Johnson & Johnson is expanding its position in prostate cancer by acquiring Aragon Pharmaceuticals in a deal that could be worth $1 billion.

The healthcare giant is paying $650 million in cash upfront along with $350 million in contingent development milestones. For the money, J&J is getting hold of Aragon's androgen receptor antagonist programme, including its most advanced compound, ARN-509.

The latter is a second generation androgen receptor signalling inhibitor in Phase II for castration-resistant prostate cancer. Observers believe it could be used in combination with J&J's Zytiga (abiraterone) which had sales of $344 million in the first quarter, up 72%.

Peter Lebowitz, head of oncology at J&J’s Janssen R&D unit, said the acquisition of privately-held Aragon "further enhances our leadership in prostate cancer drug development". He added that ARN-509 complements Zytiga and provides the potential for exciting, novel approaches" to treating the disease.

The deal does not include other programmes, notably ARN-810, Aragon's Phase I treatment for metastatic breast cancer. These will be spun off into a separate entity called Seragon Pharmaceuticals which will be financed by the current Aragon investors and headed by its current chief executive Richard Heyman. J&J will not have any stake in Seragon nor retain any rights to its technology or products.