US drugmaker Merck & Co. is to buy Peloton Therapeutics in a deal that could be worth as much as $2.2 billion to the clinical-stage biopharma. The acquisition would give Merck access to the privately held company’s lead kidney cancer drug candidate, bolstering its oncology portfolio.

Peloton is focused on developing novel small molecule therapeutic candidates targeting hypoxia-inducible factor -2α (HIF-2α) for treating cancer and other non-oncology diseases. The company’s lead candidate is PT2977, an oral HIF-2α inhibitor that is in late-stage development for kidney cancer.

Under terms of the agreement, Merck (through a subsidiary) will make an upfront payment of $1.05 billion in cash. Peloton will also be eligible to receive a further $1.15 billion, dependent on the successful outcome of future regulatory and sales milestones for certain candidates.

“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, adding that PT2977 has shown “intriguing” activity in treating kidney cancer.

The transaction is expected to close in the third quarter of 2019, subject to the usual conditions and regulatory approvals.

Last month, Merck’s blockbuster immunotherapy Keytruda was approved for treating kidney cancer in the US.