Making the ultimate investment in a company it once partially financed, Baxter Healthcare Corp. signed a definitive agreement to acquire Epic Therapeutics Inc.

"We've been doing some project work for Baxter for some time now, and when we went out for our last round of financing, Baxter led the round," Epic CEO George Dunbar said. "I think they liked what they saw in the progress we were making, and as a result, they made an offer to the venture investors to acquire the company."

Baxter gained a seat on Epic's board in February following the eighth round of financing for the Norwood, Mass.-based firm.

The companies expect to close the transaction this month, subject to Epic shareholder approval. Baxter said its total investment upon closing of the deal is expected to range between $50 million and $100 million. It said it would allocate a significant portion of that to in-process research and development upon closing, resulting in a one-time charge.

Asante Partners LLC acted as financial adviser to Epic.

Baxter, looking to increase its profile as a drug delivery provider, might have hit the nail on the head by adding Epic's controlled-release protein formulation and pulmonary delivery formulation technologies. Epic's ProMaxx technology creates microspheres that release drugs in the body over a period of time, from hours to weeks. The microspheres, which can be tailored to formulate a variety of drugs, including protein drugs, also have potential as drug delivery vehicles to the lungs.

"It has some significant advantages, particularly because it's a water-based system," Dunbar said. "The scale-up to manufacturing is very simple compared to systems that use organic solvents."

Deerfield, Ill.-based Baxter currently offers clinical and commercial-scale operations for its NanoEdge formulation technologies for poorly soluble drugs, ready-to-use prefilled syringes and bags, ready-to-mix reconstitution technologies and vial filling, and lyophilization.

"To align ourselves with a company that is going to be an emerging leader in drug delivery and formulation in the future was a smart move," Duncan said. "It's maybe not an obvious move until they make clear what they intend to do in the drug delivery space. But they're going to be a major player."

Privately held Epic's lead product, LeuProMaxx, leverages the delivery technology to treat prostate cancer in a 28- and 84-day sustained-release leuprolide product. Preliminary Phase IIb results indicate ProMaxx was well tolerated and demonstrated pharmacological activity.

Epic said it also has produced immediate- and sustained-release injectable formulations of other proteins, peptides and small-molecule drugs such as human growth hormone, insulin and estradiol.

Founded 10 years ago, Epic employs 38 people. Following the acquisition, its facility will remain in place and all but one employee will stay on board - Dunbar. He said Cambridge, Mass.-based MPM Asset Management, Epic's lead investor in the two rounds prior to Baxter's lead investment in the Series H round, hired him as CEO just under two years ago.

"I agreed to come here from California on a fairly short-term basis to try to create some liquidity for these investors," Dunbar said. "Now that the job is complete, I'll be going back after closing."

Baxter Healthcare is the principal domestic operating subsidiary of Baxter International Inc., whose stock (NYSE:BAX) fell 6 cents Monday to close at $26.35.