Biopharmaceutical company Merck (NYSE:MRK) reported on Tuesday the launch of a definitive agreement to the acquire privately held and Peloton Therapeutics Inc.

Through a subsidiary, Merck will acquire all outstanding shares of Peloton in exchange for an upfront payment of USD1.05bn in cash.

Under the terms of the agreement, Peloton's shareholders will be eligible to receive another USD1.15bn contingent upon successful achievement of future regulatory and sales milestones for certain candidates.

Subject to certain conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, the acquisition is expected to close in the third quarter of 2019.

Peloton is a clinical-stage biopharmaceutical company focused on the development of novel small molecule therapeutic candidates targeting hypoxia-inducible factor-2α (HIF-2α) for the treatment of patients with cancer and other non-oncology diseases. Its lead candidate is PT2977, a novel oral HIF-2α inhibitor, is in late-stage development for renal cell carcinoma (RCC). HIF-2α was previously thought to be intractable using small molecules.