Gilead Sciences is expanding its presence in oncology and acquiring Calistoga Pharmaceuticals in a deal that could net the  privately-held biotech $600 million.

Under the terms of the deal, Gilead will initially pay out $375 million and Calistoga could earn up to an additional $225 million if certain milestones are achieved. The Seattle-based group has a portfolio of compounds that selectively target isoforms of phosphoinositide-3 kinase (PI3K) and its lead candidate, CAL-101, is currently in Phase II as a single agent in patients with refractory indolent non-Hodgkin's lymphoma and in combination with rituximab in treatment-naive elderly patients with chronic lymphocytic leukaemia.

Norbert Bischofberger, Gilead's R&D chief, said that "oncology remains an area of significant unmet medical need and our increased understanding of the genetic basis of cancer allows for the development of disease specific targeted therapies". He added that the company is "very encouraged by emerging clinical data for CAL-101",  and said the deal builds upon Gilead's recent acquisitions of CGI Pharmaceuticals and Arresto Biosciences, broadening its pipeline and expertise in oncology and inflammation.

The deal has gone down well with analysts and Joshua Schimmer at Leerink Swann issued a research note saying that CAL-101 is "one of the more promising emerging oncology assets".