Johnson & Johnson (JNJ) agreed to buy privately-held drug developer Aragon Pharmaceuticals for as much as $1 billion on Monday as it looks to build-out its portfolio of drugs that treat hormonally-driven diseases like prostate cancer.

The New Brunswick, N.J.-based drug giant will pay $650 million upfront as well as potential contingent payments of up to $350 million upon reaching pre-determined milestones.

The deal, slated to close in the third quarter, includes Aragon’s castration resistant prostate cancer drug ARN-509 in mid-stage development and its androgen receptor antagonist program.

Aragon will spin-off all of its other assets into a newly formed company in which J&J will not have a majority stake. 

“ARN-509 complements ZYTIGA and provides the potential for exciting, novel approaches to treat prostate cancer patients," said Peter Lebowitz, global therapeutic area head of oncology for Janssen Research & Development.  "Prostate cancer is one of our main areas of focus, and we are pleased to be adding ARN-509 to our portfolio."

The closing is subject to antitrust and other regulatory approvals as well as customary closing conditions. The boards of directors both J&J and Aragon have approved of the deal.

Shares of J&J, up about 21% since the beginning of January, edged slightly higher on Monday to $85.45.

Follow Jennifer Booton on Twitter at @Jbooton