In an effort to expand its presence in oncology, Gilead Science (GILD) said Tuesday it is buying privately-held biotech company Calistoga Pharmaceuticals for $375 million.

Calistoga, which focuses on the development of medicines to treat cancer and inflammatory diseases, could earn up to an additional $225 million if certain milestones are achieved.

“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,” said Dr. Norbert Bischofberger, Gilead’s chief scientific officer. “Building on the recent acquisitions of CGI Pharmaceuticals and Arresto Biosciences, this acquisition serves to further broaden Gilead’s pipeline and expertise in the areas of oncology and inflammation.”

Gilead said it is encouraged by Calistoga’s CAL-101, a first-in-class specific inhibitor involved in a variety of inflammatory and autoimmune diseases and hematological cancers.

“This compound could represent an advance for the treatment of certain hematological cancers,” Bischofberger said.

The transaction, subject to certain closing conditions, is slated to close in the second-quarter of 2011.

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