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Drugmaker Merck & Co. (MRK - Get Report) on Tuesday said it agreed to buy privately held Peloton Therapeutics for about $1 billion in cash, giving it access to Peloton's molecular therapy biotech treatments currently in development for patients with cancer and other non-oncology diseases.

Under terms of the agreement, Merck, through a subsidiary, will acquire all outstanding shares of Peloton in exchange for an upfront payment of $1.05 billion in cash, the company said. Peloton shareholders also will be eligible to receive a further $1.15 billion contingent upon successful achievement of future regulatory and sales milestones for certain candidates.

Peloton's lead disease-fighting candidate, PT2977, is a so-called "novel oral HIF-2α inhibitor" - an oral treatment designed to fight late-stage development of renal cell carcinoma, or RCC, a form of kidney cancer common in adults, and responsible for approximately 90-95% of cases.

$MRK has entered into a definitive agreement to acquire Peloton Therapeutics, a #cancer biotech: https://t.co/60IsiYKy5D #kidneycancer pic.twitter.com/naf9ydAMn5

— Merck (@Merck) May 21, 2019

"This acquisition exemplifies Merck's strategy to pursue novel therapeutic candidates based on exceptionally promising and innovative research," said Roger Perlmutter, president of Merck Research Laboratories. "We look forward to advancing this late-stage asset as part of our broad oncology R&D program."

The companies anticipate the acquisition will close in the third quarter of 2019.

Separately, Merck revealed on Tuesday that one of its key cancer-fighting drugs, Keytruda, failed to meet its stand-alone goal of treating an aggressive type of breast cancer.

Shares of Merck gained in early trading on Turesday, rising 0.16% to $79.01.