior healthcare market. Consolidating this pivot, Health Advance announced shortly after the Hantian announcement that it had acquired the domain name DiscountSeniorSupply.com.So the first deal focuses on what we might call non pharmaceutical health and wellness, and the assumption is that Health Advance is going to leverage the DiscountSeniorSupply brand name to retail direct to consumers.The second deal represents the pharmaceutical side of the shift.As per the letter of intent, signed on October 31, the company will pick up the rights on closing to some generic formulations in the above mentioned arenas. Note, they all relate specifically to the senior market: CNS for anti convulsants, dermatology for anti fungal and anti inflammatory, steroids and ophthalmics.There's not been any word on the terms of the deal other than HADV will issue shares to pay for the rights transfer, and that they come from a Canadian resident called Patrick O'Charchin.More importantly right now, and what we see as the key driver in the value of these formulations for Health Advance, is the data that comes with them. For those not familiar with the generic space, a company has to prove that its generic versions of a branded drug contain the same ingredients, called bioequivalence, and performs the same as the branded version when taken, known as bioavailability. The lion's share of the cost of bringing these drugs to market is putting together data that confirms both of these points.The formulations that Health Advance will pick up as part of the deal come with bioequivalence data packaged, so Health Advance will only have to add bioavailability data to the equation before submission to the FDA for approval. Note, that bioavailability doesn’t mean it has the same impact on the patient – Health Advance doesn’t have to demonstrated efficacy, as such. It's more about pharmacokinetics. Does the active compound reach the site in question in the same way it does in the branded version? If the company can prove this, it can rely on the already available database of safety and efficacy data to supplement a submission.So here's what we think the company is doing.It has recognized that senior health and wellness is a booming market, and it is transitioning to attract a portion of this growing demand towards its own balance sheet. It's going to start selling the Hantian products through its DiscountSeniorSupply website to generate capital, which will foot the bill for the BA data generation on the generics. Once the generics are approved, it will retail these via its DiscountSeniorSupply brand in addition to its Hantian non pharmaceuticals.Forecasts are tough, since we don’t know the exact generic target indications. We do know that Hantian generates more than $1 million in revenues from its portfolio annually, however, and this should mitigate any potential capital raise requirement (and in turn, help avoiding adding to the dilution from the acquisitions) that the data collecting and FDA submissions necessitate.There's a chance these deals won't go through, and that's early stage risk, but if things pan out as planned, there's plenty of momentum carrying this one forward.We will be updating our subscribers as soon as we know more. For the latest updates on HADV, sign up below!Disclosure: We have no position in HADV and have not been compensated for this article.