Baxter Healthcare Corporation has signed a definitive agreement to acquire Epic Therapeutics Inc. Epic Therapeutics is a privately-held drug delivery company that specializes in the formulation of various types of drugs for injection or inhalation, including controlled-release protein therapeutics, using its proprietary PROMAXX microsphere technology.

Epic PROMAXX microsphere technology allows the creation of uniform microspheres that can be tailored to formulate many types of drugs, including protein drugs. The microspheres release the drugs in the body over a period of time from hours to weeks, thereby reducing the need for frequent injections. In addition, the microspheres have potential application for efficient drug delivery to the lungs.

"The acquisition of Epic Therapeutics complements our current capabilities and helps our pharmaceutical and biotechnology clients solve many of the problems that hinder product formulation and delivery efforts," said David F. Drohan, senior vice president and president of Baxter's Medication Delivery business. "The company's PROMAXX technology is designed to improve overall drug performance while offering a safer and more efficient alternative to other technologies. By combining Epic's PROMAXX technology with our drug delivery focus and global reach, we expect to significantly enhance the growth potential of both companies."

"Epic is very excited by the prospect of becoming part of Baxter's Medication Delivery business. As a small company, Epic has been very successful in developing and applying our microsphere technology. By combining our technical strengths and drug delivery expertise with those of Baxter, these efforts will be further enhanced," said George Dunbar, CEO of Epic Therapeutics Inc. "The combined strength of the companies will help further Epic's internal programs and provide new opportunities for our pharmaceutical clients to successfully bring to market drugs with particularly challenging formulation and delivery needs."

The acquisition of Epic Therapeutics will enhance Baxter's position as a full-line drug delivery service provider by adding controlled-release protein formulation and pulmonary delivery formulation technologies to its current platform capabilities. Baxter currently offers clinical and commercial scale operations for the NANOEDGE formulation technologies for poorly-soluble drugs, ready-to-use pre-filled syringes and bags, ready-to-mix reconstitution technologies and vial filling, and lyophilization.

"PROMAXX and NANOEDGE formulation technologies are complementary in that they enable our pharmaceutical and biotechnology clients to develop engineered drug particles out of small and large molecules that have challenging formulation or delivery needs," explains Drohan.

Both companies anticipate that the transaction will close in November 2002, subject to approval from Epic Therapeutics' stockholders. In accordance with Generally Accepted Accounting Principles, Baxter will allocate a significant portion of the purchase price to in-process research and development upon closing the acquisition, resulting in a one-time charge. Baxter's total investment upon closing is expected to be in the range of $50- 100 million.